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BUSINESS JOURNAL BUDAPEST
VOL. 26. NUMBER 13
JUNE 29 – JULY 12, 2018
SPECIAL REPORT U.S. Country Focus SPECIAL REPORT
U.S. Ambassador Arrives in Hungary David B. Cornstein became the ninth U.S. Ambassador to Hungary appointed since the change in regime when he officially took up his post on June 25. 17 SPECIAL REPORT
AmCham’s ʼInsightʼ Dinner a ‘Thank you’ to CEOs AmCham Hungary has held its traditional invite-only “Insight” dinner. The event brought together more than 140 CEOs and business leaders for an evening of food, fun and discussion. 18
Digital Champion
SOCIALITE
Cult of ‘Fridolatry’ Comes to Budapest “Fridolatry” refers to the cult inspired by Mexican artist Frida Kahlo. Now, for the first time, Hungarians can see what the fuss is all about, as an exhibition of her work opens at the Hungarian National Gallery on July 7 . 21
NEWS
Parliamentary Budget Debate Kicks Off
The house will be discussing the draft budget proposal in the coming weeks, with the final vote due to take place on July 20. A raft of associated tax proposals is also up for debate. 3
NE BUSI
SS
Vodafone Hungary’s new chief digital officer, Italian Michelangelo Giacco, says his job is two-fold, though the goals are interlinked: improve the customer experience and make the company more productive. 6 BUSINESS
Leadership Changes at PwC Hungary
Nick Kós is to become CEO for the whole Central and East European region with effect from July 1. He will be succeeded by Tamás Lőcsei, PwC Hungary’s tax and legal services leader, as the local head. 11
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THE EDITOR SAYS
EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester Eddy, Bence Gaál,
David Holzer, Christian Keszthelyi, Gary J. Morrell, Rob Smyth, Zsófia Végh, Ágnes Vinkovits. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:
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THE news we had dreaded was confirmed on Tuesday afternoon, as we began to gear up for our deadline; our much loved colleague, Vanda Vedres, died in the morning, almost exactly a week since she was found unresponsive in her appartment. She was taken to hospital and placed in an intensive care unit, but she never regained consciousness. All week we clung to hope as she clung to life, but it was not to be. Vanda had little direct connection with the Budapest Business Journal itself, beyond handling a couple of key clients, but she was deeply involved with many of our other titles as a project manager, particularly the Luxury Cities series, the Hotelier International magazine and the annual Fine Restaurants publication. Every office needs a Vanda. Publishing houses live by deadlines, and Vanda did not miss a deadline. But she was also so much more than that. She remembered birthdays and name days, she had a hug for those coming back from holiday, and when she came back from trips abroad herself – she loved to travel –, it was always with some local treat to share with her colleagues. She was that modern day contradiction, an often intensly private person with an interest in others, and an avid social media user, frequently using the hashtag #Ilovemyjob. She would have been 41 on July 1. Every office needs a Vanda. And now we need to find a new one. I have known her since our days working together on The Budapest Sun. It is with great sadness that I dedicate this issue of the BBJ to her memory.
********* AFTER an interregnum lasting the best part of a yearand-a-half, America once again has an ambassador in post in David B. Cornstein. This is good news for American citizens and businesses in Hungary, but also for the country itself. I say that intending absolutely no disrespect for chargé d’affairs ad interim David Kostelancik, who has run the embassy in an exemplary manner since the last ambassador, Colleen Bradley Bell, had her mission terminated on January 20, 2017, following the election of U.S. President Donald Trump. Such terminations are normal practice for political appointments, and in the last 30 years the ambassadorship in Budapest has almost always been just that. The fact remains that the words of an Ambassador Extraordinary and Plenipotentiary (to use the full and rather wonderful title) carry more weight and gravitas than those of a chargé d’affairs. Put crudely, if the ambassador wants to make a point to the Hungarian government over “the freedom of speech, the freedom of press and the freedom of religion”, issues he mentioned in his appointment hearing before the foreign relations committee, it matters more because he was hand-picked by the President, and is backed by the authority of a Senate vote. He even has Hungarian ancestry. But it also gives Budapest a more direct connection with Washington. Whether that gets Hungary what it wants is another matter, but the bridge that was missing is back in place, and that is good news for all. Robin Marshall Editor-in-chief
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School’s Out For Summer: Pupils write “Vakáció” (the Hungarian for “vacation”) on a blackboard on the last day of school before the long summer break, which started this year on June 15. In the black and white picture, pupils sing a song at a school closing ceremony in 1960.
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News
///macroscope
Parliamentary Debate on Budget Kicks Off
The general debate on next year’s budget bill has started in Parliament. The house will be discussing the draft proposal in the coming weeks, with the final vote due to take place on July 20. Hungary’s State Audit Office (ÁSZ) said in a statement this week that the budget is well grounded, supports stability and contributes to the sustainability of the Hungarian economy. Opposition parties, on the other hand, called it unfair, not sustainable and unpredictable. ZSÓFIA CZIFRA
The revenue targets in the government’s 2019 budget bill are fully achievable, ÁSZ said in reaction to the draft. It noted that the budget contains HUF 60 billion of reserves in the National Protection Fund, sufficient to counter remaining budgetary risks. In addition, reserves for “extraordinary government measures” and targeted reserves provide room to maneuver to address emerging risks, ÁSZ added. The draft bill, called a “budget of safe growth” by the government, assumes economic growth of 4.1%, a state budget deficit of 1.8%, inflation of 2.7% and a lower government debt-to-GDP ratio for the year 2019. Together with the budget bill, a tax package for next year will also be discussed by the Parliament. The tax package was introduced to the Parliament on June 19. If passed, the bill ensures that tax reductions would leave several hundreds of billions of forints with families and enterprises and cut the administrative burden, Minister of Finance Mihály Varga said. According to the plans, the
The amount of the gross minimum wage in Hungary. Minimum wage available applicable on January 1 (HUF / month) 138,000 127,500 111,000 105,000 101,500 98,000 93,000 78,000 73,500 71,500 69,000 65,500 62,500 57,000 53,000 50,000 50,000 40,000 25,500
Source: NAV/MTVA Sajtó- és Fotóarchívum/MTI
15% personal income tax
(SZJA) will remain in place, in spite of earlier suggestions about reducing it to a single-digit level. The government noted that the level of SZJA is already among the lowest in the EU. As for the corporate income tax, which is the lowest in the EU, it is set to remain at 9%.
Family Incentives
The government will also continue to broaden the existing family tax incentives. Next year, the amount of tax allowance for families with two children is to rise by HUF 5,000 per month, to HUF 40,000 per month in all, which will leave as a
whole
HUF 20 billion
with 380,000 families. The so-called social contribution tax, payable by employers, is to be reduced once again from the current 19.5% to 17.5% in 2019. This reduction will leave a further HUF 130 bln in the economy over the course of one year. The VAT of basic food stuffs such as poultry, pork, fresh milk and eggs will remain at 5%, and the rate of VAT on UHT and ESL milk will also fall to 5% next year. In the name of simplifying the system, five kinds of taxes will be ended next year. As of 2019, nobody will have to pay the 75% surcharge, the special banking charge
or cultural tax any more. The accident surcharge and the healthcare contribution tax will also cease to exist, as the former will be integrated into the insurance tax and the latter into the social contribution tax. The often criticized fringe benefit system will also be reshaped, leaving only the Széchenyi Recreation Card in the system; however, these plans have already received so much criticism from worker’s unions that they will probably be fine tuned in the near future. Reactions on the first day of the debate were plentiful. In parliament, opposition parties were quick to point out the perceived weaknesses of the budget plans. According to the Hungarian Socialist Party, the draft is against the future, and favors the rich, while education and healthcare expenditures will be even lower, in GDP ratio terms, than was the case this year.
EU Dependence
Representatives of the radical nationalist Jobbik said that the draft bill does not address the real problems of Hungarian society and will only cure the symptoms. Jobbik said that the 2019 budget will not ease the dependence of the Hungarian economy on EU funds, and will not solve the problem of emigration. The largest opposition party called the planned budget unsustainable. Both LMP (the green-conservative Politics can be Different) and Párbeszéd (the leftist Dialogue) described the draft
bill as unfair. The LMP harshly criticized the amount the budget allocates to the area of education, saying that in real value, the amount is less than it was in this year’s budget. The party also criticized the fact that the single-rate SZJA system will remain in place. Párbeszéd said this is a budget of an unfair country, and also noted that in the ratio of GDP, the government plans to spend less on education, healthcare, old people and social expenditures. Opposition parties will propose modifications to the budget bill in the coming weeks, and a final vote on the bill will take place on July 20.
Numbers to watch in the coming weeks The balance of the general government sector at the end of Q1 will be released by the Central Statistical Office (KSH) on July 2. The next day we’ll find out whether the 58-month expansion continued in May in the retail sector. On July 6, the first estimate of industrial production in May will be published. June’s consumer price index will be released on July 10.
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S TA R T U P S P O T L I G H T
App Aims to Improve Kids’ Reading in Modern, Exciting Way The emergence of technology in the past decade has made it increasingly difficult to make children read books. BOOKR Kids is a Hungarian educational startup, which utilizes phones and tablets to attract kids’ interest when it comes to reading. BENCE GAÁL
The BOOKR Kids Library application aims at not only familiarizing children with a number of classic stories and tales, but also at improving reading skills with interactive features. The app currently offers more than 200 interactive e-books, ranging from Hungarian classics such as István Fekete’s “Vuk” to international bestsellers including Antoine de Saint-Exupéry’s “The Little Prince”. New works are added to the library every week, with some of the digitalized texts previously only available in print. The downloaded books can also be accessed offline, according to the BOOKR Kids website. To retain the readers’ excitement, BOOKR Kids Library comes with more than 300 educational games inside the stories. Narration of the texts is also available, provided by well-known personalities, including Gabi Hámori, Nóra
Ördög and Péter Szokol. Children who can’t read well may also use the app, as an icon-based search feature is built-in, helping the navigation between stories.
Linking Trad and Tech
The three-year-old startup’s CEO and founder Dorka Horváth describes the application as an important link between tradition and technology. “Our main goal is to build a bridge between books and the digital world so that literature – besides screens – can also become a natural part of children’s lives,” she said. “We gamify the books while keeping their original values; it is only the format and the platform that changes. BOOKR Kids means ‘legal tablet time’ for kids since its developing effect is approved by parents, teachers and educational experts.” In 2018, BOOKR Kids received an
EURinvestment 1 million
from the state-owned Hiventures Venture Capital Fund. A special
pedagogical program for elementary schools, approved by the Digital Prosperity Program of Hungary, is set to utilize the application starting from September. BOOKR Class is a customized platform service which aims at helping teachers to teach reading. The application itself allows students to access interactive stories that improve their reading comprehension, and a web-based admin system offers teachers a platform to monitor student performance in real-time, assign homework, and create a personalized learning plan. BOOKR Class was first introduced by the company at this January’s BETT education industry show in London. This year, BOOKR Kids has already matched its total revenue from 2017. The business set an ambitious revenue goal for 2018 at EUR 500,000. Now present in five countries, the company is planning further international expansion,
with the help of the Hiventures’ investment. The BOOKR Kids Library application has had more than 50,000 downloads on Google Play, and is available on Apple’s
“Our main goal is to build a bridge between books and the digital world so that literature – besides screens – can also become a natural part of children’s lives.” App Store as well. Subscriptions are available in one- and three-month auto-renewable and 6 month fixed-term forms. Stories are available both in English and Hungarian.
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TriGranit Starts Final Phase of Millennium Gardens Developer TriGranit has been purchased by the CEE investment manager, Revetas and funds managed by Goldman Sachs Asset Management from the current owner, TPG Real Estate. The deal reflects the development and possible valueadd potential of the TriGranit portfolio, notably in Budapest and key Polish cities. GARY J. MORRELL
The new owners of TriGranit say they intend to continue with the current management of TriGranit. “Revetas’ acquisition of TriGranit represents the opportunity to create further exceptional real estate developments in key university cities in CEE, combining both Revetas’ long track record in the region as a value-add investor and TrGranit’s exception track record as a developer,” comments Eric Assimakopoulos, managing partner at Revetas.
pattern of TriGranit to develop large-scale projects on brownfield sites and includes
600 parking
Millennium Gardens by TriGranit. “We are pleased to be partnering with a strong management team in the continuation of delivering high-quality developments into the core real estate sector, which has been the only liquid asset class throughout the region over the past cycles,” he adds. The total asset value of the portfolio, including the gross development value,
exceeds
EUR 450 million.
The TriGranit CEE portfolio comprises a GLA of more than 173,000 sqm of fully leased office buildings and three further office development projects. Under the ownership of TPG Real Estate, TriGranit completed the sale of earlier office phases of Millennium Gardens, Bonarka City Center in Poland and Lakeside Offices in Slovakia. The sale of Millennium Gardens to CA IMMO for EUR 175 mln was one of the largest ever single asset office transactions in Budapest and a milestone in the resurgence of the Hungarian investment market. In Krakow, the 92,000 sqm Bonarka City Center,
developed on a brownfield site, was sold to South Africa’s Rockcastle.
Well Located Targets
“Revetas targets well located real estate assets with the potential to benefit from active asset management initiatives and additional capital investment. Revetas focuses on commercial property including office retail, hospitality and logistics as well as residential assets,” Assimakopoulos explains. In related but separate news, TriGranit has commenced construction of its latest Budapest office development; the 37,000 sqm Millennium Gardens, the final phase of the Millennium City Center project is expected to be completed in 2020. The BREEAM “Very Good” accredited complex, located on the bank of the Danube adjacent to the National Theater and the K&H headquarters, has been designed by Finta Studio. The project follows the
spaces, 200 bicycle storage and changing facilities and a roof top garden. Between now and 2019 the company says it is working on the launch of four office developments across Central Europe. “The Millennium Gardens office complex is the first TriGranit development in Hungary since 2011, so it is extremely special to us. Besides this project, we remain active abroad as well – our pipeline projects, together with Millennium Gardens, reach 107,000 sqm GLA in the CE region, including the construction of 77,000 sqm GLA of office space that will start within the coming 12 months in Budapest, Krakow and in Katowice,” said CEO Árpád Török. In addition to Millennium Gardens, TriGranit says construction of the 10,000 sqm Building H, the latest phase of Bonarka for Business (B4B) in Krakow is now in
“We are pleased to be partnering with a strong management team in the continuation of delivering high-quality developments into the core real estate sector, which has been the only liquid asset class throughout the region over the past cycles.” progress. Silesia Towers in Katowice is also expected to start in the near future; the twobuilding complex will be constructed near a previous TriGranit development, Silesia City Center, extending the city’s office supply by an additional 40,000 sqm.
CPI Undertakes Latest Stage of Balance Office Park In a sign of the continuing positive mood in the Budapest office market, CPI has celebrated the stone-laying of the 16,000 sqm Balance Hall. GARY J. MORRELL
This third phase of Balance Office Park on Váci út is scheduled to be delivered at the end of 2019, bringing the total space at the complex to 35,000 sqm; there remains the possibility of a fourth phase of the development. The CPI Property Group Hungary says it now manages more than 315,000 sqm of space with a value of more than HUF 500 million. The group is mainly present in Germany and the CEE region with assets in the office, hotel and industrial
sectors. Balance Hall is being financed from the company’s own resources. Office development activity is accelerating, with vacancy in the Budapest office market currently standing at a record low of 7.5%. In this landlord dominated market, more developers are opting for speculative development. Colliers International put the
2018 pipeline
at 244,000 sqm and the 2019 pipeline at 163,000 sqm, with more than 20 office projects due to be delivered in 2018-2019.
The Váci Corridor is the most favored area for office development with around 30% of total construction, and developers looking to source more development sites in the area.
ʼConscious Buildingsʼ
CPI describes Balance Hall, designed by Balázs Marián, as an example of what it calls “conscious buildings”. “We are creating an intelligent building monitoring system that reacts to environmental changes; thus, systems using energy can easily be adapted to daily needs and will be able to implement self-learning,” says Gyula Győri, CPI Hungary facility management director of the concept. “Conscious attention and smart developments can make the workplace one of the cornerstones of sustainable development. We strive to create harmony between environment and building, because we think that this is – and must be – the future. Therefore, we continuously
draw our tenants’ and visitors’ attention to the fact that we are not only obliged to take care of our environment, but this can also be financially profitable,” he adds. Balance Hall is being developed on a speculative basis. “We expect a strong negotiating period and our goal is to inform regarding lease agreements by the end of the year,” says CPI.
Balance Office Park by CPI.
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Business
Driving the Digital Revolution, Remembering the Human Touch
Vodafone Hungary’s digital champion, Italian Michelangelo Giacco, says his job is two-fold, though the goals are interlinked: one, improve the customer experience; two, make the company more productive.
valued at
EUR 18.4 billion,
Michelangelo Giacco
ROBIN MARSHALL
Giacco was only appointed to the Chief Digital Officer’s role in April, although he has run Vodafone’s commercial operation in Hungary since 2016. The position shows the importance the company is placing on the digital agenda. He says the company has taken a deep look at what it does. That has led them to five key areas where the company needs to excel: personalization; ease; speed; collaboration; and data driven decisions. Data is perhaps the most interesting of these. In many cases companies such as Vodafone already have much of the information they need to improve things today. For example, by responding in real time to a reduction of traffic on the website, or by creating a service that will proactively message clients
Mini C.V. Michelangelo (Mirko) Giacco was appointed to the newly created CDO post in April 2018, adding it to the position of director of commercial operations he has held since he joined Vodafone Hungary in March 2016. That role sees him responsible for sales and service, covering retail, call center, digital, customer experience, collection and transformation. He moved to Budapest from London, where he
“The digital revolution can make operations more efficient, so I want to digitize where it makes sense to do so, like bill paying or topping up. But we also want to combine the digital experience with human interactions, for the more emotional and complex tasks that require a personal touch.” Find that equilibrium, and customer engagement will improve, he says. “We can make our customers’ lives much easier, giving them what they want, what the need, when they need it. We have some big ambitions. Fundamentally we want to be more relevant and more personal to each customer.” That’s all very good, but is the ultimate goal to protect the existing market share, or to see it grow? The Italian director points to the recent announcement that Vodafone Group Plc. had agreed to acquire UPC Hungary, the country’s largest cable operator, as part of a wider European acquisition that also includes Liberty Global’s operations in Czech Republic, Germany and Romania. The deal,
and give them the required information upfront, if their bill is
suddenly
25%
more than usual. Many of the five key trends also feed back into each other: “I use a program called Neticle to help me understand what customers are saying on social media. I know exactly how many negative comments we are getting each day. Of course you are never going to stop those being made entirely, but my job is to see that the number is declining.” A key part of Giacco’s role, therefore, is “to introduce the organizational and the technical capabilities to make sure we can accelerate in these five areas and provide the most engaging digital experience.”
Productivity
But Vodafone did not just look at its own business. In just ten years, the once
had been Vodafone’s global head of multichannel sales and distribution from January 2015. Prior to joining the telco, Giacco had been a commercial director at Barclays for three years, where he led the Big Data start-up created within the high street bank. That followed roles at Northern Rock (following the nationalization of the troubled lender, he joined the small team whose task was to return it to the private sector), Indesit Company, and McKinsey & Company.
is subject to European Commission approval. “Our intention is to grow and offering convergent services will accelerate competition in the Hungarian market; I think the UPC deal is testament to that. We think the best way to grow is by being very relevant, a very easy organization to deal with, also by being a little quirky and innovative – like with our GoodThings app –, by being a bit different. If we can differentiate by offering quality services, as a minimum that will protect our business.”
traditional top companies, pharma and oil, have been replaced by tech companies: Facebook, Microsoft, Apple and Google. They work in very different ways to their predecessors, but the telco says it has identified the common features that make the newcomers more productive. “Part of my job is to understand these “Giants like Amazon and activities and bring them here. We have to Google and small tech use data differently, use communications differently, do customer engagement in a disruptors are always different way.” Given the level of mobile phone penetration experimenting, and they in the Hungarian market, providers have to start small; at the beginning, get creative in order to keep clients. “We have to give customers some benefit,” they do not invest a lot of says Giacco. The JóDolgok (GoodThings) money, just enough to learn. app aims to do just that. Customers are At Vodafone, we are not gifted benefits, which they reveal by shaking their phone. And it is available afraid of failing: failure is both in Hungarian and English, meaning good, as long as you have foreign users not blessed with Hungarian language skills can also benefit. failed quickly and not Speed is another important aspect, the CDO says. How quickly do you respond to spent a lot of money. They the customer? How quickly do you respond say in tech ‘fail fast’. I say to the market? How quickly do you innovate? “Giants like Amazon and Google ‘fail fast and learn’.” and small tech disruptors are always experimenting, and they start small; at Not surprisingly for a digital champion, the beginning, they do not invest a lot of Giacco is keen for Vodafone Hungary to money, just enough to learn. At Vodafone, do more in the local startup scene, and he we are not afraid of failing: failure is good, says the company is assessing how it can as long as you have failed quickly and not best do so. “Do we want to use the tool that spent a lot of money. They say in tech ‘fail the startup makes for our own internal use, fast’. I say ‘fail fast and learn’.” or do we want to present these startups to Keeping a Balance our customers to accelerate their digital That might imply rolling out ever more journey? Do we want to use these tools or digital solutions, but a balance must be become a hub?” It seems to be a case of struck, Giacco says. watch this space.
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Future driven innovation
sponsored by
Unseen Slow-paced Innovation Puts Tesco Ahead While innovation might be less visible in the retail sector than in more obviously technical fields, and its pace is inevitably slower, Tesco Hungary tells the Budapest Business Journal it has some serious developments that affects the lives of many. CHRISTIAN KESZTHELYI
“In the retail sector innovation happens through lots of little steps – unlike in the tech or automotive field, where they bring out a new model every so often. It is less visible but actually
reaches lots of people and enhances customer experience,” a Tesco Hungary spokesperson says. Tesco says it is committed to focus on applying innovations that are truly based on customer needs, and makes a special efforts to provide them with a wide range of products and high-quality services.
Doing so, the retailer “must follow and reflect on the consumers’ changing lifestyles and shopping habits”, Tesco pinpoints. The retailer especially notes the importance of keeping an eye on gastronomical trends, as it needs to cater for special diets and special lifestyles. Along these lines, Tesco says it commits to constant product development in order to provide own-brand offerings for customers with special dietary needs also. The British-based retailer says it also keeps a finger on the pulse of the environment. Tesco works together with partners to produce environment-friendly and high-quality products.
Sustainable Future
“As a result of that, last year Tesco reduced the added sugar in all of its own branded soft drinks to less than 5 grams per 100 milliliters, recently launched the Food-to-Go products, developed its online shopping system with a smartphone application, introduced self-serving tills and installed a ‘Scan & Shop’ system in several stores. Thanks to these innovations, customers can complete shopping in a fast, efficient, healthy and comfortable way. These small steps lead to a positive and modern outcome that ensures and builds the basis of a sustainable future,” the retailer says. Beyond being environmentallyfriendly and keeping special dietary needs in mind, Tesco also puts a special
Business
|7
emphasis on sustainability by working out best practices and even changing the way it does business to reduce food waste in its operations, while helping suppliers and customers to reduce their own waste too. “For example, working in partnership with its suppliers, Tesco introduced its Perfectly Imperfect range to Central Europe, which to date has sold more than 6,000 tonnes of perfectly edible, but aesthetically not so perfect fruit and vegetables that may otherwise have gone to waste on farms. When crop flushes occur, the retail chain works with suppliers to distribute surplus effectively. This system provides customers a great deal and Tesco helps to reduce food waste on farms. Tesco has recently also launched the Food Waste Hotline in Central Europe, enabling its suppliers to alert them if they have potential supply chain food waste so they can work together to address it,” Tesco’s spokesperson tells the BBJ. When it comes to innovation, Tesco says it makes sure that its approach is a global one. This approach does not only involve partners and customers but colleagues, too, when introducing a new tool or product range. Tesco ensures that colleagues have the opportunity to learn and/or try them, the retailer says. This regular column, run in association with Audi, looks at how some of Hungary’s biggest companies involve innovation in their daily practice.
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Budapest Business Party Making Waves on the Danube The seventh edition of Budapest Business Party, sponsored by about 50 companies, was declared a resounding success by its organizers. ITL Group said the networking event was completely booked two days prior to the party on June 7, with the number of registration exceeding 2,000. BENCE GAÁL
Held, as usual, on the Európa boat, the guests had the opportunity to network while enjoying a (stationary) view of some of Budapest’s most recognizable sights, such as the Chain Bridge and the Parliament. Alessandro Farina, the Italian-born entrepreneur who founded Budapestbased consulting company ITL Group in 1995, praised the unique atmosphere created by the evening’s game-based formula. “We are happy to have achieved once more the objective of putting together Budapest’s vibrant international community, providing an occasion to make and reinforce contacts during a memorable night,” he said. A large number of events were organized by the party’s sponsors: BBP guests had the opportunity to view the new BMW X2, which had been brought on board, take a ride in speedboats supplied by Martini and Dunarama, and grab a taste of Rajkot Place’s Indian specialties. The night also featured a couple of concerts, by the Nyári Music Family, and Theodóra Sebestyén. Bátor Tábor and Associazione Amiche dell’Italia were the charity partners for the event, which the Budapest Business Journal once again supported as one of the media partners.
Európa boat, the venue of the party.
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Business | 9
From ʼGreat Gatsbyʼ to ʼWolf of Wall Streetʼ Corporate parties, promotional events, conferences; companies today are increasingly looking for somebody to organize these kinds of occasions, instead of handling them by themselves. The Budapest Business Journal sat down with István BereySoó, founder and owner of Europrax Marketing Agency Ltd. to discuss how the business has changed.
Do it Yourself?
Why does he think so many companies prefer professional event planners nowadays instead of organizing matters themselves? “At first, there is experience. The companies who wish to organize by themselves have a lack of experience. This is why they have to turn to experts who have lots of experience and specialize in this field. You have to be very careful, accurate, and pay attention to the budget and the timing. You have to know the reliable service providers and subcontractors. They lack the knowledge of the proper places, the right venues.”
István Berey-Soó prepared and unorganized. When one does not have enough creativity and welleducated people. The second is from the other side, when your client does not have a sense of reality. The demands can be unreasonable, unrealistic, and of course they might want more things for less money,” he says.
Great Gatsby
Berey-Soó has handled events across Europe, yet he says the biggest event he ever organized took place in Hungary and
BENCE GAÁL
“Around 2004 I was working for an American IT company named Sybase. After a year I was contacted by headhunters searching for a CEO for an international marketing agency. That is how it all started,” recalls 55 year old István Berey-Soó, talking about his beginnings in the industry. “I ran the agency for a year, and then I founded my own company named Europrax,” he says. As the owner of his own company, he now has more than a decade of experience in being directly in charge of organizing events. And while his company’s services attract the likes of Ingram Micro or OTP Bank nowadays, the past ten years has seen its more difficult moments. “Everybody knows the year 2008. During the crisis, the first thing clients cut back on was marketing budgets. The number of events decreased significantly as well,” he explains. “After the year 2011-2012, business started to bloom again. More and more money was spent on events and marketing. This could be felt on the market, and the number of companies newly founded for organizing conferences and events signaled the change as well,” he says with a smile. So what does he feel the main challenges of event planning are? “I think we should talk about two kinds of pitfalls. One is internal, when the staff is not well-
“After the year 2011-2012, business started to bloom again. More and more money was spent on events and marketing. This could be felt on the market, and the number of companies newly founded for organizing conferences and events signaled the change as well.”
“A certain international company wanted to have a night party at the pool during their conference in Ibiza. The party itself was great, and everybody was satisfied, but the company had to foot the pool cleaning bill the next morning. It was full of things such as sangria,” he laughs. Asked about current trends for the kinds of events and activities that clients are actively looking for nowadays, he notes that water-related themes are in fashion now. “It depends on the type of the event. We are organizing lots of incentive programs as well. One of the most popular locations is Slovenia, for rafting. We also organize sailing tours on Lake Balaton and Croatia. There is a large demand for extreme sports as well, like flyboarding. Naturally, classics such as Visegrád and boat trips on the Danube are still there,” he explains. “Clients nowadays have more sophisticated requests than, let’s say, ten years ago. International trends reach Hungary quicker, a simple buffet and a dance is no longer enough.”
“I think we should talk about two kinds of pitfalls. One is internal, when the staff is not well-prepared and unorganized. When one does not have enough creativity and well-educated people. The second is from the other side, when your client does not have a sense of reality. The demands can be unreasonable, unrealistic, and of course they might want more things for less money.” He also mentioned another crucial factor: organizing events on any scale requires effort, which place an additional burden on the staff of the company itself. “It is a lot of extra work. It is much better to let somebody with the basic knowledge of event planning at his disposal do it. For a small charge, everything is facilitated, running smoothly. Everything is wellorganized and you don’t have to take your own personnel away from their tables in order to focus on planning, searching, and so on,” he says.
was ordered by a Hungarian company. “It was OTP Bank’s ‘Great Gatsby’ party in Sümeg, back in 2015, I think. The party was attended by about
250-260 people.
It was the most difficult, most creative, most highly demanding task. And it was an absolute success,” he remarks. The party featured authentic costumes, casino games and vintage cars. While most events come nowhere near the excesses in the movie “The Wolf of the Wall Street”, there are things that could go wrong. One specific case comes to this mind when Berey-Soó is asked to name the most unorthodox situation he has had to take care of.
OTP’s Great Gatsby party.
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Decathlon Hungary Welcomes Country Manager Diego Rango d’Aragona took over in May at the Hungarian branch of sports retail company Decathlon. He succeeds Gábor Pósfai, who headed the Hungarian business for seven years and will now be responsible for building the Austrian market for Decathlon.
The 46-year-old d’Aragona, born in Turin, graduated from the trade and marketing department at the University of Turin and has been working at Decathlon since 1995, including postings in France and Germany. In his new position as country manager in Hungary, he is planning to focus more on online sales. “In Hungary, Decathlon is the market leader with a 35% market share, but there are always areas to develop,” d’Aragona says. “Hungary is a small country, but it plays an important role at corporate level. Potential [to grow] is still there, especially with the advancement of online sales, which we pay close attention to. With omnichannel, we can be market leaders, if we are well prepared for it, but we still have to develop a lot. The most important goal for us is to provide our users with all the support and options on all platforms and sales channels.” D’Aragona has moved to Budapest with his Hungarian partner and their sixmonth-old boy.
Szecskay Hires British-Scandinavian Antitrust Expert Szecskay Attorneys-at-Law says it has further strengthened its EU Competition Law practice with Sam MacMahon Baldwin joining the firm in June 2018. Baldwin is originally a British national
court proceedings as well as at the General Court and European Court of Justice in Luxembourg.
MOL Hungary Appoints COO Hungarian oil and gas company MOL has announced the appointment of Péter Ratatics as chief operating officer. Ratatics also retains his position as executive vice president for consumer services, according to a press release. Sándor Fasimon, who previously held the position of MOL Hungary COO, remains a member of the executive board.
and has practiced as attorney (Advokat) for eight years in Copenhagen, Denmark with top-tier law firm Gorrissen Federspiel. Szecskay describes him as a seasoned compliance and competition law practitioner with extensive expertise in advising businesses on how to handle all matters related to behavior on the market, including antitrust issues by way of anti-competitive agreements, abuse of dominance, and merger control. Baldwin also has “vast” advocacy experience before national competition authorities and the European Commission. He has represented companies in national
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Changes at PwC Hungary as Nick Kós Takes CEE Role Nick Kós, who has become a familiar face in Budapest business circles during his six years as PwC Hungary’s country managing partner, is to become CEO for the whole Central and East European region with effect from July 1. He will remain based in Budapest, and will be succeeded by Tamás Lőcsei, PwC Hungary’s tax and legal services leader, as the local head.
aid, and has frequently been involved in drafting legislative proposals, PwC says. He has also helped numerous foreign companies to invest in Hungary and the region. From 2014 to 2017, Lőcsei managed tax and legal operations across the CEE central territories (Poland, Hungary, Czech Republic, Slovakia and the Baltic states). He was appointed as CEE innovation leader
in
2017.
From left to right: Nick Kós, Tamás Lőcsei and Ádám Osztovits.
BBJ STAFF
In his new role as CEO for the region, Kós will lead more than
10,000 people
. “This is an exciting professional challenge that I am very proud to undertake as the first Hungarian in that position,” Kós said when the news was made public. “Our success in Hungary has also contributed to the regional partners’ decision to entrust me with this important role.” For Lőcsei, his appointment as CEO of PwC Hungary, which will also be affective from July 1, is the continuation
of an impressive career. The 43-year-old joined the firm as an intern in 1997, and has worked in several fields within tax and legal services, according to a statement put out by the advisory company.
Youngest Partner
He was appointed lead partner of indirect tax in 2005, in doing so becoming the youngest person yet elected partner at PwC Hungary. He has also gained wide-ranging experience working in the Netherlands, Switzerland and Germany. Since Lőcsei’s appointment as service line leader in 2012, the tax and legal services business line has developed dynamically. Lőcsei is an internationally recognized expert in taxation and state
“Economic and especially technological changes pose major challenges to global companies like PwC,” Lőcsei said. “The main priority of my term as CEO of the Hungarian company will be to prepare our firm and our people for permanent change, to make sure that we are able to learn something new every day. We do not simply want to keep pace with changes or endure them; we want to show the way. I have resolved to lead a future-oriented company driven by innovation,” he added. Lőcsei will retain his role as head of TLS, while Árpád Balázs will continue to serve as assurance leader. In one other leadership change dating from July 1, Ádám Osztovits will become strategy and transformation leader for the CEE region, which comprises 29 countries. In addition to his new role in the leadership team, he will continue in his role as advisory leader in Hungary.
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Special Report U.S. Country Focus
Doubling Down on Competitiveness
14
Budapest Brightens Young Retireesʼ Colorado Boredom 16 U.S. Ambassador Arrives in Hungary
17
AmCham’s ʼInsightʼ Dinner a Thank You to CEOs 18
A closer look at the largest investor in Hungary outside of the European Union.
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Special Report | 13
U.S. Companies Boost FDI in Market with High Potential Foreign direct investment figures have been rising quickly in Hungary for the past few years, much of which is down to the work of the Hungarian Investment Promotion Agency. While the United States does its fair share in contributing to the country’s well-being in terms of FDI, there is still room for improvement. The Budapest Business Journal talked to AmCham CEO Írisz-Lippai Nagy about U.S. investments. CHRISTIAN KESZTHELYI
The country’s popularity has been on a steep rise among foreign investors, according to Róbert Ésik, the president of HIPA, which has been voted the “Top Investment Promotion Agency, Eastern Europe & Central Asia” according to the Site Selection “Global Best to Invest 2018” report. In fact, according to the latest figures, last year a record number of 96 positive investment decisions were made for Hungary with a total investment volume of EUR 3.512 billion, leading to the creation of 17,021 jobs here, Ésik told the BBJ earlier. He also underlined that between 2014 and 2017, HIPA-assisted investment decisions created almost 60,000 jobs. U.S.-based companies have a significant weight in the Hungarian economy, and the past few years have seen huge investments in the country. In fact, many U.S. firms are represented among the Top 200 companies in Hungary (ranked according to revenue) as listed in the annual Book of Lists, a Budapest
Business Journal publication. According to the 2017-18 list, compiled from data collected by Coface Hungary Kft., the top U.S.-based companies were GE (in fifth place), Flex (12th) and Lear (46th). In late March, General Electric announced plans to boost the value of its supplier purchases made in Hungary. The current level is
already
USD 900 million
a year from 1,300 certified Hungarian suppliers, GE Europe chairman-CEO Peter Stracar said at a supplier forum initiated by GE and held in Budapest. State secretary of the Ministry of Foreign Affairs and Trade Levente Magyar underlined that GE has been active in Hungary for almost 30 years, and the cooperation with the company has been successful.
“Hungary has the potential to be a regional center – in part due to the favorable taxation and regulatory environment, which could attract further increases of foreign FDI.” At the end of May, contract electronics manufacturer Flex — formerly called Flextronics — inaugurated a HUF 3 billion factory in Hungary’s Zalaegerszeg (227 km southwest of Budapest), which aims to supply the automotive industry from its base in the town. The investment, which was supported with an EUR 2.5 mln grant by the HIPA, lead to 100 new hires in the recently added 2,600 sqm production hall. Flex has been in the country
for 25 years, and its production base here is its largest in Europe, supplying jobs to more than 3,000 people.
Holistic View
Given that the American Chamber of Commerce in Hungary represents companies not only from the United States, but also many other international businesses in the country — altogether 360 firms from more than 20 countries — the chamber has a rather holistic view of the investment and reinvestment climate in here. “In general terms, there is a willingness from corporations to make a shift to more added value investments in the country in a wide range of sectors,” AmCham CEO, Írisz Lippai-Nagy told the BBJ. “This means moving up the global value chain, and elevating Hungary from a production site to a value creator, and a research, development and innovation hub. We can see the drive to elevate operations in a number of sectors from the automotive industry, through pharmaceutical and electronics manufacturing or shared service centers,” Lippai-Nagy says. In order to motivate foreign companies to invest or reinvest in the country, a pro-business taxation and regulatory environment is a prerequisite, LippaiNagy says, underlining that such promising changes have taken place already. She mentions the
9%
corporate
income tax level (the lowest in Europe), the pre-agreed, gradual reduction of the labor tax burden, and the non-refundable cash incentive system with the purpose of supporting R&D activities as examples.
Serious Bottleneck
Still, there appears to be a serious bottleneck according to the chamber:
namely the lack of skilled workforce and the efficiency of the existing one. “We need to focus on education in the schooling system, as well as adult education and re-skilling. With a plethora of new jobs being created in the new economy, training must be our number one priority in order to remain competitive and to attract further investment. Job orientation and competency-based education are the keywords we emphasize to decisionmakers, and we also have a number of tangible recommendations and programs to enable positive change,” Lippai-Nagy says. Even given its holistic approach, AmCham nonetheless notes that there is an “impressive number of prestigious U.S. companies” operating in Hungary at the moment. The number of such companies has been on the increase in the past few years, because businesses see a great location, close to key markets, where there still is an impressive pool of skilled talent. “Hungary has the potential to be a regional center – in part due to the favorable taxation and regulatory environment, which could attract further increases of foreign FDI,” Lippai-Nagy emphasizes. Speeding up changes in the overhaul of the education system in the country is key, but there are further gains to be made from becoming ever more competitive and attracting new and keeping existing international and U.S. investors in the future, Lippai-Nagy says.
Top Ranked U.S. Companies in Hungary According to 2016 Net Sales Revenue, Compiled From the Database of Coface Hungary Kft. GE Global Operations
5th
Flex
12th
Jabil
22nd
Eaton
31st
Arconic
44th
Lear
46th
Delphi
49th
National Instruments
53rd
Philip Morris
57th
Cargill
76th
Coca-Cola
78th
Ford
87th
Mars
131st
For the full table, see 2017-2018 Book of Lists
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Doubling Down on Competitiveness The ministers of foreign affairs and trade and innovation and technology are to prepare an action plan for how to make Hungary more competitive and attractive to FDI, and business input will be essential, Péter Szijjártó told an AmCham business forum on June 14.
Maintain and Enhance
“As a consequence [of all this], Hungary will have to double its efforts to maintain and even enhance competitiveness. […] We have to maintain the lowest tax rates in Europe and continue our economic strategy in the future of cutting taxes on labor.” Szijjártó told members “We understand that low unemployment is a challenge, but it is a good challenge to have.” The government was trying to promote labor
“Given the deep integration of Hungary into the European economy, you have to understand that the challenges ahead of the EU are challenges for us too.”
ROBIN MARSHALL
“At the end of June I will be meeting with the new minister of innovation and with him will put together those proposals on his side with those from myself, for example from you. From these issues an action plan will be put forward to the government and then hopefully to Parliament,” the foreign and trade minister told AmCham members at the forum at the Marriott Hotel Budapest. In a speech that was rich in details, Szijjártó outlined the challenges that lie ahead for Hungary. Interestingly, he did not mention immigration once. “Given the deep integration of Hungary into the European economy, you have to understand that the challenges ahead of the EU are challenges for us too,” he said. He pointed out that with a 90% export over GDP ratio, 79% of exports went to the EU. The second biggest export destination outside of Europe was America, with China third. The possibility of escalating trade disputes between the United States and Europe and the United States and China was, therefore, extremely worrisome. “If there is a country on earth – and I am sure there are others – interested in resolving these trade conflicts as quickly as possible without any injuries or harm for others, it is Hungary.” Given the size of the Hungarian market, it would be “ridiculous” to urge the sides to settle their disputes, the minister said candidly. Hungary would do what it could but must “cross fingers” there would be no full blown trade war.
Debates Over ‘Homework’
Other concerns the minister raised included the long-term financial framework of the EU, where he said there would be “big debates”. Hungary had understood the EU required “homework” to be done, decreasing deficits, introducing structural reforms, being fiscally responsible, and had completed those tasks.
within them. If border controls have to be reintroduced within Schengen, it threatens companies, including AmCham members, who run “just-in-time and just-in-sequence businesses”, the minister warned.
Péter Szijjártó “This homework was not made by everyone, but now we see some endeavors that this kind of irresponsible behavior should be rewarded, and we are definitely against that.” He used tax reduction as an example. Hungary had worked hard, politically and economically, to be able to introduce the lowest corporate tax rate in Europe. Other countries who had “not behaved in a fiscally responsible way” wanted to undercut that advantage Hungary had created for itself and argued for a unified EU tax rate.
“We will fight against this phenomenon,” Szijjártó promised AmCham. On Brexit, the foreign minister said Hungary wanted an end treaty that offered “the most comprehensive and deepest free trade agreement possible”. Given the country’s export-orientated economy, Hungary’s default setting is “free and fair” when it comes to trade, he said. That same rationale applied to the country’s determination to see the Schengen borders upheld. The external borders have to be protected in order to allow free movement of goods
mobility and offering tax incentives to companies building dormitories or helping employees with home or rental loans, he said. Some 26 universities now offered training under dual education schemes, working with 600 partner organizations. There are even autonomous engineering faculties being established to make sure there are qualified experts available for what Hungary is targeting as a growth industry. The government also recognized that connectivity is important. New transatlantic flights have started, and there are negotiations about further routes. “We understand that getting to the places where decisions are being made quickly is important.” The minister ended by once again calling on AmCham members’ support. “We have no ambition to reinvent hot water or the wheel,” he said. “For me it is better to get suggestions from you how we can make your sectors more profitable and competitive. I really do count on you.”
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Special Report | 15
Minister of Innovation and Technology Dr. László Palkovics, a new face in Prime Minister Viktor Orbán’s fourth government, summarized the priorities, goals and immediate actions of Hungary’s newest ministry at an AmCham Hungary luncheon held at the InterContinental Hotel in Budapest on June 22. BBJ
“We now have our own MIT,” quipped AmCham Hungary President Dr. Farkas Bársony while introducing the featured speaker. “This new ministry addresses Hungary’s need to focus on higher valueadded investment to move higher up the value chain.” Minister Palkovics then took the floor and got straight to the business at hand, packing a great deal of information into a 20-minute presentation entitled “Concepts in Economic Policy, Sustainability and Innovation”. “The Ministry of Innovation and Technology [MIT] is a new and unconventional ministry. We don’t cover traditional disciplines,” Palkovics began. “When we look at today’s global megatrends, we need to ask ourselves where the world is heading. Traditional means of investment and production have already begun to move from the West to other parts of the world, while changes in mobility and a transformation of the labor market present new challenges and problems. What all this means is that we need to cooperate with each other.” As modern workplaces become increasingly automated and digitized, questions abound regarding human capacities in a technology-driven future. The coming age of robotization will, of course, have different effects on different occupations. Retail jobs, for example, are the most common form of employment in today’s economy, but stand a 90% chance of being automated in the near future, according to the U.S. Bureau of Labor Statistics. Teaching and nursing,
Photo by Lázár Todoroff
Palkovics Presents MIT Platform to AmCham
László Palkovics (center) talking with AmCham board members prior to the forum. on the other hand, might emerge as the most common occupations. Automation will likely result in fewer floor managers and supervisors, with many lower-skill jobs will likely be displaced through automation.
New Competencies
“Will human capacities increase or decrease?” Palkovics asked his audience. “My own feeling is that technology and innovation will free capacities for value-added activities, which in turn will accelerate the development of new competencies. Social skills, creativity and higher education will likely matter more than traditional technical skills in the future economy.” Key demographic challenges that Hungary will need to learn how to face in coming years, according to Palkovics, are increased levels of urbanization and an aging population. At present, roughly one in five Hungarians is aged 60 years or older, he noted. Hungary will also need to find ways to deal with emerging global concerns such as energy, food and water scarcity, the minister warned. Palkovics explained that the MIT has developed a civil infrastructure focusing on four main areas: energy and climate policy; information and communication; transport and construction; and sustainability to meet the anticipated challenges. Efforts within each of these areas are broken down into separate elements of application, control, and infrastructure. “The weight of nationally-owned companies in value-added industries is low,” Palkovics noted, “and we need targeted development packages, as well as to raise the competencies of SMEs.” Innovation is also high on the list of MIT priorities.
“In terms of innovation policy, we want to achieve 1.8% of spending on R&D by 2020 and to increase the share of pipeline funds,” Palkovics said. “Right now, however, we’re not so good in innovation, ranking just 22nd in the EU, according to the Cumulative Innovation Index. So we’ll need to improve in this aspect to get money from Brussels.”
“In terms of innovation policy, we want to achieve 1.8% of spending on R&D by 2020 and to increase the share of pipeline funds. Right now, however, we’re not so good in innovation, ranking just 22nd in the EU, according to the Cumulative Innovation Index. So we’ll need to improve in this aspect to get money from Brussels.” Three things that the MIT can do to get things moving in the right direction, Palkovics stated, are to “strengthen cooperation between ecosystem actors, focus on specialization and efficient use of resources, and to get good R&D and innovation policies in place.”
Scientific Methods
Perhaps anticipating questions about the transfer of a portion of funds in the 2019 draft budget from the Hungarian
Academy of Sciences to the new ministry, Palkovics declared the need to focus on sustainable activity and research, reiterating a claim made to the Hungarian media earlier this month that the MIT should have a say in determining areas of scientific research that are “important to the Hungarian public”. Draft budget details reveal that the MIT will coordinate and distribute nearly HUF 70 billion in R&D funding between higher education institutions (HUF 29.1 bln), Academy of Sciences research institutes (HUF 28.1 bln) and the National Scientific Research Program (HUF 12.7 bln). Palkovics went on to highlight the development of science parks in six Hungarian cities (Debrecen, Győr, Miskolc, Pécs, Szeged, and Zalaegerszeg) as important centers of innovation for a future society built around broadband communications and “sharing economy” principles. “Transportation is one of the most important sectors, and while there is a need for improved logistics centers, a sharing economy will become an integral part of Hungary’s public transport network,” Palkovics said. “A unified ticketing system for public transport is one such solution.” Palkovics noted that Hungary currently ranks sixth in the EU in terms of broadband coverage, and improvement in this domain can help to raise the percentage of adult education in the country, which stands currently at just 3% of adults (compared to 27.6% in Finland). “Our aim is to reach a figure [for adult education] of 25% by 2030,” Palkovics said, elaborating that the number of people with secondary vocational qualification in Hungary is 15% lower than the OECD average, even as our number of advanced graduate students is 12% higher.”
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Budapest Brightens Young Retireesʼ Colorado Boredom It was in 2013 that Marcus Lowry and Julia Wirsching, then living in Colorado, USA, came to a lifechanging decision. KESTER EDDY
“It had gotten to where we had the huge house, we had the big yard, the two cars, the two iPhones. We had everything: we had the perfect middle class lifestyle,” says Wirsching. “And we bored out of our frickin’ minds!” Lowry, then 51, had retired from the Green Berets, the elite force of the U.S. Army, after battling insurgents in the Philippines. “There is no guarantee how long you have in this world. A lot of Marc’s peers in the military had started dropping dead. There was not two months go by when we didn’t hear of [someone dying],” Wirsching recalls, “So we looked at what we wanted from life, and decided to make changes.” The couple checked their finances, and concluded they could maintain a varied, outdoor lifestyle in Europe. After investigating a long list of potential locations – including Slovenia, where Lowry had a “good friend in the army” – plumped for Hungary, primarily because it didn’t tax income from pensions.
Secure Lifestyle
So it was that in January 2014, the two landed in the Hungarian capital to join
Marcus Lowry and Julia Wirsching at La Verna, Tuscany, Italy, one of the many trips they have made since settling in Hungary. a small, though growing number of compatriots who find that a typical U.S. pension buys a pleasant, secure lifestyle in the heart of middle Europe. (The specific number is difficult to ascertain: the Hungarian immigration office had
3,769 Americans
officially resident in the country at the end of May 2018, but does not differentiate between retirees and those in work.)
The new arrivals settled in District IX, close to the Big Market, and began exploring the city, reveling in its culture, history and architecture. “The longer I live here, the more I learn about Hungarian history, politics, the people... and I’m just fascinated by the resiliency. It’s all so different,” says Wirsching. And, as planned, they also soon began using Budapest as a base for forays further afield – first to the region - including a visit to Wirsching’s ancestral winery
From Louisiana to Zugló, via San Francisco and Kaposvár
David Keen, 63 and originally from New Orleans, “fell in love” with Hungary and his sister-in-law’s family, who hail from Kaposvár. So
“In the United States, enamored, he moved to Budapest I’d have to work. I’d like to work in August 2017, in part – so he here, maybe some tour guiding thought - to look after his niece, on river cruises, something who was beginning life away from like that. I don’t need to make home as a student, while exploring much money, I just like to Hungary and the region. keep busy and make a bit of In practice, his niece proved to cash,” he says, though he be “a bit more independent than acknowledges the difficulty of expected”, leaving Keen to enjoy getting both a work permit and life and dabble in learning the work simultaneously. vernacular. Almost 11 months into his stay, A former restaurant and hotel worker in San Francisco who’s “done Keen wants to arrange a five-year visa, but says he first has to arrange everything” from washing up to for longer-term accommodation. management (he admits to “doing “They told me I can only stay as long very poorly” at the latter), Keen as my rental agreement is in effect,” is reliant on his deceased wife’s pension for day-to-day income until he says. Any disappointments? “Yeah, he draws his own when 70. my lack to pick up Hungarian. Even though this is a “typical I need to put more effort in, value” U.S. pension it is sufficient and I know that eventually, I will to maintain a comfortable lifestyle do it if I’m here long enough,” in Hungary. This despite his share he says. “I want to learn, because of the rent for their flat in Zugló I love my niece’s grandfather. He (Budapest XIV) amounting to HUF was 18 in 1956, I’d love to talk 120,000 (USD 450) monthly – a tad [to him] about that. Every time higher than ideal, but, as he “just I go, he uses it as an excuse to pull walked right in,” on arrival, he out his home-made pálinka.” doesn’t complain.
in Iphofen, Bavaria – before expanding horizons to more far-flung destinations such as Nepal and Cambodia. “One of the things we like about Budapest is the ease of travel, especially throughout Europe. Wizz Air is very inexpensive and connects to many European destinations,” says Lowry. The pair have also found the train useful for taking their bikes along to discover the environs of cities like Bratislava, Prague, Dresden, and Berlin.
Entranced by Budapest
More than four years on and both remain entranced by Budapest itself. “There are still days we walk out and I say: we can’t believe we live here,” says Wirsching. There have been downsides: procuring a local driving license proved a patiencetesting, if doable process, and while they have a U.S. health insurance covering them in Europe, medical experiences have been mixed. “We’ve been using a private clinic in Budapest. So far, I’ve had two minor surgeries and Julia one. The cost is much lower than in the U.S. and quality is as good or nearly as good, [but] … we’ve had some great doctors, and some we will never consider again,” says Lowry. Inevitably, their rent has also risen, up by EUR 50
to
EUR 600
(now circa HUF 190,000) per month for a 76 sqm flat – though the pair still rate that a good deal for the location. On the streets, dining and shopping for food has “much improved” during their stay. “There’s a much greater diversity of restaurants, the markets also have a better selection of fruit and vegetables, along with more international prepared foods,” says Lowry, before adding “and lots of good craft-beer venues”.
Special Report | 17
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Budapest Business Journal | June 29 – July 12, 2018
MTI Photo: Tamás Kovács
U.S. Ambassador Arrives in Hungary David B. Cornstein, has become the ninth U.S. Ambassador to Hungary appointed since the change in regime, officially taking up his post on June 25. ROBIN MARSHALL
Among the first formal duties Cornstein will perform will be to welcome guests to the annual Independence Day celebrations (held this year, as usual, on July 3 as the Fourth of July is a national holiday in the United States) at the ambassador’s residence in the leafy Buda Hills. Cornstein, who’s maternal grandmother, Sarah, was a Hungarian immigrant to the United States, was officially nominated by the White House on February 13. His hearing before the Senate Committee on Foreign Relations was on May 9, and the Senate voted its approval on May 24. The same day, the ambassador designate took his Oath of Office. Although in-country since June 22, he did not officially assume his post until he presented his credentials to the head of state, President János Áder on June 25. Beyond that, there are few details at this stage for his upcoming schedule. The ambassador and his wife Sheila were greeted on arrival at Budapest
Cornsteinʼs C.V. According to the official White House nomination statement, Cornstein is chairman of Pinnacle Advisors, Ltd and was previously CEO, president, and ultimately chairman emeritus of Finlay Enterprise, a billion-dollar NASDAQ Stock Exchange Company. A native
security concerns. Working together, we can further strengthen communication between our law enforcement and counterterrorism communities and further global security. I hope to advance our economic interests in Hungary.” Describing himself as a “proud American-Jew”, he noted: “An extremely important goal I have, if confirmed, is to halt the rise of anti-Semitism in Hungary and Central and Eastern Europe.” He added that “it hurts and disturbs me deeply that this cancer continues to grow. I will work diligently with Jewish organizations, other religious communities, and the Hungarian government to make sure the Jewish community feels safe and secure. I will reach out to the Hungarian people from all walks of life to share this American value of religious freedom, protection, and tolerance for all people.”
U.S. Ambassadors 1990-Present Apart from Charles H. Thomas, who was a career Foreign Service Officer, all the U.S. Ambassadors to Hungary since the change of regime have been political appointees.
David B. Cornstein, Ambassador of the United States of America (left) and János Áder, President of the Republic of Hungary, talk on the terrace of the Alexander Palace after the acceptance of the formerʼs diplomatic credentials on June 25. Ferenc Liszt Airport by Deputy Chief of Mission David Kostelancik and senior embassy diplomats. State Secretary Levente Magyar was also there to welcome the couple on behalf of the Hungarian government.
New Yorker, the ambassador served as chairman of the New York City Off-Track Betting Corporation and as vice chair of the city’s Economic Development Corporation. He was also chair of the New York State Olympic Games commission and a board member of the Battery Park City Authority and of the Jacob Javits Development Corporation. He has been recognized as Man of the Year by the Chemotherapy Foundation and the Juvenile Diabetes Foundation. He earned his B.A. from Lafayette College and M.B.A from New York University. The website AllGov: Everything our government really does says Cornstein was born in New York City on August 17, 1938. He went to Lafayette College in Easton, Pennsylvania, where he earned a B.A. in 1960 before returning home to attend New York University. He graduated NYU in 1963, earning a Master of Science degree from the School of Retailing. Cornstein also served in the Army Reserve as a cook. He and his wife, Sheila, have a son, Marc, who is a sports agent.
Hungary has been without an American ambassador since Colleen Bradley Bell, who was appointed by President Barack Obama, left her post on January 20, 2017, as is always the case with political appointees when the White House changes hands.
Political Stalemate
There was an even longer interregnum between Bell taking office (she presented her credentials on January 21, 2015) and her predecessor, Eleni Tsakopoulos Kounalakis, leaving post on July 20, 2013. Bell’s appointment was one of a number held up by political stalemate between Republicans and Democrats, though she also had a difficult time at her Senate hearing. In his statement to the Senate foreign relations committee in May, Cornstein described it as “humbling that the President has confidence in me, hopefully with your approval, to represent the American people in engaging with an important ally in a challenging and changing part of the world”. Discussing what he hoped to achieve in office, Cornstein said: “First and foremost, I will encourage Hungarian officials at all levels of government to advance American interests and to promote American and democratic values; the freedom of speech, the freedom of press and the freedom of religion are values that cannot and should not be compromised,” he insisted. “I will work closely with the Hungarian government to address collective
Charles H. Thomas Appointed: June 27, 1990 Presented credentials: July 2, 1990 Left post: January 11, 1994 Donald M. Blinken Appointed: March 28, 1994 Presented credentials: April 1, 1994 Left post: November 20, 1997 Peter Francis Tufo Appointed: November 10, 1997 Presented credentials: December 3, 1997 Left post: March 1, 2001 Nancy Goodman Brinker Appointed: August 7, 2001 Presented credentials: September 26, 2001 Left post: June 19, 2003 George H. Walker III Appointed: August 4, 2003 Presented credentials: October 6, 2003 Left post: August 6, 2006 April H. Foley Appointed: May 30, 2006 Presented credentials: August 18, 2006 Left post: April 2, 2009 Eleni Tsakopoulos Kounalakis Appointed: January 7, 2010 Presented credentials: January 11, 2010 Left post: July 20, 2013 Colleen Bradley Bell Appointed: December 14, 2014 Presented credentials: January 21, 2015 Left post: January 20, 2017
Source: Wikipedia
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AmCham’s ʼInsightʼ Dinner a Thank You to CEOs AmCham Hungary held its traditional “Insight: AmCham Debriefing for Top Executives” dinner at the Marriott Hotel in Downtown Budapest, on June 14. Organized annually as a thank-you to AmCham members for their efforts and contributions throughout the year, the invite-only event brought together more than 140 CEOs and business leaders for an evening of food, fun and discussion. NATHAN JOHNSON
“AmCham acts like a think-tank for the business community and is an important advocacy group in terms of representing business interests in Hungary,” AmCham CEO Írisz Lippai-Nagy told dinner guests during her welcome notes. “We want you to feel precious tonight, and this is our opportunity to thank you for your support.” A short video followed that recapped the success of recent AmCham flagship events developed around the “Cooperation for a More Competitive Hungary” publication. Notable examples include the third “Business Meets Government Summit” (September 2017), the “Competitive Education Conference” (held most recently in October 2016), and
From right: Farkas Bársony, Írisz Lippai-Nagy, and Róbert Ésik reflect on AmCham’s impact. the “Digital ‘MythBusting’ Conference” (May 3, 2018). AmCham also makes its presence felt through its annual “Compliance Conference” and “Regional Tax Conference”, while the organization’s fourth biannual “HR Dream Day” took place on May 30. All told, AmCham organized more than
80 major
events in 2017 alone, attracting more than 4,800 participants. For some added perspective on AmCham’s recent and upcoming efforts, Lippai-Nagy was joined onstage by Róbert Ésik, president of the Hungarian Investment Promotion Agency (HIPA), and Farkas Bársony, president of AmCham Hungary’s Board of Directors, and a partner at PwC Hungary.
Good Idea Source
“AmCham is constantly giving us good ideas,” HIPA’s Ésik noted. “Your combined action across many fields generates a deep pool of ideas put forward to the politicians.” Bársony affirmed that AmCham’s advocacy role continues to bear fruit. “We’ve actually been able to raise our level of advocacy,” he said. “In fact, the business community’s relationship with the government has never been so good. Why? Because we carry a lot of weight
in the Hungarian economy. AmCham member businesses represent 36% of Hungarian exports and
employ
on our four main pillars of activity: investment, building a competitive workforce, innovation, and digitalization,” Bársony explained.
people, so our voice is being heard better than ever.” Bársony added that AmCham’s good relationship with the Hungarian government continues, and a Business Forum with Minister of Foreign Affairs and Trade Péter Szijjártó took place very recently, on June 15, also at the Marriott Hotel. Also
To conclude the pre-dinner discussion, the AmCham CEO asked her guests to elaborate on some of the changes that the Hungary-based business community has triggered in recent years. “The business community has been influential in bringing a single-digit corporate income tax to
220,000
“AmCham acts like a thinktank for the business community and is an important advocacy group in terms of representing business interests in Hungary.” to come is AmCham’s quarterly meeting with István Lepsényi, Secretary of State for Economic Development and Regulation. “Meanwhile, in order to ensure Hungary’s competitive future, we continue to focus
Change Makers
Hungary
[9%],
the lowest in the EU,” Ésik replied. “We’re also concentrating about how to further reduce the tax burden.” Ésik added that HIPA is now concentrating on issues related to labor mobility and labor regulations in the context of a market geared toward technology and innovation. “Naturally, we are focused on R&D and innovation, as well as how digitalization can improve productivity levels,” said Ésik. “Innovation is indeed a significant market that will create many jobs,” Bársony noted. “We also need to figure out ways to draw people back to Hungary who have moved abroad. We need to let them know about new opportunities.”
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U.S. Company United Performance Metals to sell LCS Certified Materials in Europe United Performance Metals, a U.S.-based distributor of high temperature materials used for aerospace applications, has been granted MCL-LCS approval by engine maker Pratt & Whitney UTC, allowing UPM’s Hungarian branch to distribute LCS (laboratory control at source) certified materials to customers in Europe. UPM, which opened its facility in Budapest last year, welcomed the decision to grant the certification. “Achieving MCL-LCS certification proves our commitment to servicing customers within the European region,” said Rich Vanatsky, director of international business.
Coca-Cola Hungary Expands Capacity to Produce ‘Smartwater’ Coca-Cola HBC Hungary is investing HUF 1.8 billion in an expansion of its mineral water plant in Zalaszentgrót (217 km southwest of Budapest), where it will begin production of its Glaceau Smartwater premium product, the company said on June 18. Glaceau Smartwater is a vapordistilled water with added electrolytes, produced using technology inspired by cloud
///news
formation, notes a report by online news portal index.hu. Coca-Cola will initially sell the brand in Austria, Croatia, Czech Republic, Ireland, Italy, Russia, Serbia, and Slovakia, with annual production potentially increasing to 100 million bottles in the coming years. Minas Agelidis, general manager for Coca-Cola HBC Hungary, said Smartwater has already become a leading premium product in the United Kingdom and the United States, where it was introduced in 1996. The technology used in its production has hitherto only been employed in Europe in the U.K. and the Netherlands.
Indotek to Renew Four Shopping Malls Indotek Group will invest HUF 2.5 billion in the renovation of four shopping malls in the country during this summer, forbes. hu reported. The shopping malls are located in Zalaegerszeg, Sopron, Szeged and Debrecen; in the first two towns a new Auchan store will also open. Both the exteriors and the interiors of the buildings will be renovated. Indotek has allocated HUF 500 million for Zalaegerszeg (220 km southwest of Budapest), HUF 1 bln for Sopron (214 km west), HUF 450 mln for Szeged (174 southeast) and HUF 800 mln for Debrecen (231 km east of the capital). The modernization of Csepel Plaza was completed this May. In 2019, the
renovations will continue in Veszprém (115 km southwest), Szolnok (119 km southeast) and Kaposvár (191 km southwest from Budapest). Indotek Group is owned by U.S. and Hungarian investors; the majority owner is Dániel Jellinek. Indotek deals with Category “B” and “C” offices, warehouses, industrial buildings and hotels.
Flowserve to Open Development Center in Bp U.S. industrial and environmental machinery supplier Flowserve will set up a development center in Budapest, State Secretary of the Ministry of Foreign Affairs and Trade Levente Magyar said on June 5, Hungarian news agency MTI reported. The center will create 35 jobs in the coming years but headcount could rise to 150 later, Magyar said. Flowserve VP Rob Phillips said the company had picked Hungary for the development
center because of its talented engineers and first-class universities. The center will start operating with a staff of 25, but that number will grow later, he added. Flowserve already employs 200 people at its shared services center in Debrecen (231 km east of Budapest).
Cargill to Build HUF 5 bln Feed Plant in Pápa Cargill Takarmány Zrt., the local unit of U.S.-owned Cargill, has laid the cornerstone of a more than HUF 5 billion feed plant at its base in Pápa (165 km west of Budapest), magyarmezogazdasag.hu reported. The plant will make feed mainly for pigs and poultry as the consumption of meat is increasing in Hungary, said Cargill chairman-CEO Szabolcs Makai. The company also trades in grain and oil seeds. Cargill has been operating in Hungary since 1995 and has five feed plants and storage facilities.
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I wish I could claim credit for the excellent term “Fridolatry” but it’s not mine. It refers to the cult inspired by Mexican artist Frida Kahlo, who died in 1954. Now, for the first time, Hungarians can see what the fuss is all about. An exhibition of Kahlo’s work opens at the Hungarian National Gallery on July 7 and runs throughout the summer and fall. DAVID HOLZER
In the past, paintings by Kahlo have been notoriously difficult to show outside Mexico. This exhibition includes works loaned by the Museo Dolores Olmedo, Mexico City, and other significant Mexican collections. It consists of more than 30 paintings and other works, including Kahlo’s first ever canvas, painted in 1927. Today, Kahlo is probably the most easily recognized artist in the world. Her unibrow and riot of traditionally-patterned Mexican clothing adorn a weird and wonderful array of merchandizing. She’s also a constant source of inspiration to the fashion industry. But to take Kahlo simply at face value is to miss her real significance. Frida Kahlo was born in Mexico City almost exactly 111 years ago to the day the National Gallery exhibition opens. She died in 1954
aged
47.
Kahlo’s father was German – not Hungarian-Jewish as she claimed – and her mother a mixed-race Mexican. Perhaps not surprisingly, there is still a Hungarian angle to Kahlo’s story. One of her long-term lovers was the Hungarian photographer and Olympic Fencer Nickolas Muray, also known as Miklós Mandl, from Szeged.
Photo by ararat.art/Shutterstock.com
The Cult of ‘Fridolatry’ Comes to Budapest
Contracting polio as a child left Kahlo disabled. When she was 18 she was badly injured in a traffic accident. Although she’d been heading for medical school, months in secluded recovery led to her becoming increasingly interested in art. After she joined the Mexican Communist Party in 1927, Kahlo met the Mexican muralist Diego Rivera. Throughout their life together, it was Rivera who was regarded as the star artist of the two.
Going Solo
Kahlo began painting seriously in the late 1920s and ’30s as she traveled throughout Mexico and the United States with Rivera while he worked on commissions. Her first solo exhibition was in New York in 1938, arranged by the French Surrealist André Breton, who described Kahlo’s work as “a ribbon around a bomb”. In 1939, Kahlo exhibited in Paris where her painting “The Frame” was purchased by the Louvre, making her the first Mexican artist to become part of their collection. She had to wait until
1953 to have
her first one-woman show in Mexico, shortly before her death. Up until the late 1970s, Kahlo’s work and reputation were still overshadowed by the giant figure of her husband Diego Rivera. Despite the fact that Kahlo’s life could be seen as rather tragic, she lived it to the full. She had a brief affair with Leon Trotsky in Mexico. When she was in Paris, she had a fling with the legendary American dancer
Josephine Baker who was working for French military intelligence at the time. All that pain, suffering and correspondent determination to really live fed into Kahlo’s art. On the face of it, the art appears simple and accessible. Kahlo painted many selfportraits but was also inspired by the Columbian and Catholic folk art of Mexico, using this to explore modern questions of identity, gender and race. Her paintings also mixed realism with fantasy. Most of all, Kahlo’s paintings were, as she put it, “the most frank expression of myself”. This uncompromising depiction of femaleness is why her work has been embraced by feminists and the LGBT community. “Self-Portrait with Cropped Hair” (1940) is a good example of Kahlo’s magical mix of honesty and ambiguity. The Museum of Modern Art in New York described the work as expressing her feelings of estrangement from Rivera while also having a dreamlike quality. The painting also illustrates the influence of Mexican popular culture. Into it, Kahlo has written “Look, if I loved you it was because of your hair. Now that you are without hair, I don’t love you anymore.” Sadly, the subtlety of the work is often missed while the more cartoon-like aspects of her life and appearance have fueled the cult of Kahlo.
Kahlo Cult
I first became aware of Kahlo when her name was mentioned in a 1990 “Vanity Fair” magazine interview given by Madonna. It’s not hard to see why Kahlo’s mix of sexual ambiguity, intense color
and Catholic iconography would have appealed to the singer. Cultural magpie Madonna was also picking up on a trend gaining momentum since the
early
1980s,
when Kahlo’s biography was published. Madonna is still mining Kahlo’s life and work. The cover of her 2015 album Rebel Heart, which depicted her face bound in rope, was inspired by Kahlo. But by far the biggest boost to the cult of Kahlo came with the 2002 biopic “Frida”, which starred Mexican-American Salma Hayek, complete with unibrow. Since then “Fridolatry” has grown and grown, with her unibrowed visage featured on everything from socks to aprons. (Full disclosure: my partner is the proud owner of a splendid Kahlo bamboo curtain.) Earlier this year, the mainstreaming of Kahlo reached ludicrous proportions when, as part of their “Inspiring Women” series, Mattel launched a Frida Kahlo Barbie doll. The Kahlo Barbie was sans unibrow, which wasn’t a smart move in terms of credibility. Strangely enough, according to the Allure website, Kahlo’s “legendary unibrow may be the summer’s biggest – and boldest – beauty trend”. Will we see the gorgeous, chic women of Budapest proudly sporting huge, hairy unibrows this summer I wonder?
Find out more about the Frida Kahlo exhibition at the Hungarian National Gallery website: www.mng.hu.
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BMW CEO Experience BBJ: What kind of driver would you consider yourself? JZ: I drive a lot because of my job and my family. I like to drive fast but safe. BBJ: Would you recommend it as a business or family car? JZ: It is a perfect car for a smaller family and also a good choice as a company car, but perhaps a bit overpriced compared to the BMW X5 which I use at the moment. BBJ: What did your children think of the car? JZ: My sons liked it a lot as it is very fresh with a cool exterior and interior design.
With Dr. Judit Zolnay, CEO MetLife Hungary
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BBJ: Would it suit an executive fleet? JZ: I would use such a car for the sales representatives to attract and maintain. BBJ: Where did you take it and why? JZ: I used it to go shopping, to go to Lake Balaton for a short visit and also to get me to the airport. BBJ: What kind of manager would you describe yourself as? JZ: I am passionate to develop my high performing team and serve our customers in a way that we would prefer if we are costumers. I am more a leader than a manager, who empowers the team members
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to bring ideas and form the issues to a solution. BBJ: How long has MetLife been in Hungary? JZ: The company has started to operate in the Hungarian market 25 years ago. The MetLife brand has arrived here in 2012, via acquisition. BBJ: What is your staff headcount? JZ: 116 at head office, with 450 in the sales branches.
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BBJ: Any special attributes about MetLife’s presence in Hungary? JZ: MetLife offers its clients accident, health and risk coverage and manages savings and pension plans both for individuals and corporate clients in Hungary. MetLife Hungary has the highest average premium in the market thanks to the high level of services and standards which comes from our world-class corporate experiences and background.
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Kékfrankos Coming of Age (and About Time Too) For a long time Kékfrankos, Hungary’s most widely planted grape, wasn’t taken seriously by many Hungarian winemakers and consumers. Now, the Hungarian wine fraternity has firmly and thankfully cottoned on to the fact that this indigenous grape is capable of making very good wine and is very much the future.
and lots of other Kékfrankos coverage. Some
ROBERT SMYTH
The Hungarian Ministry of Agriculture has followed up on last year’s Furmint publication with a detailed handbook featuring the results of the “Hungarian Wines of Excellence: Kékfrankos” panel tasting,
151 wines
were entered and more than half of them made it into the book, satisfying the 14-member strong panel
comprising winemakers and wine experts, with five wines singled out as top wines. “The wines came in way beyond our expectations,” said András Horkay, president of the National Wine Expert Commission (OBB). He observed that Kékfrankos hailing from around Lake Balaton faired particularly well, despite a limited number of entrants. My pick of the Top Five bunch, and also the standout from a rushed tasting of (almost) all of the wines to make the book, was also from Lake Balaton: Piritye 2015 from the Konyári winery from the Balatonboglár wine region on the south side of Central Europe’s largest lake. It not only tasted good, it also looked good with its vibrantly pretty purple-ruby color. It had Konyári’s classic intensity as well as that trademark magic touch with the use of oak, with the grape’s firm acidity nicely cutting through the concentration, making the wine long and allowing the juicy red fruit, especially sour cherry, and the spicy notes from the barrel to ride long and smoothly on the palate.
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The wine is a great tribute to János Konyári, a master in the use of oak, who sadly died last year, but his son Dániel already made the wine with his father for many years. Available for HUF 6,950 from Bortársaság.
Potpourri Style
and marks a return to form for the Tolna-based winery that was once a real force to be reckoned with but had diminished in recent years.
Minty and Spicy
“The wines came in way beyond our expectations.”
The Top Five was completed by the minty and spicy Soltész Premium Kékfrankos 2015, which is the top range of the large Eger producer Ostorosbor. Yet more evidence that big does necessarily mean bad in the wine business. For those who like a fruit forward and light style, Márkvárt’s Kékfrankos 2015 from Szekszárd is still positively bursting with fresh red fruits. It was made solely in the tank to preserve the fruit and with its light body is an ideal red for summer imbibing and can be served a little chilled. It also made the “Wines of Excellence” book and costs just HUF 2,200 from Bortársaság. Accounting for 7,592 out of Hungary’s 64,000 or so hectares of land under vine, Kékfrankos is a dependable grape in the vineyard, holding up well in more challenging vintages when other grapes take a battering. It makes mediumrather than full-bodied wines and the alcohol level rarely pushes
role for so long. However, results have been impressive since the grape has been treated with as much TLC as the Bordeaux varietals, especially Cabernet Franc. In fact, Vylyan’s Kékfrankos 2015 (a Top Five wine) stands up very well when tasted alongside the winery’s other international varietal offerings. The riper style from down in Villány is certainly for those who may find wines from the grape lacking in body and weight. Villány’s Csányi winery, the region’s biggest producer, showed that it is not just about cheap and cheerful bottomshelf wines with its high-end Teleki range, with Teleki Selection Villányi Kékfrankos 2015 making the Top Five. From a bit further north (but still in the south of the country), Szent Gaál Kastély és Borház’s Szekszárdi Kékfrankos 2016 claimed another Top Five berth,
As such, the grape is well placed to meet changing demand (at least internationally!) for less alcoholic wines, yet it lacks nothing in terms of depth. Kékfrankos also makes some very good rosés and also provides the backbone for Bikavér blends. Kékfrankos can age amazingly well, though it is hard to test that theory as most of it sells out quickly. Although its tannins are not mouthfilling like those of Cabernet Sauvignon, it can take a while for them to soften and after a few years they can have a supremely elegant fine-grained feel. The grape’s high acidity helps it age and as the red fruit fades, impressive earthy and tobacco notes take over. Meszes Vidék Magnum 2007 from Sopron’s Pfeiszl is a case in point. The “Hungarian Wines of Excellence: Kékfrankos” book is in both Hungarian and English, and can be posted out to those interested upon written request to the agriculture ministry at: Agrárminisztérium, 1055 Budapest, Kossuth Lajos tér 11. Copies are also available at wine shops like Bortársaság and Zwack, and a complimentary copy also comes with the July issue of VinCe Magazin. While the Austrians are well ahead of the game with their Blaufränkisch (the same grape) in Burgenland, the Hungarians are finally out on the field with some nice wines of their own.
This big Balatonboglár Kékfrankos contrasts with the lighter, more perfumed potpourri style of Homola and Szent Donát from Csopak on the lake’s northern shore, with two from the former and one from the latter making it into the “Wines of Excellence” publication. Homola’s Kékfrankos 2015 costs HUF 3,350 from Bortársaság, while Szent Donát’s Magma 2016 is HUF 5,030 from Borbolt. hu. Both come from the Tihany peninsula that juts out in to the lake, a warm spot where red grapes can ripen fully. Homola Kékfrankos 2015 comes from
30 year
old vines planted slap bang in the middle of the Tihany peninsula and was spontaneously fermented in the vat, then aged in 500 liter barrels for ten months and bottled unfiltered. The southwestern region of Villány claimed two of the Top Five spots, which is an impressive result for a region in which the grape took a backseat
past
13.5%.
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