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First industrial brewer in a century has a new business model and heady ideas

While not yet a brewery in its own right, Zemský Akciový Pivovar is already making its mark in the country’s capital and has a goal of establishing itself as the first small industrial-sized brewery in Prague in more than 100 years.

That is the vision of Pavel Prchál, a 15-year veteran of the Czech beer industry, who, along with his partner Libor Utekal and two American investors, launched Zemský a little more than three months ago. Roughly translated as “earth’s beer,” the group is now selling its beers in more than 20 pubs in Prague.
Although some beer critics will say that Zemský is not yet a brewery in its own right – its beer is currently produced by the Chotěboř brewery under the guidance of Brewmaster Oldřich Zaruba — Zemský has big ambitions to build a brewery of its own and is currently scouting locations.

The goal for the Zemský team is to establish a small industrial brewery capable of brewing more than 20,000 hectoliters per year, a capacity that far exceeds what other small breweries like the successful Únětický brewery are doing.

Microbreweries refer to a capacity of 10,000 hectoliters or less. Anything above that is a small industrial brewery. A large brewery is defined as more than 200,000 hectoliters.

“Based on our love for beer and the need in the market we decided to start our own brewery,” Prchál said. “The history of brewing in the city combined to help our vision. The goal: For the past 113 years breweries have been dying in Prague. Six have closed. This has been a trend around the country. We are talking small-industry breweries, not microbreweries.”

The company hopes to follow in the footsteps of Bernard, which Prchál said started the trend against the larger companies. Although smaller breweries battle big market budgets, Prchál said Bernard’s quality was better and interest grew. It was the beginning of the beer renaissance in 2006, he said.

He added that small breweries, besides making beer, have had to learn to do branding and market, something the Czechs are lacking, but learning. “We believe in quality beer and we want to show Prague, and Czechs, that we can bring an industrial brewery to Prague for the first time in 113 years,” he said. “We want to show that a small and personable brewery has a place in Prague, a place where our partners can work together for the future.”

But part of Prchál’s ambitious plan is to do things a bit differently. While the brewery will focus on producing true Czech pilsner-style beers, Prchál also wants to network with foreign brewmasters to produce foreign recipes, including an IPA, for example. “We want to open a brewery where we can create the classic Pilsner styles as well as beers from other countries,” he said. “Our goal is to have experienced brewers from different corners of the Czech Republic and Europe cook for our brewery.”

To do that, the brewery wants to prepare its technology to produce other styles of beer and the way to do it is to go back to the roots of those styles, by bringing brewmasters here and putting a face to the beer, according to Prchál. “An Irish beer, for example, would have an Irish brewmaster and we would use the brewmaster’s name to promote that beer. We want the whole story of why it is that way,” he said.

Zemský is also in negotiations with a brewery in Bavaria about making a wheat beer, although the flagship beer will be a Pilsner. “We can show our nation what is going on with beer, show the country real beer and educate the market about new beers. It only belongs in places that are interested in quality beer,” he said.

Beyond the beer, another differentiator is the business model, which is a joint-stock company. Zemský is in the process of identifying and selecting “partner pubs” they consider to be potential long-term partners for the brewery. The company has set aside a certain number of shares in the brewery to a limited number of the partner pubs.

“We feel that the relationships with our pubs are so important that we would like to include these pub owners as true partners in the business, including giving a form of ownership of the brewery,” a Zemský statement read.

But Zemský is not just throwing around shares. Selected pubs will have to earn shares through certain sales benchmarks. If a pub reaches the benchmark, it receives shares in the company.

Zemský has poured millions of euros into the project and the product, but the owners are confident. “We have a dream of bringing back the first industrial brewer to Prague in more than 100 years — a beer brewed in a traditional manner and worthy of the greatness of the most beautiful city in Europe,” Prchál said. “We are looking for partners who have the same goals as we do.”