Red Wine
  • Paula Stanca

THE NEED OF FOREIGN INVESTMENT TO BE TAKEN TO A DIFFERENT LEVEL

Due to fast reforms and liberalization in the 1990s, numerous high investments poured into Hungary’s wine industry. Greater location-specific advantages, due to the recognition as the world’s most famous sweet wine, turned all investors’ attention towards Hungary’s Tokaj region. As such, French insurance companies’ investments in Hétszőlő, Disznókű and Château Pajzos wineries marked the first in a line of investments to occur in the Tokaj area. Likewise, Oresmus was acquired by Spanish winemaker Vega Sicilia with financial backing from the Alvarez Family, followed by Royal Tokaji Wine Company purchased by a group of Anglo-Danish investors led by author and wine expert Hugh Johnson, and Királyduvar bought by American entrepreneur Anthony Hwang, to name just a few of the pioneers trying to revive a wine region succumbed to the ideologies of the Soviet Union. As such, vigorous efforts were made to transform the production environment from decrepit borkombinats into modern wineries with sole focus on quality, innovative winemaking methods and vineyard management, along with infrastructure modernization. Despite counting on long-term investments, as the nature of the wine business dictates, with aging requirements for wines before they hit the markets, after 30 years of struggles, these companies are still operating today at a loss. Consequently, foreign investment in just one region is not enough to improve the host country’s wine image abroad and increase its wine exports on the global market.




Hungarian public and private cooperation should entice multinational enterprises to establish foreign subsidiaries across all Hungary’s distinct wine regions and strategically invest in wineries that have already made steps in aligning with the newest world trends within the wine industry, such as production of wines of volcanic origin, quality boutique wines of Egri Bikavér and Egri Csillag, and creation of a fascinating array of dry Tokaji wines. Along with a strategic geographic location, great infrastructure, export potential on global markets, country’s openness to trade, and governmental institutions’ efficiency, the internationalization of the above-mentioned trends, that wineries embraced but failed to promote on the global wine market, would not be hard to achieve for foreign investors. Due to operating on a large scale these multinational subsidiaries would have the ability to globally cross-market their product in an environment of steady supply driven by a global demand of consumer preferences of ‘old-new’ wine styles.

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