Hungary revamps Tokaj wine brand to target China, US and UK exports

By bne IntelliNews June 4, 2015

Kester Eddy in Budapest -

 

For visitors to Hungary who have snapped up a bottle of the famed Tokaj wine at the bargain basement price of €3, only to disappointingly pour the contents down the sink after tasting it, help is on the way.

Budapest, keen to maximise the potential of Hungary's flagship wine region, has initiated a programme designed, its backers say, to cut out the dross and promote the highest-quality, sweet aszu wines – the like of which was once de rigueur at the royal courts of Europe. No more will the unwitting punter, lured by the illustrious name, mistakenly lay out cash for barely drinkable plonk. “To have seriously lower quality wines and even vinegars called Tokaj, you can't do that,” Michael Claessens tells bne IntelliNews, “There is a whole part of the [current] portfolio that they should stop making, because it diminishes the brand.”

Chairman of his own London-based branding consultancy, Claessens has a client list that includes names such as Chivas Regal, Bacardi and Glenfiddich: he knows what ticks the boxes – and what doesn't – in the global marketing of wines and spirits. Which is why the Tokaj Wine Region Development Council (TWRDC), the body charged with developing Hungary's north-eastern vineyards, has sought him out for advice.

Two years and a 62,000-respondent survey later, and the practical results – by way of a package of strategic guidelines – was revealed on June 2 in Budapest.

Beauty in simplicity

The implementation of these guidelines will bring “radical changes”, says Andras Tombor, chairman of the Development Council, but they are “unavoidable” if the long-term competitiveness of Tokaj wine is to be ensured and the general economy of the region, including its tourist potential, is to be fully developed, he argues.

Fundamental to the overhaul is a thorough simplification of the product portfolio: only the highest quality and sweetest – primarily the so-called five- and six-puttonyos aszu wines – will carry the Tokaj wine label. The best quality dry wines – which have proved increasingly popular in the last decade and form the bulk of production – will be classified as “Product of the Tokaj Region”. Table and lower quality wines will be assigned another label altogether, and prohibited from using the Tokaj name.

Although the proposals are to be presented to the various wine community councils for detailed evaluation and implementation, the Development Council has already begun the process by scrapping the less sweet classifications of three- and four-puttonyos aszu wines in 2013.

In parallel, the Council is urging stricter controls on wine production while pushing for a comprehensive review of all 11,000 hectares of designated Tokaj land – only half of which is currently under vine – to identify the specific terroirs capable of producing the best quality grapes at an economically sustainable level. “The terroir assessment [will enable us] to define exactly the economic sustainability of every quarter hectare of land as for quality wine production,” says Tombor. “We have to stop focusing or concentrating resources on [sub-standard] land  it doesn't make any sense,” he says.

As another pillar underpinning the changes, the Tokaj Trading House – the state-owned winery which, with around 40% of total Tokaj output is the largest single producer in the region – is undergoing a total refurbishment designed to improve product quality, rather than quantity.

The Council, which is targeting EU funding to support its plans, says it needs HUF13.7bn (€45m) in grants for these and associated developments.

If successfully implemented, the Council believes that by 2020, 40% of its “super premium” Tokaj exports could be sold in China – a rather ambitious target, given that sales there are still in their infancy – with the US and UK taking 20% and 10% respectively. Partly as a result, it envisages the ex-cellar price of the flagship wines will rise from current average of €20 to between €25-40 per bottle.

Wine reception

But out in the vineyards, what do the winemakers make of proposals? In particular, the foreign-owned investors from France, Spain, the UK and others that since the mid-90s have sunk tens of millions of euros into the vineyards, wineries and marketing of Tokaj wines?

Laszlo Meszaros, estate manager of the French-owned Disznoko Winery, and a tireless worker for the Tokaj cause over the last two decades, largely welcomes the moves. “We have a complex, very complicated wine range, and it's difficult to make the difference between the different categories, so I think this vision to have a more focused and simplified branding is a good thing,” he tells bne IntelliNews.

Nonetheless, with the details yet to be hammered out, he admits grape growers and vintners are unsure of the full implications. “These changes create a sort of unstable environment, because the winemakers don't know what direction to take,” he says, adding: “On the other hand, this strategy is for the long term, so having some troubles in the short term I think it's acceptable.”

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