Hungarian Brewers’ Association Toasts Successes, Faces new Challenges

Appointments

From left: Pierre-Olivier Bergeron, secretary-general of the Brewers of Europe; Nikos Zois, managing director, Heineken Hungária; Sándor Kántor, director of the Hungarian Brewers’ Association; Zsolt Vuleta, general manager of Borsodi Brewery; Marcin Burdach, CEO of Carlsberg Hungary, and Gábor Békefi, general manager of Dreher Breweries.

The Hungarian Brewers’ Association celebrated its 30th anniversary this year by reviewing the progress the beer industry has made here since the 1990s and the new challenges ahead with the heads of the four biggest beer producers in Hungary: Borsodi, Dreher, Heineken, and Carlsberg, and the secretary-general of the European brewers association.

Opening the panel discussion, Hungarian Brewers’ Association head Sándor Kántor noted that the habits of Hungarian consumers are shifting towards quality over quantity: “Thanks to the recent product and technological development, the product range of Hungarian breweries has broadened significantly.”

While beer consumption per capita fell from around 100 liters in the early 1990s to just 64 in 2021, Kántor said that the market share of premium beers has grown to 30%.

Speaking about the war in Ukraine, all the brewery heads agreed that the crisis had brought about significant challenges for an industry that has only just started to recover from the COVID pandemic.

“We thought 2022 would be the year of peace after the HoReCa [hotel, restaurant, catering] shutdowns, but now we have a skyrocketing input cost inflation,” said Marcin Burdach, head of Carlsberg Hungary.

He added that in terms of the increasing costs of grains and malts, the difference is not a mere 5-6% and that the brewers will have to adjust the consumer prices.

Nikos Zois, who leads Heineken Hungária, remarked, "In two years, we had two global crises. A crisis is not pleasant, but may also offer opportunities.”

Mental Health

He argued that, in terms of priorities, people’s mental health should come first, followed by continuity of operation and cash flow. He agreed that the war had brought about soaring inflation and noted that Heineken is trying not to push it all on consumers.

Dreher Breweries general manager Gábor Békefi concurred that employees’ mental health is important and added that “COVID and the war brought about different supply chain challenges.”

Zsolt Vuleta, general manager of Borsodi Brewery, noted that the crises “Changed the operation environment and consumer habits, but we persisted and served the markets. The crisis catalyzed changes, as we needed to react to stay on our feet and be viable in terms of operation.”

Pierre-Olivier Bergeron, representing the Brewers of Europe association, told his Hungarian colleagues that they were being “too modest.”

“The situation reminds me of a car’s dashboard full of red lights, warnings about human costs, production costs, and more.”

He also praised the breweries’ solidarity schemes during the crisis that helped employees and people in need, adding that they dealt with the situation with “modesty, solidarity, and intelligence.”

Speaking about the success of the beer industry in Hungary in the last three decades, Kántor concluded, “The development of the largest beer producers operating in Hungary over the past 30 years shows that beer production plays a key role in the Hungarian food sector, especially in terms of supply and occupational safety. A wide range of products and high European quality ensure the companies’ present, while continuous product and production development guarantee the future of the sector.”

Forefront of Innovation

Talking about specific successes of his brewery, Vuleta said that Borsodi has always been at the forefront of innovation, with achievements such as introducing the first 0.0% alcohol content beer to the market.

“In 2020-2021, we concluded the biggest development at our facilities in Bőcs, which is now the regional center of Molson-Coors,” he added.

Zois emphasized the success of Heineken’s popular Soproni Óvatos Duhaj beer line, which includes several beer specialties such as IPA, APA, and also a sour-cherry flavored beer.

“We are also supporting a local hops cultivation program in Kastélydomb,” he added.

Burdach noted that Carlsberg had managed to “move away from being just a lager distributor in Hungary. Now we offer several special beers, and also the popular Sommersby ciders,” he said.

Békefi recalled that Dreher was privatized in 1992 when the brewer’s association was founded and reckoned that the “premiumization” of the brand was successful as “on the economic side, profitability grew.”

Kántor asked the brewers about the supply security issues brought about by the Russo-Ukrainian war.

“Supply security is now an everyday question; in the past years, we drew up a one-week plan and completed it. Now, even a one-week plan must be revisited due to the shortages. For us, this issue is more of an economic question, rather than quality,” said Dreher’s Békefi.

Who Speaks 1st?

Vuleta of Borsodi said that one of the most noticeable changes today is who speaks first around the table at brewery meetings.

“Now, it’s almost always the supply guy,” he noted, adding that since the factory in Bőcs is a regional center, it is now a priority for Molson-Coors, which is a huge advantage.

Burdach explained, “The situation is not easy. We can buy the goods, but we can’t say what the price will be.”

Zois said that Heineken Hungária is now planning with three scenarios: optimistic, realistic, and pessimistic. He also explained that the company has an alliance with Heineken subsidiaries in the Czech Republic and Slovenia to help each other with supply issues.

“Overall, in Europe, there is a control center that helps in case we can’t find raw materials locally,” he said.

Bergeron of Brewers of Europe made the point that the production costs of beer are high, and the brewing process is complex.

“The duty of the EU is to maintain its internal market. Now is not the time to implement indirect taxation that would further complicate the lives of brewers,” he warned.

This article was first published in the Budapest Business Journal print issue of June 17, 2022.

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