Beer has a long history in the Czech Republic, and was for a long time enjoyed in the wood-panelled environs of the traditional pub. But as a new generation of Czechs grow up, the ways in which they drink their beer is changing and the country’s beer brands are scrambling to keep up.

Like many other European capitals, Prague’s millennials are shunning the traditional watering holes in search of a more modern experience, Reuters reports.

For the country’s largest breweries, such as Asahi-owned Plzensky Prazdroj, which makes Pilsner Urquell, this has meant exploring a new concept of bar. It is planning to open a “Pilsnerka” bar, one of around 20 pubs it is planning to open this year all tied to different beers from its wide portfolio.

“Consumers are changing so this is a big opportunity to bring something new to the market,” says Tomas Mraz, sales director at Plzensky Prazdroj.

With a brighter, more open, and family-friendly design, these new bars are intended to appeal to an audience beyond the traditional male drinker.

There are broader forces at play. Though unemployment in the country is relatively low, GDP growth is also low compared to the global average. There is some anxiety about the economy as a whole, according to Deloitte.

This might reflect the increase in home consumption of beer, which has now reached two thirds of all the beer consumed in the country. For the breweries, this has led to lower margins and a need to get people out drinking in bars. The introduction of an indoor smoking ban in 2017 may also have something to do with it.

Pubs are also feeling increased competition from cocktail and wine bars, alongside a new electronic ordering system designed to clamp down on tax evasion has also proved cost intensive for pubs, forcing some to shut up shop.

Around 65% of the beer sold in the country is in stores, a trend that breweries expect to see continue. A key problem with in-store sales is the product’s vulnerability to promotions, which have the dual effects of diminishing the perceived value of the product – and therefore consumers’ price elasticity – and also hit profits. Though exports, which last year jumped 12%, offer a bright spot, the on-trade remains key to breweries’ future plans.

“Breweries are going all out to make their draft beers and pubs attractive to younger consumers who have many more choices these days,” explained the head of the Czech Beer and Malt Association, Martina Ferencova. “Consumers are also demanding more.”

The other new idea stronger breweries – both small and large – are exploring is the branded restaurant. Like an updated pub concept, it offers a direct avenue to consumers as well as a controllable brand experience.

“Consumers are more demanding than before, they have less time and once they decide to visit a pub or restaurant they expect a certain standard,” explained Jan Trochta, head of Molson Coors-owned Staropramen’s branded pub division. The company was one of the first to launch a branded bar 20 years ago.

Sourced from Reuters, Deloitte