Ep. 1239 Hungarian Wine Market | wine2wine Business Forum 2021

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This hybrid edition of the business forum was jam packed with the most info speakers discussing some of the hottest topics in the wine industry today. For more information, please visit wine to wine dot net and tune in every Thursday at two pm central European time for more episodes recorded during this latest edition of wine to wine business forum. Welcome to our session in this morning, small introduction of myself. My name is Al Mahofer. I'm, Italian, my number. So, though, and, Samilier, I'm working here in Alto Adigi, Italy. And today, our session, it's, hosted by Alexandra, Alexalo, of Forka. Also, she's a Italian wine officer. WSTT diploma holder. And, a master of mine, stage two, level student, originally from Moscow, but, in the last, three years based in Hungary, and working as line consultant and, our wine provider. For Angumi and wine, Jeanal Vins in the best. And she will introduce you to the, Hungarian wine market today. So thank you very much, Elmer, for introducing me. Thank you everyone, for your interest in the Hungarian wine market. So I would like to share with you today how particular and only is the Hungarian wine market. Showing maybe some differences and similarities with the other markets just to give you the context. And I hope that everyone give the session with the idea what kind of opportunities are in Hungary for the wine producers, especially for wine producers from Italy who are willing to diversify their export markets. So I would like to start just with some, general market notes. So Hungary can be classified as a established market with some strong historical growth that is kind of tailing off. And in this, terms, the hunger and wine market is really similar to Italian wine market. That also classified as established one. I think that everyone who have ever been visited Hungary could notice the presence of the strong wine culture here. So I think also where I love to find events and, I love to find festivals. And wine is available really everywhere, and wine is drunk everywhere, even in the beer bars. You can see, still the people are drinking wine. So, and of but from the other hands, so you can see that actually the GDP is, thirty one thousand and, This is this is not the lowest in European Union. Yeah. However, it's a six lowest in European Union. And you can see that actually VAT rate, it's, twenty seven percent. This is the highest VAT rate in European Union. And we are talking first of all about Hungary as a really bright sensitive market. So but from the other hand, we also, It's it's a wine producing country. Of course, so we have sixty one thousand, hectares. Fifty eight, fifty eight thousand hectares were harvested in commercial purposes in twenty twenty. And, Hungary is six teentieth wine production country in the world, according to quality report twenty twenty one. So it's just after New Zealand, but, still we have higher production than in Austria. So, two point nine million hectoliters, our production. It's, if to think it's just one percent of the wine production in the world, and two point three million hectoliters, one consumption in the country. So it's also one percent of global wine consumption. Same amount of wine consumption we can find, for example, in Sweden market. And, yes, the Hungary is relatively small country. Adult population is just above eight million people. So it's the market is very small. But if to have a look, actually, on divine consumption in the last, ten years, so, you can see that this relatively stable. And you can see, of course, some fluctuations in two thousand fourteen and two thousand nineteen. So it's clearly the economical reasons, but also you can see that actually COVID really seems to have boosted the wine consumption. So now it's twenty four point four liters per year per person. Just to give you the context in UK, the wine consumption is nineteen point two. So, the one consumption is high, but perhaps the most interesting and unique thing about the Hungarian market is that the frequency of the one con con consumptions. So you can see here that actually twenty two percent, of wine drinkings consume wine once a week. So I can tell you that in comparison in Germany, it's just fourteen percent. So forty eight percent consume wine at least once per month. So they can be classified as a frequent wine drinkings. If you are familiar with, with the reports from the wine intelligence, they just global market and consumer's research agency. They classified frequent drinkers exactly as a once per month. So, yeah, I think just Hungarian's drinking wine also during the working week. It's not necessarily the bottle of the wines, and we are not necessarily talking about the high volume of the consumption. But maybe it's one glass or two glasses. So this is, I think very unique thing for this market. So it is to make the first small conclusion about that. So, yes, that's true that market is very price sensitive. But in the same time, many Italian wines can actually offer to the Hungarian market value for money wines. And, yes, that's true. The country is, country and market is small, but the strength of this market lay down in stability, in the frequency of the wine consumption. And, of course, this wine consumption reflected in in the in in the wine production. So you can see this. It it's relatively stable, and it's growing a little bit. So and from the two point nine, million hectoliters that were produced in twenty twenty, we can see that most of them, it's, actually white wines. Hungary is a white wine country. And, here, I it's it's it's a lot of unpronounceable and unreadable. It's genius grape varieties from Hungary. I will read some of them for you. So the highest is Bianca. The second one, ninety nine percent is Church Seguisures, amazing aromatic, grape variety, actually with very crisp facility that is rare foromatic wines. So after that, of course, our most important indigenous grape variety for mint, all as reslink as well as a heritage from the communistic area. Yeah. It's still very popular. And you can see here, Charlene, five percent, and you can see four percent. It's actually translated as a gray brother. So it's it's Pina Brija. Or pinot gris. So it's also very popular in Hungary, but what I wanted to tell here, it's actually that the white wines, so sixty nine percent, quite seventy percent of the wine production. White wines are very popular. In Hungary, but also you can see here the big diversity of the grape varieties inside of the country. Of course, not so big as in Italy, but we have more than hundred twenty grape varieties, white grape varieties. So, it's possible to suggest that, hangari one consumers, they are not intimidating to see some obscure name on the label of the of the bottle So they can they they they used to see the different names of the grape varieties. And I think it's it's it's clear opportunity for wines from Italy from indigenous grapes. However, it would be gliulo, Aviana, or Inzulia, or whatever. So and but if we are looking actually for the black wine grape varieties, you can see that there is no really big diversity here. So we are not, red wine country. Kek Frankos, it's, actually blow Frankish in Austria. It's the same grape variety, but, yeah, it's clearly believed that it's indigenous to Hungary, actually. If to talk about the profile of the cake from coast wines. They are, similar to to Berbera, actually, with the highest CDT and the food profile is also similar, but it has a little bit of the spiciness inside, like maybe, or something like that. So and you can see that, of course, the, international grape varieties, of course, they are planted, and also, Kabernefran is very important in, Hungary. It's considered as our very important, monovarital wines made from Kabernefran, and it's a it's it's a lot of wines of the premium, at the premium price. And I think here also some opportunities can be for the crocodile France from, from Italy because some parents like this great variety. And if you think about the Tuscany, yeah, where Kibbarnet from is booming, can grow more and more. Yeah. And if we talk maybe about, fluily, yeah, zone of the zone so, or whatever. So, And because it happened that we have only thirty percent, of our plant exist with black grape varieties, so we it's just not enough for hungry. So historically, Hungary was buying a lot of red wines, and especially from Italy, and especially in bulk, as I will show you later. So so the the first, the the second conclusion that they can give, there are opportunities for Italian red wines. Here. Hundred is a market where volume of exports of steel wine, three times higher than import. Expert is very important for Hungary. And you can see from the data that eighty percent. It's still white wine, what we are selling on the road, twenty five percent bottle, and forty six percent bulk wine. And you can see from the nine four two point nine million hectoliters, but we are producing one point three million hectareructures. Actually going to the export. And we saw the big growth in the last year plus twenty one percent. And, actually, Hungary become the tenth most important exported of the bulk wine in the world. So and, our destinations are Slovakia, Germany, Czech Republic, United Kingdom, Poland, and Slovakia is especially very important for Hungary. We export Buffalo wine, as well as bulk wine, So they are many important buyers for for the last two, three years. And, if I look in for the import, so as you can see, so the share of imported wines end up in the market. It's only six percent. So I told this is small market and, but we can see actually that also it was decreased thirty six percent from two thousand nineteen. But if you if you look at the table on the right side, what kind of changes happened between two thousand sixteen and two thousand twenty. You can you can see from the from the from the first view minus seventy percent in volume minus fifty percent in volume. But if to look closer, it's actually visible that it was bulk wine that fell down. And the bottle is wine. Was thirty six percent plus in volume and plus thirty seven percent in volume. So we are not longer buying the bulk wine. We are buying but lead wine. And, one more change. From the other table, as you can see, that in two thousand sixteen, we will buy as a bottle of wine. We will buy more red and rose wines, sixty three percent. But now, actually, we're buying more white wines. So it's quite fifty, fifty. However, fifty two percent of the butlet wine that come in Hungary. It's actually white. So the popularity of the white wines are growing. And one more positive news and positive trend for Italian one producers that actually since two thousand nineteen, Italy has the largest share of Hungarian's imported wines. So it followed by Germany. What actually was historically our biggest supplier. But in two thousand nineteen, it was changed for Italy. So, also, you know, we buy wine from Slovakia, of course, for the from the neighbors as well from France and Spain. And if you look closer to them, imbroke from Italy. So you can see this, on this chart. You can see really positive trend, what happens since two thousand sixteen, plus twenty five percent in volume, plus thirty seven percent in volume. Once again, I'm talking about butlet wines. So and even in the pandemic here, the change was plus four percent in value in this price sensitive market. So I would like to talk also a little bit about the sparkling wines. So the sparkling wines, it's six six point five percent of the share of the market. And, what I wanted to tell that domestic sparkling wines from our biggest producer, thoroughly, that is part of the Henkel and FreshNet, the biggest sparkling wine producing in the world, is important very much in our markets. It's actually sixty percent of market share, but from the other hand, Sparkling wines in Hungary are actually only wine category where import exceeds export and forty eight percent of imported wines from Italy. So every second bottle of imported pork and wine is Italian wine. So one more positive, trend you can see from them chart on the right side And you can see that actually the, price per unit increased by twenty eight percent. So here we can see as well the premise premiumization trend. So the the one more conclusion what it can do just to summarize all points about that, yes, there are opportunities for Italian steel budget and for sparkling wines in Hungarian market. Are you enjoying this podcast? There's so much more high quality wine content available for mama jumbo shrimp. Check out our new wine study maps. Our books on Italian wine including Italian wine unplugged, the jumbo shrimp guy to Italian wine, Sanjay Lambrusco, and other stories, and much much more. On our website, mama jumbo shrimp dot com. Now back to the show. I also would like to tell to give you just the overview a little bit of retail market structure. This is for steel wines in particular as, it was visible from the previous slide twenty percent of, spark inquiries sold out on the on trade. But this is this is retail market structure for steel wine. And here you can see also the prices. And you can see that actually the, highest average price per liter is in specialized wine stores that are mostly buying wines directly from producers. To name you few most important, focused on the premium wines, it's retail chain, Bartasha Shag, and also, drop shop that, has famous wine bar in budapest for many years. I'm sure that everyone who visited Buddha test, have been in drop shop. This is very important, wine bar for us, and they also actually have online shop. But if to to check the online retail share, Before COVID, it was just zero point three percent. So hungarians are not really buying wine online. During COVID, that's true. It shows fifty percent growth in terms of revenue, but, however, it's still just zero point six percent. And there are different couple of reasons, and one of them is actually that we don't have people enough for delivery. And for delivery, wine, competing with the food, and with other things. So it's just, I think, the technical thing, mom, mainly. So you can see also that the small grocery stores and it's glued also tobacco stores of this twenty four hours open stores. And, in the end of the every street in Buddha. So, they they are actually focused on the on the domestic line. So they are not really interesting, for us today. But you can see also the discounters, lidl, and Aldi. They are not so much important as in Germany, where it's forty percent here. It's just twelve percent of the volume. And but the preferred place, as you can see, to buy wines for handbillions are hypermarkets, even not supermarkets, so hypermarkets. And I mean here that Tesco, Spire, and Ocean. This is free main hypermarkets, but also supermarket chains. So, and this is actually the main channels for Italian wines in terms of volume. These supermarkets and hypermarkets. So I would like also to look a little bit closer on the preference of the line consumers. You can see, ninety four percent prefer domestic wine. And there's really, really love their own wines, and they believe that this is the best wine in the world. So you can see imported wine just six percent. That is really in line with Volaga that I showed you before. However, Also, I would like to tell a little bit about the consumption occasion that makes so much unique this market. You can see that, that actually, you can see that, similar to other excommunistic countries like Poland, for example, here, seventy eight percent of Canadian consumers prefer to drink wine at home or visiting friends or relatives. So on trade is actually only thirty percent, thirteen percent. And this is kind of the particularities in many, markets and, eastern Europe with this part. But, interestingly, this nine percent divine events So it's not just the weddings. So I'm always telling like that. It's actually an incredible amount of the festivals and buying, events and a lot of wine drunk there. Nine percent. It's it's it's it's a lot. It's also one of the particular things, in hungarian market. So, in terms of color, You can see here that twelve percent rosette. It's quite popular rosette wine. But if if to look at the shelves, you will not find really a lot of this pale provençal style rosette. Actually, hungarian rosette wines are mostly very intense pink color and even pale red. And if to think about opportunities for Italian rosette, I'm thinking about even cerras all of the brusso, or something like that. So this is not the market. Market is not so oriented on the pale color of of of the Rosaire. Orange wines are not here. However, they are growing in popularity, especially between young wine consumers. And also, I think you can hear about the Ramatos from Italy. Or, yeah, even pinot grisier that actually in fact made is the same as a orange wines with the skin contact. So, it's just to have you to give you idea about, about the preferences, for the color. And, yeah, fifty four, fifty four percent is white wine, white wine is very popular. In terms of sweetness, and this is probably the most unique thing about the Hungarian by market. So remembering that this is not a emerging market, this is established market. So The preference is a sweetness. You can see that fifty nine percent prefer semi sweet or sweet wines. Sweet wine category is struggling to sell in all markets. Except hungry. I don't know exactly why, but probably because we have the most famous sour sweet wine from Tokai. And probably because the perception of the sweetness in the wine for Hungarian consumers really associated with the high quality. So we are they are really ready to pay the premium for the sweet wines. And this is very unique. This is very unique. And this is one more so rare opportunity to sell maybe sweet Italian wines just as ideal. So, if to look at the social demographic profile of divine drinkers, here also, the particular thing, so fifty fifty, it's about, female male. So there is no difference. And forty percent of wine drinkers. I'm just sorry. You can see that here is thirty seven percent are actually millennials in JZ, so less than forty years old. This is young generation, and they it's generations, and they are drinking wine, and they will continue to drink that. And This, once again, show in the potential of this market in the future. And as we all know, the younger generations prefer the diversity that Italian lines really can offer. As, you can see also one one of the unique thing, that according to social class based on the education and, income, you can see that forty three percent from the wind of of the wind drink and slayer from the lower class. This is very unique thing in Hungarian wine market. Everywhere, of course, middle class, drinking wine in, in, in every market and upper class. But here, this is maybe perhaps the explanation why the market is so price sensitive. It's not because the wine consumers, just don't want to pay more like in Germany. It's just because they can't pay more, and they are looking for value for money. So one more idea about the segmentation, and this is actually same as the previous, slides. This is actually the study that was published in twenty twenty, with collaboration of University of Geisingheim. So it's very all all the data is very, very fresh. So and they were it's one more attempt to to to segment wine consumers. And, you can see here that this price sensitive consumers is actually only twenty seven percent. And it's not only about the it's, yes, it's lower in, level of income and often take advantage of say or they they they try to take advantage of the sales, but this is exactly the seekers of the value for money. And it's still there are possibilities here for Italian wines that I explained already. But the social security seekers, thirty two percent. Yeah. It's a lot. High level of education, high level of beverage income, and spendings, these are the buyers for Italian wines and special special group foreign funds that with high level of income spending primarily via favor Italian wines. So the foreign funds really about Italian wines. Generally, they have generally these negative attitudes over domestic products. I don't know why the Hungarian wines are amazing. However, we have this group of the consumers as well. So, some sessions session takeaways just to, yeah, the Hungarian market established with strong lung culture, high frequency stable lung consumption, growing volume and value of imported wines and in in in the bottle, but bulk import is decreasing. Still and sparkling wines from Italy have the largest share of imported wines. And the one hundred and one consumers buying wine mostly in hyper supermarket, drink them at home, prefer white, semi dry, semi sweet, and sweet wines. They are price sensitive. Yes. They're true. They are looking for value for money. They are young, thirty seven percent millennials and generation z. And they are looking for diversity, thirty two percent on loyalty seekers. So thank you. Thank you very much for your attention. So, please, if you have any questions, I'd gladly try to answer. Thank you, Alexander, for you, deep inside the Hungarian market. And, now if there's some questions, Hello? I I, you know, I spend a lot of time at hungry, but I was wondering, in some of the shops, and it's a lovely harvest tokai, sweet tokai. Are there any foreign sweet wines that are having success there in the market, semi sweet or sweet? You mean, or foreign? Forein. Forein. Yeah. Uh-uh. Yeah. We have so terms and it's possible to buy in the in the in the supermarket and, hypermarket. Yes. They there is interest to the sweet wines from around the world just to give you idea, before I arrive here, I was participating for the tasting of the sweet wine of of the foreigners of of the sweet wines from abroad. So for the local magazine, Vincent, and we have a lot of incentives, we have Percito Duility. We have a lot of sweet wines from around the world, but Bigshare was from Italy. And they all will appear on the on the pages of the Vincent magazine, and the people can read about them, And this is interesting because the the wine magazine will will will not write about something that is not interesting, yeah, for the consumers. So I don't see a lot, of sweet wines from Italy. However, I made, a little bit of research, and it was amazing. Actually, I found even pickle it from friuli, the sweet wine. Yeah. So that's that's already telling about something. So Yeah. Somebody, it's it's actually specialized, important and distributed for Italian, why they, sell wine to the Horicam, to the restaurants. So they have pickled it. Presentation, which is very, really nice. And, I would like to ask you about Bianca because it is eleven percent of the plantation. Yeah. And with it's a hybrid. Yeah. Yeah. It's It it will increase in this context of popularity of P. We great varieties and, you know, this is an actual topic as an MW student. Thank you. Thank you very much for the question. Thank you very much for the question. We just discussed with EMR and this, Bianca. So, It's a crossing. Actually, it was developed in nineteen sixty three. So it's heritage from Soviet Union and from communistic time. But, fifteen years ago, nobody cared about Bang, to be honest. And, this grape variety has, some percentage of Fittis Berlandieri and, Riparia as well. So it's extremely, it's frost resistant, but it's also resistant to the fungal diseases. And I think this growing popularity in the last ten years that the the Bianca was planted so much that it become the white grape variety number one in Hungary. This is actually, answer of the wine industry in Hungary. For the for the challenges of the economical sustainability of the vineyards. I think it's very rational, decision. And the great variety itself is pretty neutral. So you can do a lot of things of that. You can you can use it in the blend with the fifteen percent, and you will be still with, with the grape variety on the label. So that's that's Bianca. And actually, it was also one more, grape variety, Aletta, that is also kind of. I I call them indigenous crossings because because they are truly Hungarian. And, they were developed inside of the country, and they are valuable adopted. So, yeah, this is about Bianca. If I woke up so early, so I had a lot of questions, so normal. Okay. So, did you have roughly a percentage of screw kept wires consumed inside domestically? Yeah. No. Unfortunately, no. Nothing about the packaging. I can I can I can see, the idea from the popularity of packaging only from the from the data available from them? Official statistical office, what is export, what is import. I saw a little bit that was begging box with a little bit increasing. However, it's a perception of the consumers that it's lower quality. I think that it should be influenced from the Austria and Australia use screw cap a lot. And the Austrian wines are presentate, especially at the premium level in in Hungary. So I can assume that that that even if on the level of the supermarket and hypermarket, then we are talking there, hunger is by the white. Even if here, there are still perception of the screw cap, I think, I think it's it's it's just it just disappears, but very slowly. So the same thing with, with the bottles, you know, with that traditional glass bottle, it's the same thing. So whereas perception, this is better quality. I think as in many other markets as well. Yeah. But the percentage unfortunately, I don't have how Yeah. How many wines exactly under screw kept in Hungary? I I will ask you. One more question, and that's a lot. Yeah. When I was living in in budapest, I saw this, mid range at level, price fines from Italy are quite missing, because they have to keep me with the high, high level producing, of Hungary, what an interim mine producer can do to go in that market? Yeah. If you remember the slide with, I I think I can't come back. But if you remember the slide about, a retail market market structure, you probably saw that that this difference is big, really. So we have, average price, in the specialized shop at ten euro. And we had, two euro, three euro, in the in in in the grocery stores and supermarkets and discounters. So and the middle is only cellar door because it was about six euro. So, yeah, that seems like it's missing. But I think the answer was in the in the slide, with that forty three percent of the wine consumers in Hungary from lower class. I think this this is the answer to that. Yeah, I think the middle price wines are struggling everywhere because because it's just more concurrence. They are they they are in the market in the Hungarian market. Just it's more competition. Yeah. Okay. So thank you very much. Yeah. So anyway, if you're if you have any questions, you have my contacts, you can you can, reach me directly by mail or whatever. And I'm here for the rest of the day. So wishing you wishing you the good day, the good interesting seminars So thank you very much for your attention and getting one. Listen to the Italian wine podcast wherever you get your podcasts. We're on SoundCloud, Apple podcasts, autify, PamelaFM, and more. Don't forget to subscribe and rate the show. If you enjoy listening, please consider donating through Italianwine podcast dot com. Any amount helps cover equipment, production, and publication costs. Until next time, teaching.