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Hungary's businessmen pour 'fun' money into wine

17 november 2011, 11:31
Red wine of Sauska at the local winery of Hungarian-born US businessman and winemarker Krisztian Sauska, Villany. ©AFP
Red wine of Sauska at the local winery of Hungarian-born US businessman and winemarker Krisztian Sauska, Villany. ©AFP
Having built up massive fortunes, some of Hungary's richest businessmen are turning to wine-making for the joy -- and cachet -- it brings, even if their investments may take years to turn a profit, AFP reports.

Sandor Csanyi, Hungary's wealthiest man and the head of its biggest bank OTP, opened the now-renowned Teleki winery in the late 1990s while another, Beres Winery, was launched in 2002 by the owners of Hungary's Beres pharmaceutical company.

"All of these investments were made for prestige, at least in the short term," said Zoltan Zilai, managing director of Borkultura Nonprofit, organiser of Budapest's largest wine festival.

And without any immediate expectation of profits, they have been a welcome boost to an industry ravaged under communism.

Nimrod Kovacs, a Hungarian-American businessman known for bringing cable television and US network HBO to Hungary, is another who switched to the "bottle" trade a few years ago, launching a company that exports Hungarian wine to US markets.

"I do it because I like wine... I don't mean to sound arrogant but the losses we make do not cut into the flesh," he said in his office above his cellars in Eger, a historic winemaking town in the northeast.

Kovacs, whose 2006 NJK and 2008 Battonage Chardonnay have been hits in the US, predicted his winery would break even starting next year but that profits would take more time.

"We cannot make it with cheap wines for the global market because better cheap wines are made in Argentina, Italy or Chile," he said. "We must go for high quality," which in turn takes time to master.

"My 2009 wines will be in the pipeline for eight to 10 years. Until then, there is no money coming out," he explained.

Kovacs, like Zilai, said that what he started as a hobby has become a "sexy enterprise" as Budapest residents, like people in many places worldwide, developed more sophisticated tastes in wine.

Wine-making used to be widespread in Hungary but the wineries, techniques and knowhow suffered greatly during 40 years of socialist-type mass production.

-- 'For the joy of it' --

"There was no wine culture, only mass production for the Comecom market (of former communist countries)," says Zilai.

In the 1970s, 500 to 600 million litres of wine of dubious quality were produced every year. Today, Hungary bottles 400 million litres, of which 50 million litres go for global export.

"We did learn a lot from the French winemakers, they are the best we know," said Zilai.

And while foreign investors have entered the Hungarian sector -- including France's Axa Group, Bordeaux winemaker Michel Reybier and Spain's Vega-Sicilia -- they make up a tiny share of production, he said.

After Hungary's switch to democracy in 1989, wineries had to start over in a highly competitive global market.

Today there are 7,500 wineries in Hungary-- down from 12,000 in 2004, the year it joined the European Union. Yet most still produce a tipple of uneven quality using obsolete techniques and rundown vineyard structures, according to Zilai.

"Only the top tier of wineries is successful, some of them even on the international market," he said.

Christian Sauska, a Hungarian businessman who made his fortune in the US in the lighting industry, said he aims not only for top-notch quality but also for uniqueness.

His winery is located in the oldest classified European wine region, Tokaj, home to Hungary's sweet aszu wine.

"But you can't make a living out of sweet wine ... The local harslevelu and furmint (vintages) are the ones that are special and that interest consumers."

Sauska is already selling to the US, Britain and China -- where his Tokaji Birsalmas Furmint 2009 and the 2008 Cuvee 7 are popular -- and he hopes to include Russia as well in the near future.

The Sauska Winery opened in 1998 in northeastern Tokaj and established another 100-hectare (247-acre) vineyard in 2006 in the southwestern Villany region, possibly the most state-of-the-art production site in the country.

Still, the business will take at least a decade to break even, said Sauska.

"If I look at how much investment it has required and what the return is, it is a bad joke," added the 63-year-old CEO, who said he invested in wine "for the joy of it."

The profits "will be enjoyed by my grandchildren."

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