Hungarian wine - 20 years of hard toil is just the beginning

By bne IntelliNews October 14, 2011

Robert Smyth in Budapest -

In the 20 years of its existence, the Budapest Wine Festival has grown from a few huts on bijou Vorosmarty square to packing out the grounds of the imperious Buda Castle. This year's sun-blessed festival that ran from September 7-11 saw almost 50,000 people spend a record amount on wine and reflected the optimism of Hungarian winemaking as its winemakers anticipated a bumper vintage of top quality grapes, in stark contrast to the rain-drenched festival and sub-standard vintage of 2010. But while the Budapest Wine Festival represents a magnificent showcase for a Hungarian wine industry that has been transformed since 1989, without a coordinated marketing strategy like many of its competitors have, many of the country's best wines are destined to remain in Hungary.

"This is by far the most important festival of the year and there are many. We're very happy with our position and the number of potential new customers we can get to know," Norbert Bodorkos, estate manager of Kreinbacher, one of the two largest wineries in the Somlo region, told bne at the festival.

Somlo is Hungary's smallest region, but it is renowned for intense, fiery whites from its volcanic basalt soil that were once a favourite tipple of Queen Victoria, who is said to have believed that drinking wine made from its Juhfark grape would help produce male heirs. Despite its small size, Somlo is prized almost as highly as Tokaj by wine experts for its volcanic influenced wines, but is far less known outside Hungary. "The main question is not about selling just Kreinbacher wines, but rather building a market for Somlo wine. If we can't sell our increasing output at home, then our future will lie abroad," said Bodorkos. Kreinbacher already exports 20-25% of its 30,000-35,000 bottles of annual production.

But if history is any guide, creating that international market for the country's best wines won't be easy.

Marketing miss

Izabella Zwack, head of the wine division of Budapest Stock Exchange-listed drinks company Zwack and owner of internationally-acclaimed Tokaj winery Dobogo, says that while there are many exciting and unique wines coming through, "in some ways Hungarian wine as a whole has unperformed expectations, especially when it comes to communicating with the outside world."

"For Hungarian wine to become a hot category internationally, we need more concentrated efforts," she insists.

Since the collapse two years ago of a sleek marketing programme (due to members not paying fees on time), Hungary's wine marketing has continued to lack the focus of most of its international competitors ranging from Austria to Australia. Various associations do carry the can for their own regions or subregions and Hungary's Agricultural Marketing Centre runs campaigns at home and attends wine fairs abroad, but the international impact is limited.

Nevertheless, several of the country's larger wineries like Torley, Hilltop, Nagyrede and Danubiana each export millions of entry-level, mid- and up-market bottles to markets like the UK, Germany and Sweden. Further, many lower volume premium category-focused wineries have already succeeded in shifting significant quantities onto foreign markets.

However, Hungary has failed to create a buzz internationally like its neighbour Austria, which with its lower output than Hungary has succeeded in targeting lucrative wine specialists in the international arena. Many Hungarian winemakers are also reluctant to export when they find foreign markets are unlikely to pay the same high prices that their wines fetch at home.

Poland, one of Hungary's traditional export markets, is the exception and is increasingly on Hungarian winemakers' radar, especially since Poles have been seen to be moving up from entry-level Hungarian wine. Hungarian wine there has been boosted by the country's historically strong relationship with Poland, with only Hungarian wines poured at Poland's Eastern Partnership Summit held at the end of September. Hungarian wines will also be poured at all high-level events during Poland's six-month stint at holding the rotating EU presidency, which runs until December.

Addressing the press and winemakers at this year's Pannon Wine Challenge, John Szabo MS (Master Sommelier) described Hungary's strong suite of indigenous grape varieties as a national treasure that should be championed for export markets. "It is important for producers to determine which markets they're after," he said.

It is not only its grapes that are special, however. "Hungary has a wealth of extraordinary terroirs and the potential for world-class wines that deserve to be served on tables around the world and can happily stand up against any wines in the world," furthered Szabo.

It's not just in marketing where Hungarian wines are falling short, however. "We've seen the effort that's gone in over the last 20 years, but we're a bit concerned that the final step in getting to the consumers is letting producers down," cautioned Caroline Gilby MW (Master of Wine) on delivering the jury's verdict at the Pannon Wine Challenge.

She mentioned the relatively low quality of corks, packaging and exposure to oxygen at bottling as negatives. "There's been a higher level of cork taint and early oxidation than I've seen in a while at international competitions," she said.

Changing tastes

Zwack and many others, including Hungary's most internationally acclaimed winemaker Istvan Szepsy, believe that the dry Tokaj from the Furmint grape is the spark that could ignite Hungarian wine internationally.

First foreign and then local investors piled into Hungary's legendary region of Tokaj, which has the world's oldest vineyard classification system, following the end of communism, only to find the market for its legendary sweet Tokaji Aszu was limited due to changing consumer tastes. But after 10 years of perfecting dry Furmint, the hope now is that positive consumer experiences with the dry style will lead to consumers then trying a wider range of Tokaj and indeed Hungarian wines in general.

London Tokaj is a start-up that's looking to sell 100,000 bottles of premium Hungarian wine to the UK market each year, promoting Hungarian wines in around the slogan of wines from the "New Old World". Its founders, Frank Smith and Giustino Palazetti, were at the Budapest Wine Festival meeting new winemakers to include in their online-based portfolio. "The UK wine market has matured, we need to hit the premium end of the market via communicating strongly with the press and trade with unknown but unique wines. Our wines are not going to be cheap, but will offer excellent value for money," said Smith.

Dry Furmint will be a key part of their message, but the traditonal sweet Tokaji Aszu will be crucial, especially in targeting restaurants. The pair will work with London-based Hungarian sommelier Gergely Barsi-Szabo who will specifically target the on-trade. "Tokaji Aszu is more understandable than other sweet wines and could really appeal to lovers of claret, with the acidity creating balance and layers of flavour rather than overt sweetness," he said.

Szabolcs Ujfalussy, head of sales at Tokaj winery Oremus, which is owned by prestigious Spanish winery Bodegas Sicilia, noted that sweet wines continue to drive turnover. Oremus exports around 60-70% of its output to 50 countries. After a 25% drop in sales abroad in 2009 in the depth of the global crisis, 2010 saw an increase of 50% over 2009. "In Hungary, sales of dry wine has been going up, while internationally dry dropped back a couple of years ago but is now increasing again," said Ujfalussy.

Hungarian wine appears to need foreign markets, especially now that the domestic market has been further hit by the continued surge of the Swiss franc against the local forint, which has left hundreds of thousands of mortgage holders with even less disposable income. "It's awful at the moment, some regular customers are coming in much less than they usually do," lamented one wine trader.

Hungarian wine - 20 years of hard toil is just the beginning

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