The second largest spirits producer in the Czech Republic – Jan Becher Karlovarská Becherovka – will invest CZK 100 million to build a new production hall in Karlovy Vary. Other spirits producers are investing multi-million sums of money as well, despite the economic recession, which is having an increasing impact on domestic spirits consumption.
Becherovka has definitively left its traditional production areas in the centre of Karlovy Vary and is moving to the Bohatice quarter on the outskirts of the city. One bottling facility was opened in the local premises already in 2005.
Part of financial resources for the new investment is to come from the sale of six buildings in the city centre. In late February, the company sold the properties to local tycoon Karel Holoubek who also owns the Karlovy Vary heating plant, the race course, the hockey team and the golf course, among other things. Becherovka’s new investment should extend the bottling line capacity and gradually raise production.
The spirits maker, controlled by the French company Pernod Ricard, did not comment on the size of the new investment. “We are not going to any provide details yet,” Becherovka spokeswoman Eva Kotýnková told HN.
But nothing changes for the spa city of Karlovy Vary and its fame. “What is important is that Becherovka stays in Karlovy Vary, although in a different area than where it was headquartered for decades. And that the new owner will leave the company museum in the original Becherovka buildings,” Karlovy Vary mayor Werner Hauptmann said about the new investment.
Starting such a big investment at a time of economic recession is a logical step, people from the industry say. And Becherovka is not the only such company. The largest Czech spirits producer, Stock Plzeň – Božkov, invested CZK 750 million in technologies and buildings in the last decade and wants to continue with investments this year, the company’s head Martin Petrášek said. “We are already feeling the impact of the crisis, but that is not a reason for us to neglect the development of technologies,” said Petrášek whose Stock sold a record 27.5 million litres of spirits last year and controls more than a third of the market.
Petrášek, who is leaving Stock in late April after thirteen years, as well as people from other distilleries admit that the crisis means a significant consumer shift to cheaper alcoholic drinks. “People will hardly quit drinking spirits, so instead they are searching for cheaper products,” said Josef Nejedlý, co-owner of Fruko Schulz that is the country’s second largest producer of the Czech “rum” behind Stock.
So this year does not have to be a disaster for Fruko because 80% of its output is cheaper spirits, such as private brands for retail chains.
“Now it really depends a lot on who produces what,” said Vladimír Steiner, head of the Czech spirits producers association Unie výrobců lihovin.
And there are exceptions to the rule, he said. One of them is the constantly growing demand for the Irish whisky Tullamore Dew that is sold here in the Stock distribution network.
At the moment, it is not known how the crisis has influenced and will influence Becherovka sales. The company, which also sells other spirits besides Becherovka, including the products of its parent company Pernod Ricard, has not released its 2008 results yet.