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Budvar Brewery Lost Quarter of a Billion in Revenue Due to War In Ukraine

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Due to the Russian aggression in Ukraine, Budějovický Budvar, the second-largest exporter of Czech beer, was unable to replicate its record-breaking performance from 2021. However, the brewery has observed a revival in the gastronomy and hotel sector following the challenges posed by the COVID-19 pandemic.

Budějovický Budvar CEO Petr Dvořák expressed that if it hadn’t been for the conflict, another record would have undoubtedly been achieved. The combined sales from Russia and Ukraine accounted for eight percent of the brewery’s total sales in 2021, making the impact of the situation significant. Unfortunately, exports to these markets ceased at the end of February 2022, resulting in an approximate revenue loss of CZK 250 million for Budvar. In addition to Russia, deliveries to Belarus were also halted.

According to the brewery’s annual report, revenues declined from CZK 3.115 billion to CZK 3.031 billion compared to the previous year. Pre-tax profit experienced a 40 percent drop, amounting to CZK 256 million. Beer production also decreased by 1.2 percent to 1.788 million hectoliters.

Budvar holds the position of the largest exporter of Czech beer after Plzeňský Prazdroj, with exports constituting over seven percent of the total Czech beer production prior to the conflict.

CEO Petr Dvořák expressed satisfaction in mitigating the volume and sales loss caused by the sudden discontinuation of sales to the Russian market. However, Budvar faced additional challenges resulting from significant price increases in energy, fuel, and packaging materials, which collectively impacted the company by over CZK 250 million.

The brewery acknowledges that the losses cannot be fully recovered and will continue to affect its performance in the forthcoming years. Budvar, like many other companies, has felt the secondary effects of the conflict, particularly in terms of raw material prices, packaging materials, and energy costs.

On a positive note, beer consumption in hotels and restaurants has returned to pre-war levels. However, the report highlights a deterioration in the situation towards the end of the year, with pub operators facing substantial economic pressure, potentially complicating the outlook for this year.

The report also summarizes that the end of lockdowns has resulted in a decline in beer sales at retail establishments. Furthermore, the economic pressures stemming from developments in energy and input prices at the end of 2022 may lead to a decrease in volumes due to potential closures in the coming period.

Despite the challenging circumstances in Eastern Europe, Budvar performed exceptionally well in other European markets. The brewery achieved its best-ever results in Slovakia, where it has a subsidiary, and also experienced nearly a 20 percent increase in exports to the UK. Additionally, exports to countries such as Austria, Spain, Italy, Hungary, Croatia, the United Arab Emirates, and Canada saw significant growth. In total, Budějovice beer is exported to over 70 countries.

Earlier, former Agriculture Minister Zdeněk Nekula (KDU-ČSL) announced that Budvar would contribute CZK 250 million to the state budget this year, which is approximately in line with the previous year’s profit.

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