Budapest Business Journal 2704

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

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BUSINESS JOURNAL BUDAPEST

VOL. 27. NUMBER 4

MARCH 1 – MARCH 17, 2019

SPECIAL REPORT Office Equipment SPECIAL REPORT

Designing an Awardwinning Office Creativity prevailed at this year’s Office of the Year Awards, organized for the ninth time by iroda.hu. Original ideas abounded: among the winners was a company that created an office from a ruin pub and others that have even managed to attract employees back from abroad. 13 SPECIAL REPORT

Flexible Working, Digital Support Offices today are starting to look more like a living room than a working space.

Comfy couches, upholstered armchairs, fluffy rugs, vibrant and colorful wallpapers; all give the impression of a stylish home. 18

Strength Through Diversity

SOCIALITE

Photo Festival Scoops CEE 1st

From February 28-April 20, the capital becomes the City of Photography, thanks to the Budapest Photo Festival. This year’s opening international show is David Lynch’s “Small Stories”, an exhibition of photos by the highly regarded film and TV director.  22

NEWS

Rating Season Kicks off Strongly for Hungary

S N EW

Thomas Narbeshuber of BASF Hungária talks to the Budapest Business Journal about being a two-time nominee of the Expat CEO of the Year title, what travel has taught him about diversity and open thinking, and rising to the challenge of Hungary’s labor crisis. 5

The start of review season has brought two upgrades for Hungary. First, S&P lifted its rating, to be followed only a week later by Fitch. Only one major rating agency now has Hungary just one notch above junk category, but not for very much longer, according to market anticipation.  3

BUSINESS

Sisters are Doin’ it for Each Other

In honor of International Women’s Day (March 8), the Budapest Business Journal spoke to three Hungarian women entrepreneurs about their experiences.  6

2 | 1 News BBJ

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Budapest Business Journal | March 1 – March 17, 2019

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester Eddy, Bence

Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Robert Smyth, Zsófia Végh, Zalán Zubor.

LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

Should be submitted in English to news@bbj.hu LAYOUT: Zsolt Pataki PUBLISHER: Business Publishing Services Kft. CEO: Tamás Botka ADVERTISING: AMS Services Kft. CEO: Balázs Román SALES: sales@bbj.hu

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Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14., Building A, 8th floor. Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu SUBSCRIPTIONS: Budapest Business Journal 1 year 6 months 3 months

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News Services Hungary A.M., Energy Today, Regional Today 1 year, from HUF 179,000+VAT 6 months, from HUF 104,900+VAT 3 months, from HUF 58,900+VAT Book of Lists 2018-2019: HUF 20,900+VAT DigiBOL HUF 39,900+VAT Call +36 1 398-0344 or email circulation@bbj.hu What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

If you have looked to move offices recently, you cannot help but have noticed that rental costs are rising in Budapest. In part, this is driven by record low vacancy rates, a hangover from the financial crisis when many building projects were put on hold. A much more vibrant economy has seen developers return to the market and even the launch of speculative buildings. But, for now, it remains a landlords’ market.

Those low vacancy rates do not alone explain the rising costs, however; as ever, the full picture is a little more complicated than that. As you can read in our Special Report in this issue, tenants’ demands are also becoming more complex. They need greater space flexibility, more relaxed environments. The labor crisis that blights not just Hungary, but the whole region, coupled with the growing numbers of younger Gen-Zs and millennials in the workforce, mean employers are having to make their work spaces more inviting to attract and retain workers. And not just more attractive and technically savvy, but also more environmentally conscious. Those are office design elements that come at a cost premium.

But there is still one element to add to the equation of what is driving up rents, and it is perhaps the most obvious one of all: rising costs. Ironically, given that the labor shortage is one of the factors contributing to employers having to work harder to please employees, that same workforce shortage also affects the construction trade, and means it now costs more to build an office, or, indeed, any building.

Taken together, these factors shows how complex and interrelated the whole issue of who you employ,

and the environment in which you employ them, has become. Perhaps that should not come as a surprise: ever since we got past the days of sweat shops and slavery and child labor, payroll and premises have been near the top of any list of business expenses.

They have always been interdependent; the connections might well be more complex, or our understanding have grown deeper, but the effect is the same. We need talents, and we need a workspace in which they can thrive, that is healthy and efficient and, yes, occasionally fun. And that all comes at a cost.

Robin Marshall Editor-in-chief

Correction

In the photo spread from the BBJ Expat CEO Gala 2019 that appeared in our issue of February 1, the caption accompanying the main photo of short-listed nominee Kevin A. Murray, in the uppermost left-hand corner of Page 18, was incorrect. The caption should have read: (From left:) Kornél Csodó, head of Commercial Bank at Citi; Robert Stöllinger, CEO of KPMG Hungary; Kevin A. Murray, CEO of Central Europe and country head for Hungary at Citi; Adrienn Bakó, senior relationship manager at Citi; Gabriella Liptay, marketing and communications director at KPMG and Péter Kiss, a partner at KPMG. We apologize for the error.

Photo: MTI/Csaba Krizsán

Photo: fortepan.hu/Fortepan

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress.

Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2017 BUSINESS MEDIA SERVICES LLC with all rights reserved.

PAYROLL AND PREMISES INTERCONNECTED AND COSTLY

THEN & NOW

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To the right, Hungarian Erik Szilvássy (in red) grapples with a Belarus athlete at the Hungarian Grand Prix-Imre Polyák memorial event in Greco-Roman wrestling in Győr on February 24. The black and white picture to the left shows freestyle wrestlers in Budapestʼs Grand Circus in 1940.

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Budapest Business Journal | March 1 – March 17, 2019

News///macroscope

Rating Season Kicks off Strongly for Hungary

The beginning of the review season has brought not one but two upgrades for Hungary. First, S&P lifted its rating, to be followed only a week later

by Fitch. Both moves were much anticipated; only one rating agency now has Hungary just one notch above the junk category, but not for very much longer, according to market anticipation.

ZSÓFIA CZIFRA

“It was about time,” that was Minister of Finance Mihály Varga’s reaction when he welcomed the decision of Standard & Poor’s to upgrade Hungary’s sovereign debt status to “BBB/A-2” from “BBB-/A-3”, with a “stable” outlook, on February 15.

Varga said the decision finally recognizes the long-standing performance of the Hungarian economy and reflects the market consensus.

In its reasoning, S&P said: “The upgrade reflects Hungary’s sound growth prospects, supported by high private savings and real wage gains sustaining domestic demand, as well as the ongoing expansion of export capacity in the automotive and services sectors. While we expect growth to slow toward 2%

by

2021,

we think Hungary’s small open economy will be able to weather a period of weaker external demand, as well as the expected decline in EU funding,” the agency wrote.

“The upgrade reflects Hungary’s sound growth prospects, supported by high private savings and real wage gains sustaining domestic demand, as well as the ongoing expansion of export capacity in the automotive and services sectors.”

S&P said that the upgrade was supported

by Hungary’s resilient export-driven economy, and low private sector debt.

However, it also mentioned that relatively weak checks and balances, moderate wealth levels and high public debt are main constraints on the ratings.

The agency also highlighted that the country’s net external debt fell to under

10% in 2018, from 55% in 2010. It called the government’s aim to reduce general government deficit to 0.5% of GDP by 2020 optimistic.

At the same time, S&P welcomed earlier measures to cut back the share of Hungary’s foreign exchange debt to around 20% from more than 60% in 2010.

Downside Risks

Among the downside risks, the agency noted Hungary’s overheated labor market, but S&P also listed several factors that could lead to another positive rating action in the coming two years, such as stronger and more balanced economic performance than that of the country’s regional peers, and a faster than expected decline in net public and external debt.

As for what could lead to a negative rating action in the upcoming 24 months, S&P said that this could happen in the event of a significant external shock to Hungary’s open economy, or a possible suspension of EU transfers, or a rise in public debt.

Analysts had barely finished digesting the meat of the first ratings review of the year when more positive news hit the markets. On February 22, Fitch Ratings raised Hungary’s rating to “BBB” from “BBB-“, with a “stable” outlook. As with S&P, the Fitch rating is now two notches over the junk status.

The rating agency noted that Hungary’s net external debt fell to an

estimated

10.2%

of GDP in 2018, from an average of 34.4% in 2013-2017, and it also mentioned the consistent current account surpluses, stable net FDI inflows, and capital transfers from the European Union.

As for debt trends, Fitch thinks that the general government debt/GDP ratio remains on a downward trend and is forecast to fall from an average of 75.2% of GDP in 2012-17 to an estimated 71% in 2018, 68% in 2019 and 66% in 2020.

The agency notes that the general government deficit changed only a little in 2018, and it forecasts the fiscal deficit will remain largely unchanged, at 2% in 2019 and 1.9% in 2020, given the expected strong contribution of EU funds and the cushion available from

Minister of Finance Mihály Varga reacts with evident delight at a press conference on February 16 called after the S&P upgrade to Hungarian long- and short-term debt. Photo: MTI/ Lajos Soós. contingency fiscal reserves, despite slowing economic growth.

agency MTI cited Mihály Varga as saying that S&P’s decision to bump Hungary’s sovereign rating up a notch was “rather timely”.

Varga noted that the market had already priced in a significant improvement in Hungary’s fundamentals. He asserted that an even higher rating than “BBB” would have been justified.

As Takarékbank analyst Gergely Suppan pointed out, markets have already priced the upgrade, therefore it will have no significant effect; however, domestic markets can further stabilize even in an ever-changing global environment.

“The MNB, in line with its legal mandate, continues to endeavor towards the success of the national economy and ensuring stability with all of the tools at its disposal, and it trusts that the third big rating agency, Moody’s, will acknowledge the sustainable improvement in the fundamentals of the Hungarian economy in the course of a decision coming in May,” the National Bank of Hungary said.

Moody’s Investor Services still holds Hungary just one notch over the investment grade threshold, and its outlook on the “Baa3” rating is “stable”. It will carry out its first review of 2019 on Hungary’s sovereign debt on May 3.

Independence Concerns

Hungary outperforms its “BBB” rated peers on the World Bank governance indicators as well as ease of doing business, the Fitch rationale notes. However, it adds that concerns about the independence of the judiciary are increasing.

“Legislation passed in December 2018 paves the way for establishment of special administrative courts to begin adjudicating certain politically sensitive cases from 2020,” the note reads.

The Hungarian government, as well as the central bank and analysts, welcomed both decisions, saying that they were “timely” and “well-deserved”. After the S&P review, news ADVERTISEMENT

Numbers to Watch in the Coming Weeks The fourth quarter GDP data will be published on March 1 by the Central Statistical Office, followed by the January retail trade figures on March 5. Also for January, the KSH will release data on the performance of the Hungarian industry on March 7, with more detailed figures coming out on March 13.

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Budapest Business Journal | March 1 – March 17, 2019

Little Industrial Supply Meeting Strong Demand The Budapest industrial market suffers from limited development, with a lower supply recorded than in other Central European markets at 127,000 sqm in Hungary last year.

GARY J. MORRELL

Development of the Budapest market is continuing to be impeded by a limited supply of space. Take-up for 2018 was 378,00 sqm, according to Cushman & Wakefield, but the low availability of contiguous industrial space in the Budapest area and rising demand has resulted in record low vacancy rates

of

2.4%,

the lowest in Central Europe in a market with a total stock of 2.18 million sqm.

The Central European industrial and logistics market is continuing to record high demand, reflecting the positive indicators in the wider European industrial markets; take-up in Poland was close to four million sqm in 2018 and more than 1.3 million sqm for Czech Republic.

Total Central European industrial stock has surpassed the 27 million sqm threshold and the region (Czech Republic, Hungary, Poland, Romania

CTPark Belgrade West. and Slovakia) has low vacancy of below 5% in most markets.

In the current market environment with high demand and low availability, companies requiring space need to plan far ahead. At the same time, developers are now committed to delivering higher specified and sustainability accredited space in response to market and environmental demands.

“The lack of available warehouse space around Budapest and the rising cost of construction has put pressure on rents and this has resulted in a 13% year-onyear growth,” commented Cushman & Wakefield.

Rents for Budapest have risen year-onyear from EUR 3.75 per sqm per month to EUR 4.25 as of the fourth quarter of 2018. This compares to EUR 4.25 for

Czech Republic and EUR 3.8 for Poland, according to C&W.

Dominating Central Europe

Poland and Czech Republic continue to be the dominant CE markets: supply for 2018 was around 2.2 million sqm and 735,000 sqm, respectively, according to data from C&W. The Romania industrial market is also attracting significant development, with an

estimated

435,000 sqm

of new supply for 2018. Last year Poland passed a new milestone

as industrial stock stood at 14 million sqm.

With regard to supply, the leading CEE logistics park operator and developer, CTP has hit the five million sqm mark in Central Europe.

“We have been working on buying strategically located land in the five capitals of the countries in which we operate. In Budapest we are now able to offer warehouse properties all around the city,” said CTP. With these low vacancy rates some leading developers are moving towards the speculative development option in established logistics parks. However, in the current landlord favorable market, the majority of development is undertaken on a BTS basis as developers are quickly able to conclude deals for available development space.

Developers are known to be land banking and waiting to see the possibilities in assessing their speculative development options.

“The difference between BTS and speculative is a bit misleading nowadays, as most of the delivery is taken by tenants at the planning stage or during the construction phase. So there is not as much typical speculative construction as there was in the past. Bearing in mind the very low vacancy, speculative development is not a focus nowadays,” commented Ferdinand Hlobil head of CEE industrial at Cushman & Wakefield.

In contrast to Poland, Czech Republic, Romania and Slovakia, a functioning commercial industrial market has not developed outside the capital in Hungary and companies establishing light industrial facilities have tended to develop their own buildings. Therefore figures are recorded for Budapest as opposed to countrywide statistics in other markets in the region. However companies establishing production units in regional cities could act as magnets for logistics centers in Hungarian regional cities.

Prologis Hungary Portfolio Grows to 580,000 sqm International logistics park operator and developer Prologis had a Hungarian portfolio of 580,000 sqm as of the turn of the year with an occupancy of close to 100% according to the company.

GARY J. MORRELL

This is part of a wider Central European portfolio (also including Czech Republic, Poland and Slovakia) of four million sqm of logistics and industrial space with an overall vacancy rate of around 95% at the turn of the year. The most notable activity was in Poland, where the portfolio consisted

of

1.8 million sqm

and leasing activity reached 723,000 sqm in 2018.

Reflecting the strong demand and low vacancy, Prologis is developing a 11,000 sqm speculative facility at Prologis Harbor Park in greater Budapest. This was

the only development start undertaken by Prologis in Hungary last year.

In the wider Central European region, Prologis began the development of nine speculative buildings and four built-tosuit (BTS) facilities totaling 250,000 sqm of space in 2018. In total, Prologis completed 250,000 sqm of space in 13 buildings.

In Prague, Prologis has delivered an additional 38,000 sqm of space at Prologis Park Prague-Airport, 27,000 sqm of which is built-to-suit and 11,600 sqm is speculative. The company has also undertaken development of a 40,000 sqm speculative facility at Prologis Park Brno in Czech Republic.

László Kemenes, country manager at Prologis Hungary, puts the development period of a speculative project at six-to-nine months.

With regard to leasing, Prologis recorded 109,000 sqm of activity

and

32,000 sqm

of new leases in Hungary. This compares to a total of 750,000 sqm of leases in its CEE portfolio and 477,000 sqm of new leases.

The strong momentum in the European logistics markets causing rental increases is predicted to continue this year.

“It is no surprise that expansion of the European logistics market continued in 2018,

with another strong year for occupier demand, the lowest vacancy rates and long-anticipated rent growth beginning to materialize,” said Prologis research on the prospects for European logistics real estate in 2019.

Market fundamentals are seen as strong with positive customer sentiment, robust demand, disciplined supply, land scarcity and historic low vacancy rates. Kemenes sees possible development in the Budapest market in the growth in urban or city logistics, following the market trend in some of the larger European cities.

Prologis Park Budapest Harbor.

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Budapest Business Journal | March 1 – March 17, 2019

Thomas Narbeshuber, CEO of BASF Hungária Kft. and BASF’s head of country clusters Austria, Czech Republic, Slovakia and South East Europe, talks to the Budapest Business Journal about being a two-time nominee of the Expat CEO of the Year title, what travel has taught him, and rising to the challenge of the labor crisis.

ROBIN MARSHALL

BBJ: You have just become a two-time nominee of the BBJ Expat CEO of the Year awards. What does such recognition mean to you?

Thomas Narbeshuber: It is always a great recognition being nominated for such a prestigious award, not only for me personally, but also for BASF. During the five years that I have spent here so far, I have done my best to become a useful member of the business community, so it must have certainly contributed to my two nominations.

The expat community functions as a sort of bridge between Hungary and the rest of the world. I find it important to maintain an active dialogue between the expat and the local CEO communities, as a country’s economy can be best developed by the proper combination of local knowledge and international experience. We wished to further enhance this dialogue with the local business community when I initiated the founding of the Debrecen section of DWC (a German-Hungarian Business Club), where popular events are organized to give

Photos by Marianna Sárközy

Diversity Brings Flexibility and Understanding

the operations of 16 countries, from Austria to Greece. In Hungary, our consolidated turnover amounts to approximately HUF 75 billion; in the region we generate more than EUR 2 bln.

Thomas Narbeshuber (left) receiving his BBJ Expat CEO runners’ up certificate from editor-in-chief Robin Marshall. an opportunity for the senior executives of Hungarian and German companies to meet and talk about the most important topics nowadays: economic development, innovation, digital transformation, the labor shortage and sustainability.

BBJ: How would you describe your management style?

TN: I think I am a very approachable manager based on my personality. I like to be involved in brainstorming sessions with my colleagues; what I enjoy most is the creative process. BASF has a highly innovative and inspiring community that I really appreciate. The ongoing internal dialogue, the desire to make a difference and our adaptability drive BASF forward globally and in Hungary as well. This is the reason why I strive to devote time and energy to the development of people. I firmly believe in leading by example and an open feedback culture. I am committed to honest, open and objective freedom of expression, and we endeavor to create all possible platforms for this purpose.

BBJ: You were born in Vienna. Is it easy for an Austrian to adapt to life in Hungary?

TN: For historical reasons, the two nations are very close to each other from a sociocultural perspective; however, it was not the main reason that made my adaptation relatively easy. Since I was a university

student, I have had the possibility to get to know several foreign cultures, as we have lived with my family in many countries from France to China. I am particularly interested in gaining new impacts: I am curious to see how locals interact, both in people’s private lives and in the business domain. Diversity comes with flexibility; the more stimuli you receive, and the more people from different walks of life you meet, the easier it becomes to understand other people’s way of thinking. This is a very useful tool in business or networking situations. And, as a result of this, we can have an even stronger understanding of our customers and we will be able to develop tailor-made solutions for them. To adapt more, I have started learning Hungarian recently. I really enjoy it, and as far as I can see, my colleagues really appreciate when I speak to them in Hungarian.

BBJ: BASF is the largest chemical producer in the world. How long has it been active in Hungary, and what do its activities here entail? How much has been invested, and how many jobs created?

TN: BASF’s history in Hungary goes back to 1986, when BASF Poliuretán Hungária Kft. was founded in Solymár (15 km northwest of central Budapest), where polyurethane systems were produced. Today our office in Budapest serves as a hub for the Central and South Eastern Europe and is in charge of

BBJ: How was 2018 for BASF in Hungary?

TN: 2018 was a good year again, albeit with a somewhat lower growth (5%) than in the past. BASF has also come up with a new global strategy, which is very promising and now being implemented in the countries. Therefore, we look to the future with optimism.

BBJ: What can you tell us about the company’s future plans in Hungary?

TN: We focus heavily on innovation, keep an eye on startup communities and constantly seek new opportunities for cooperation. Of course, our existing partnerships are just as important, therefore, we put even more focus on our customers. We keep looking for new ways to serve them in a more digitalized, more customized manner. In addition to customer focus, innovation management and digitalization, sustainability is the fourth area that is given special attention, not only globally or where production is running, but in every country and in every process.

BBJ: By now, everyone accepts that the labor crisis affects all sectors, and is a region-wide phenomenon. How does BASF combat it in Hungary?

TN: One of the chief assets of BASF is its highly qualified and motivated employee community. For this reason, we provide continuous training opportunities to our employees and support their personal development. To help the community in an early stage we are running educational initiatives such as TechCsajok, KidsLab and Chemgeneration in the Agora Science Center in Debrecen. In order to foster the general legal employment frameworks, we recently joined the “Work and Family Balance” initiative launched by EMMI (the Ministry of Human Capacities) and DUIHK (German-Hungarian Chamber of Industry and Commerce).

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2019. 01. 25. 16:52

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Budapest Business Journal | March 1 – March 17, 2019

Business

Sisters are Doin’ it for Each Other In honor of International Women’s Day (March 8), the Budapest Business Journal spoke to three women entrepreneurs about their experiences.

ZSÓFIA VÉGH

Though there has been much progress, the problems of glass ceilings and equal pay are likely to stay with us for some time. On a brighter note, you don’t need to be limited to a corporate environment to find success. All our interviewees actually left the company they worked for as leaders to launched their own business.

Mónika Kiss, capital market analyst, advisor, formerly head of research at Equilor investment fund, now works as an independent financial advisor and writes a blog to make financial matters comprehensible for women.

I left Equilor last March; I loved working there, but we went into different directions.

Mónika Kiss I had some savings and knew I could earn enough from trading, so I started my freelancing career a year ago.

Sabbaticals are hardly a practice in Hungary but I was finally having time to do a lot of things I didn’t have time for years. One is financial self-care, another is financial well-being for women over 40.

I started to write posts for the finance section of “Anyapara”, a blog aimed

at women and mothers. The topics are general problems explained and broken down in such a way that people

“I had a hard time finding female speakers and the audience was also mostly comprised of men. I knew some really talented, charismatic women in the industry, but they were not visible.” unfamiliar in the field of finances can understand it. [Editor’s note: In her post on how to choose investment funds, Kiss uses a simile involving exes: “You don’t pick your future partner based on the performance of your ex. So you shouldn’t choose an investment fund based on its previous performance either.”]

The trickiest part is to maintain professionality while explaining in a way everyone understands it. Our first podcast was also about busting the myths surrounding financial matters.

I have been longing to do this for decades, ever since I entered the bank in Prague (my first workplace) where only a handful of women worked. Things have changed a great deal since then but women’s approach to finances hasn’t.

Though women are breadwinners, too, in most households, it is the men who decide on financial matters, at least in the region and in Hungary.

Also, I have such a strong female social network, women I could rely on throughout the years, that I wanted to give back some of this.”

Andrea Pánczél, reporter, head of news at TV2, spokesperson for MOL and GDFSuez and organizer of the Budapest Energy Summit, the largest energy conference in the region, launched an organization for women working in the energy industry in the region.

Having worked in the energy industry for almost ten years, I attended many events, conferences, etc. where many critical

decisions are taken. I believe women should be involved in them too, but there are only few who are.

When I organized my first energy conference, the Budapest Energy Summit in 2016, I had a hard time finding female speakers and the audience was also mostly comprised of men. I knew some really talented, charismatic women in the industry, but they were not visible.

It was this that gave me the idea of coming up with an association, Women in Energy (WONY), which aims to promote women to get into leadership positions and young women to embark on a career in energy.

Beyond many aspects, such as sustainability, the ratio of women in a company is a consideration that contributes a great deal to how a company is perceived. It also makes business sense, as boards with a balanced male-female ratio are more profitable.

WONY was launched in 2017. In parallel with the kick-off, the association carried out research with Boston Consulting Group into women’s situation in the energy industry in the region, something that has never been done before. Our aim was to find out where we are plateauing, where we start off from and also to see how far we will have gone when we look back in five years’ time.

The findings were shown at the first ever Women in Energy Conference last December, where leading women in energy from nine countries were invited to share their experiences.

The third project was to launch an energy mentoring program aimed at

Andrea Pánczél undergraduate girls. The organization counts 70 members from eight countries by now, and seven mentored girls. We have

found a niche with the association, which is why it has gained popularity.”

Ivett Szemrád, with a background in the printing industry, launched women fashion business, Zenda a year ago and has managed to build a big community of followers and clients on social media.

She has several cooperations with firms such as Deichmann, and is about to start a road show to share her business experience with other women.

Following 16 years in leadership positions in printing houses, I had

Ivett Szemrád burnout. A friend bought me a session with a career coach as a gift. I never really had any hobbies; I can’t bake, I work out to look good not because I like it. So she asked what I like to spend time with? Shopping for clothes, I said. So why not open a boutique?

I saved money at my last place, resigned in the summer and launched the boutique in September 2017.

The target group is 30-something mothers, simply because I couldn’t find a shop where I could buy pretty and comfortable clothes. So the basic idea was to fill that niche. The style was what I found nice.

I built the physical and the online shop/ platform in parallel. I created a closed group on Facebook only for women, as they tend to open up, ask and chat more freely this way than when their husbands or neighbors can see them.

The group has grown organically quite rapidly; it now counts 5,000 members: women with degrees, lawyers, physicians, high-level businesswomen. The clothes sell out fast: every week I upload photos of each piece I wear.

People tend to overthink the launch of an enterprise. I believe if you are resourceful, you can do a lot. Initially, I asked friends to take photos of me or take care of the online marketing. Now I have a stylist/shop assistant and a full-time online marketing specialist.

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Budapest Business Journal | March 1 – March 17, 2019

AerinX Brings AR to Aircraft Maintenance Hungarian startup AerinX aims at revolutionizing the external inspection and maintenance of aircraft via augmented reality technology.

BENCE GAÁL

“Bence [the founder] is a born innovator, who previously had several innovational ideas in a variety of industries,” the company told the Budapest Business Journal. “So he saw the possibilities in AR in 2015, and developed a way to apply it in one of his beloved fields: the aviation industry. The development of AerinX began in 2016.”

Traditionally, aircraft inspection happens manually, involving maintenance engineers and experts checking for damage with their eyes, and using manual tools for measurements.

The documentation happens on paper or in PDF. “However, AerinX offers a digital solution to all this,” the startup noted.

AerinX founders from left: Imre Hanyecz, László Gonda , Zoltán Wéber, Antal Bence Kiss.

“Firstly, it projects the data related to the size and position of any damage, as well as the aircraft’s damage history onto the hull via AR glasses.

Secondly, the documentation takes place immediately on the spot, digitally, but it is naturally accessible in a print version as well. There is also a database belonging to the system, which stores all data digitally, and is digitally accessible to everybody involved.”

AerinX was founded by four experts with a decade of experience in their areas: Kiss, László Gonda, Zoltán Wéber, and Imre Hanyecz. Currently, there are ten people working on the project.

At the end of last year, AerinX concluded an agreement with X-Ventures Alpha Zrt.,

which handles the X-Ventures Gamma Venture Fund. The company will invest HUF 250 million into the startup.

“With this help, we will be able to develop a final product from the prototype, and we can create the basis for a market launch,” the startup notes. The firm has also reached an agreement with Aeroplex of Central Europe Kft., a Budapest-based, Hungarianowned aircraft maintenance company.

Fine Tuning

“Within the framework of the partnership, we will further develop and fine-tune the system in real industry circumstances, involving the firm’s colleagues, engineers, and experts in order to perfect AerinX’s functionality.”

Business

|7

The company was selected for the finals of the “Hello Tomorrow” global competition

from

500

initial entrants. The startup will present its system in Paris in March alongside five other aviation industry innovators.

“The team of Hello Tomorrow Hungary played a major role in us getting to the finals, helping greatly in preparations and networking as well,” the startup tells the BBJ. Additionally, the firm has also been invited to the MRO Americas conference in April, the most significant event in the United States focusing on aviation and aircraft maintenance industries.

“AerinX was selected among the most promising startups there as well; we will again present our system in front of industry experts and investors alongside five other innovative companies.”

The company says its system will reach pilot phase in six months, with AerinX conducting a live test with the help of other industry players. The startup expects testing to take nine months, which will prepare it for an international market launch. At the end of 2019, AerinX expects to involve more venture capital from domestic and international investors in a Series A funding round.

S TA R T U P S P O T L I G H T

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Budapest Business Journal | March 1 – March 17, 2019

Gedeon Richter Looks to Build Specialist Future After Esmya Travails Gedeon Richter, Hungary’s flagship drugs maker, has seen some tough times of late. Shares hit an all-time closing record of HUF 7,250 in June 2017, but have since fallen to around HUF 5,600 after sales of key drug Esmya were hit by fears of possible liver damage for users. But the company, and analysts, have hopes for renewed growth.

KESTER EDDY

For the man in the street, Gedeon Richter is probably the least known of the four “blue-chip” companies on the Budapest Stock Exchange. Unlike OTP Bank, MOL and Magyar Telekom, each with numerous customer facing outlets, Richter, its headquarters located in unfashionable, industrial Kőbánya (District X), unassumingly gets on with business: making medicines.

But with total revenues last year of EUR 1.4 billion, and employees numbering almost 12,700 (including 1,000 involved in research and development), Richter is a major Hungarian company, and one of the most important pharma businesses in Central and Eastern Europe.

Pharmaceutical sales by therapeutic areas Central Nervous System

Other

17% Muscle relaxants Gastrointestinal

20%

5% 3%

on the reimbursements granted on prescriptions, Vágó believes U.S. sales could triple to USD 1.5 mln in the next five years, yielding some USD 300 mln in royalties crucial for Richter’s development.

“Richter is in a transition phase, from a branded generic pharma towards a specialty [producer], focusing more on high added value [products] such as novel drugs, oral contraceptives, CNS treatments, and also bio-similars,” he says. But this transition needs money for investment into new research and marketing.

“That’s why it’s important to have income from novel drugs on the market to finance this,” Vágó says. “That’s why we are saying the success of Vrylar is a potential gamechanging story for Richter,” he adds.

19%

Women’s Healthcare

Cardiovascular

36%

Total: EUR 1.144 blm Boasting a market capitalization of some EUR 3.3 bln and with a 25% stake held by the state holding company, Richter shares comprise almost one fifth of the BUX, the BSE’s principal share index, ranking it the third most important corporate on the exchange, behind OTP and MOL. Long a favorite stock on the BSE, Richter’s recent troubles began in 2017, with reports of a small number of patients suffering liver failure when taking Esmya, a drug to treat noncancerous tumors of the womb. The reports triggered an investigation by the European Medicines Agency (EMA), the continent’s pharmaceutical regulator, and the temporary suspension of sales in Europe. (See separate story in box.)

Revenues Flat

The hit from regulatory suspension of Esmya left total revenues last year flat in forint terms (at HUF 445.5 bln) and down 2.7% in euro, at EUR 1.4 bln. True, the

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Source: Gedeon Richter

relaunch of Esmya resulted in reduced impairment costs, which produced net income for 2018 of EUR 98 million, more than triple the EUR 28.8 mln booked the previous year.

But this was less than half the EUR 213 mln recorded in 2016, the year before the Esmya tribulations began.

Perhaps in part because of the upheavals over Esmya, chief executive Gábor Orbán was guarded regarding the immediate outlook for the company, predicting sales growth of just 2-3% for this year when presenting the latest results in February.

Somewhat in contrast, Attila Vágó, senior equity analyst with Concorde Securities, is cautiously bullish on Richter.

“The Esmya story dominated the headlines last year, but this year will be more about Vraylar,” says Vágó, pointing to the success in North America of a drug created to treat central nervous system disorders such as schizophrenia.

Partnership

Based on the active ingredient cariprazine, an original compound developed

by Richter, Vraylar was launched in partnership with Allergan on the U.S. market in 2016.

“The turnover of this drug was, roughly speaking, USD 500 mln last year,” Vágó said, of which USD 90 mln was transferred to Richter in royalty payments.

“This income falls straight into [Richter’s] bottom line. This is a great success so far,” he enthuses.

Further, an application has been made to the U.S. Federal Drug Agency to license Vraylar for the treatment of bipolar depression in addition to schizophrenia. If granted, this could result in significant sales growth, especially since there are fewer rival players in the bipolar depression segment, Vágó argues.

While Vraylar (and it’s European equivalent, Reagila) are expensive drugs, and thus sales depend very much

Richter Left to Pick up Pieces After Regulatory Issues Cripple Esmya Sales The decision by the regulator to suspend European sales of Esmya was a blow to both the Hungarian drug maker and investors, both of whom had had high hopes for Esmya, a drug launched by Richter in 2012-13.

The European Medicines Agency investigation ultimately cleared Esmya for use in May 2018 (albeit under medical restrictions to “minimize the risk of rare but serious liver injury”) and Richter announced a “focused relaunch” of Esmya in Europe last September.

However, the damage had been done. Sales of Esmya slumped from EUR 93 mln in 2017 to just EUR 25.9 mln in 2018, a 72% decline “This hit the market of the drug, definitely,” Attila Vágó, senior equity analyst with Concorde Securities in Budapest, told the Budapest Business Journal.

“This year, the expectations for sales are EUR 35 mln globally, and in the best case, sales could go to EUR 50 mln, perhaps. But competition is getting tougher, and there will be other names coming on the market.”

Furthermore, the troubles in Europe raised regulatory concerns and costs for launching the drug in the United States, dashing plans to launch Esmya in North America, Vágó said.

All this forced Richter to book impairments – losses in the book value of the drug – in 2017-18.

“Once this drug was worth about HUF 100 bln, a little bit less on the balance sheet, and now it’s about a quarter of this,” Vágó said.

Esmya is, of course, still on the market, and theoretically, if the outlook changes, it could regain its former value. But as Vágó puts it: “It’s hard to imagine; it’s a sad story for Richter.”

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Budapest Business Journal | March 1 – March 17, 2019

‘Marketing Police’ aim to Expose ‘Crimes’, but Also Educate “If you have experienced a marketing crime in your company, report it so the Marketing Police can begin an investigation,” reads the message on newly registered website marketingorseg.hu.

Despite the official sounding warnings and imagery reminiscent of law enforcement agencies, the so-called “Marketing Police” is not a real authority but rather an effort by an advertising company to bring attention to bad practices common in the field. The Budapest Business Journal speaks with one of the founders of the initiative: Zoltán Sipos, director of Kreatív Kontroll talks about the goals and the ideas behind the concept as well as the future of advertising.

ZALÁN ZUBOR

BBJ: How did you come up with the idea of a Marketing Police?

Zoltán Sipos: I don’t want to hide the fact that our motivation was partially to give our company more exposure. We do, however, have a mission as well. Currently, there is a change of generations in the field of marketing in Hungary; older professionals are giving way to young business leaders. During this process, we can see a certain drop in the overall quality of services provided by marketing companies. The problem is that the marketing community has little ability to correct itself. As a result, customers – mostly small business owners – have a hard time deciding who to trust.

Zoltán Sipos of Kreatív Kontroll.

BBJ: Currently your site has little content. What do you want to present on it in the future? Do you plan to name and shame companies that use unethical or unprofessional practices?

ZS: We want to showcase bad practices in marketing. We have neither authority to, nor do we want to, shame concrete individuals or companies. The term “Marketing Police” is mostly just guerilla marketing. We parody the communication panels of law enforcement agencies to gain more attention and get our message across more effectively.

Our message is that marketing is a legitimate profession. It is not the load of quackery many people think it is, but a profession based on numbers and hard data. Or it should be. However, due to the lack of rigorous standards in the marketing community, many businesses have had unpleasant experiences with marketing companies and now believe that either every so called marketing expert is a charlatan or that good marketing costs too much. This is what we would like to change.

Later we plan to launch training programs for business owners, showing them how to choose between marketingrelated offers. We are also going to offer materials on buying ad space or about how Google’s and Facebook’s algorithms work.

BBJ: What are “marketing crimes”?

ZS: Let’s say a marketing agency gets to set an advertising budget for a company. At the end of the year, charts show that Google ads bring much more revenue than banner ads bought on news websites. However next year, they put even more money into banner ads. Why? Because banner ad space is bought through sales houses, and unlike Google and Facebook, they pay back a percentage of the price to the middle man – the advertising company.

This is an example of a “marketing crime” because the advertising company cares more about its own interest than the interest of the customer. Another common “crime” is when the agency omits to recommend new effective tools to the customer because they do not have the capacity to implement them. For example, when the company does not have an employee adept at using Instagram, so they never recommend using the platform to the customer, fearing that they would contract with another agency.

We can humorously call badly design websites or other promotional material crimes as well. I like to liken those to pollution.

BBJ: Do you plan to tackle ethics in advertising?

ZS: Yes, we plan to bring attention to the rules found in the code of the Hungarian Advertising Alliance (MRSZ). Online marketing and direct marketing are both largely unregulated and are often aimed at vulnerable people such as children, the elderly and people suffering from illness.

We have no issue with showcasing such ads as bad examples, especially ones that give false promises of treating medical conditions. Such ads can even be illegal; naturally, only the authorities can start a prosecution. There are legitimate reasons while marketing experts have gained a bad reputation in recent years, and we should address these.

BBJ: On your site you claim that content marketing is now an indispensable part of a marketing plan. Why? ZS: I prefer the term permission marketing, because it is about corporate content that people decide to view. In the past, advertising was mainly about what we can call invasive ads: television spots, posters, banner ads on websites and so on. These are getting less and less effective. Most people did not really want to see these ads

Business | 9

but they were unavoidable. However, today I can easily block banners and popups on the internet and skip commercials on my digital television.

More and more people only see ads that they are actually interested in: they subscribed to a newsletter, clicked on a video or downloaded a catalogue.

Companies now have to build their own media and fill it with content that people actually find interesting.

BBJ: Might that not lead to problems?

It is becoming harder to distinguish between independent opinions and paid content.

ZS: Currently, this is often true.

Influencers, for example, often omit to say if they were paid to talk about a product or not. I think the ethical thing to do is to indicate if a content has been paid for in some way, although I do not think it is necessary if we are talking about a medium that is directly run by a company.

You do not need to repeat at the end of every article on the official Coca-Cola blog that “This article has been sponsored

by Coca-Cola”.

Currently a lot of Hungarian companies try to hide that they pay for content marketing but I think they should not be ashamed of it. Maybe it is because both companies and influencers see marketing itself as a form of manipulation and only indicate paid content when they are legally required to. But if more rigorous ethics become widespread in the field, having paid content will be seen as more normal.

“We want to showcase bad practices in marketing. We have neither authority to, nor do we want to, shame concrete individuals or companies. The term “Marketing Police” is mostly just guerilla marketing. We parody the communication panels of law enforcement agencies to gain more attention and get our message across more effectively.”

BBJ: There is another consequence of the decline of invasive advertising: banners and ad space is how the media, including online news sites can make a living. Can they survive if traditional advertising disappears?

ZS: I am not that pessimistic about their future. In the United States, traditional magazines are successfully experimenting with alternative financing models such as subscription and donations. Building readers’ clubs are even more effective, where paying members get access to extra content and can attend offline events.

It is inevitable that magazines have to rely more on branded content, including articles or videos sponsored by companies, showcasing products in an entertaining or informative way.

10 | 2

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Budapest Business Journal | March 1 – March 17, 2019

Photo by Marianna Sárközy

Blazing a Trail in Budapest for Women and Finland In becoming the fifth BBJ Expat CEO of the Year winner on January 25, TairaJulia Lammi also became the first woman to scoop the award, and the first Finn. She talks to the Budapest Business Journal about what the award means, and how she sees the economy in Hungary developing.

culture. When it comes to similarities, there are some similar words, similarities in the grammar, so it is easier for me to understand some rules since we have the same ones. Also the intonations and pronunciation is close; as I would describe it, relatives, yes, but probably distant cousins.

BBJ: And are there similarities in the way Finns and Hungarians go about their work?

T-J L: I think both nations are hardworking people and proud of their achievements. In addition, I believe both Finns and Hungarians could be even more vocal about the achievements over the years. So, some humbleness is there as well in both nations. Also, I think there is passion for innovation and creative thinking in both working environments.

ROBIN MARSHALL

BBJ: You won from a very strong field.

Why do you think you were chosen as the Expat CEO of the Year?

Taira-Julia Lammi: Well, I find it difficult to speculate on this question. There is certain criteria that the jury is looking at the candidates against, so I believe matching this criteria is the reason. I have worked very hard with my team in the area of power and automation and helping Hungarian businesses to become more energy efficient, automated and digitalized.

We have shared our knowledge in many associations and chambers for the benefit of Hungarian businesses.

BBJ: You are the first woman to win the award. What message do you think that sends to women at work?

T-J L: I am happy to be the first woman Expat CEO to receive this prize and it is a prize for all the women CEOs today!

Taira-Julia Lammi, CEO of ABB Hungary.

Definitely I believe this will bring a positive message to female leaders and to all working women. To bring the very much needed “you can do it”-spirit to many women pursuing their career.

Furthermore, it is important to talk about women at work and women making a career; it is not something to take for granted anywhere in the world. The old role models are difficult to break and we all

need role models to guide the way and give us ideas to think about.

BBJ: Hungary is often described as a paternalistic society. Is this something you have come across in your professional dealings in the country?

T-J L: Well, I think we need more and more female role models for the younger generations to break those traditional role models. It is apparent in many other countries, including Hungary, that women take care of the majority of the household tasks, child care etc. Women tend to work shorter hours in the office to be able to cope the family life. It is important to realize that the world is not the same as it was in the 1950s, or even the ’90s.

Working environments have changed, societies have changed and more and more professions have become gender-neutral.

Women and men can and should be able to work side by side in any profession.

BBJ: Famously, Hungarian and Finnish are both classified as part of the same Finno-Ugric language grouping. How is your Hungarian? Do you see much in the way of similarities?

T-J L: I have studied Hungarian for more than two years now and I am progressing slowly but steadily. I survive in small discussions. To me, it is important way to be closer to the people and to the

BBJ: How do you consider the Hungarian regulatory environment regarding predictability and investor friendliness?

T-J L: Of course, I have somewhat limited view on that, but I think the investment numbers speak for themselves. Year on year, more foreign investors and companies set foot in Hungary. If Hungary were not predictable and investor friendly, that would not happen. The biggest challenge I see for the future is the labor force. It is crucial to ensure the talent pool for all companies.

BBJ: In your winner’s speech, you talked of Hungary riding the wave of Industry 4.0. How do you think this might show itself going forward?

T-J L: Just to pick one example from many, I would say robotics. Having the industries in Hungary be more automated by use of robots and connected services related to this is going to be on the agenda of many companies. And based on the statistics of IFR (International Federation of Robots), the robot density places Hungary 25th worldwide, but behind other CEE countries like Czech Republic, Slovenia and Slovakia.

BBJ: Everyone in Hungary talks about the challenges presented by the labor challenge. How is ABB coping?

T-J L: Well, it is a topic for us as well, both for office employees and with our factory employees. The first priority for us is to retain the people as much as we can. We have wellbeing programs, we develop our people by providing them opportunities to get training, or learning on the job experiences; also, it is important that we have been able to show to our talents that there is job rotation as well. In some parts of the company, these activities have been successful and our retention rate is not too bad. We also put a lot of focus on team leader and manager work; having good supervisors is very important to the people. And another very important element is that we do our best to listen to our employees.

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Budapest Business Journal | March 1 – March 17, 2019

Business | 11

The Case for Gold as an Investment: Part II Part I of this series tackled the value of gold as a portfolio hedge. In this article, Les Nemethy and Sergey Glekov discuss the very limited stock of gold within the world, and the supply and demand of gold, elements an investor should also understand before investing is gold.

Gold demand in 2018, tones and percentage Jewelry 651.5

Technology

15%

Investment Central banks & other inst.

2,200

1,159.1

50%

27%

Technology 334.6

8%

Source: World Gold Council

This article (and also Part III) will highlight the low stock and supply of gold, coupled with possible spikes in demand, that have the potential to create substantial appreciation in gold prices.

Supply

The total amount of gold mined in the history of the world is approximately 193,000 tones, according to the World Gold Council. Estimates of the global amount of gold differ: a recent BBC article estimates it at

171,300 tonnes.

This represents a cube of 20.7 meters on each side – when you think about it, an incredibly small amount.

Furthermore, there does not seem to be that much new supply coming onto the market, only about 3,000 tonnes per year (in addition to a smaller amount that is recycled).

The amount mined is quite constant.

Against that backdrop, the U.S. Geological Survey estimates there are only 52,000 tonnes of minable gold in the world. Of course, more could be identified, but environmentalists are also making it much more difficult for new mines to be approved.

China is the leading gold producing country. However, a production growth pattern changed to decline in 20172018, and is likely to continue, due to stricter environmental regulations.

These regulations, particularly related to cyanide in tailings, have had a dramatic impact on national gold production.

(However, gold supply could increase from Russia, given a large number of new projects under development, Mining.com notes.)

In short, it seems the stock of gold is finite and only limited supply is being added annually to the stock.

Top 15 countries/financial institutions based on gold holdings as of February 2019 Country / Organization

Tonnes

% of reserves

United States

8,133.5

74.8%

2

Germany

3,369.7

70.1%

3

International Monetary Fund

2,814

NA

4

Italy

2,451.8

66.3%

5

France

2,436

60.2%

1

to 31.5 tonnes – to hedge against future structural changes in the international financial system and because of its lack of counterparty or credit risk. Polish gold reserves rose by 25.7 tones in 2018.

According to John Reade, chief market strategist at the World Gold Council: “Reserve asset managers at central banks recognize that they have a very high proportion of their foreign reserves is held in U.S. dollars.

If you are looking for an alternative to the U.S. dollar then I think gold looks more attractive than it did ten or 15 years ago.

If you look at alternative reserve currencies, there are issues with all of them.”

6

Russia

2,113

18.5%

7

Mainland China

1,852.5

2.4%

8

Switzerland

1,040

5.4%

9

Japan

765.2

2.5%

10

Netherlands

612.5

65.6%

11

India

598.6

6.2%

12

European Central Bank

504.8

26.4%

13

Taiwan

423.6

3.6%

14

Portugal

382.5

63.2%

15

Kazakhstan

350.4

46.6% Source: World Gold Council

Demand

Demand for gold, at a very macro level, is best summed up by the following chart: Gold demand in 2018, tonnes and percentage. Source: World Gold Council

Jewelry

In 2018, jewelry was by far the largest source of demand, particularly in Asia (India and China).

Gold demand in China tripled between 2004 and 2013, the World Gold Council says. There is potential for further increase in gold demand in China and India, due to the fact that reverence for gold seems culturally ingrained, and rising affluence and growing middle classes in both countries.

Gold demand has also been growing in other Asian countries like Indonesia and Vietnam.

Central Banks

Another source of demand – and recently a growing one – has been central banks.

According to the IMF, official world gold holdings are almost 33.9 thousand tons as of February 2019. The United States and Germany have the highest official holding, as gold exceeds 70% of their reserves.

Demand from central banks has recently been increasing significantly, from 9% of total gold demand in 2017 to 15% in 2018, the WGC says. Some past and future potential sources for central bank demand: • Both Russia and China have been diversifying away from US dollar reserves (“de-dollarising”). For these countries, holding dollar reserves is a likely source of vulnerability, given the tensions with the United States. Gold represents a safe haven, and also a portfolio diversifier.

(According to the World Gold Council survey, 76% of central banks view gold’s role as a safe haven asset as highly relevant, while 59% cited its effectiveness as a portfolio diversifier.)

• China also seeks a greater global role for its currency, the yuan.

• Central banks of smaller countries also actively purchased gold last year, including Hungary and Poland, following Article 7 proceedings that were launched by the EU against the two countries. Hungary increased its gold reserves by ten times

The technology sector and especially electronics is a third source of gold demand because of its physical properties: pliability, corrosion and tarnish resistance.

It is ideal for coatings, for connectors and contacts, and gold bonding wire within semiconductor packages.

Due to cheaper alternatives, gold’s share of the wire bonding market has significantly dropped since 2010. However, in 2017, gold use in technology rose by 3%, the first year-on-year increase since 2010.

In 2018, this rose by another percentage point, reaching 334.6 tonnes. The strong demand for consumer electronics and ongoing electrification in the automotive sector drove this annual growth.

There are also many new uses that may drive demand for gold in the automotive, electronics, industrial, healthcare (particularly related to gold in nanoparticulate form), and telecommunications (e.g. 5G) sectors.

Investment demand for gold has been the most volatile area. This includes gold bar and coin, gold-backed ETF’s. Demand goes up when investors require a safe haven. As the world economy has done well, perception of risk has been low, and the price of gold has performed poorly.

The opposite is also true. If financial markets were to become even more volatile, or demand for safe haven investments would increase, gold has the potential to perform extremely well.

To summarize: analysis of supply and demand for gold shows that the fundamentals may be in place for a rise in gold prices.

The third and last article in this series will focus on the demand for gold for investment purposes, and summarize the case for investing a portion of one’s portfolio in gold.

Disclosure: Les Nemethy is long on gold coin, gold miners, and gold royalties. The authors wrote this article, which expresses their own opinions. They are not receiving compensation for this article (other than from Seeking Alpha, a crowd-sourced content service for financial markets), and have no business relationship with any company marketing or selling gold. This article should not be construed as investment advice.

Les Nemethy is CEO of Euro-Phoenix (www.europhoenix.com), a Central European corporate finance firm, author of Business Exit Planning (www. businessexitplanningbook.com) and a former president of the American Chamber of Commerce in Hungary.

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Budapest Business Journal | March 1 – March 17, 2019

Special Report Office Equipment

What are the trends shaping office equipment supply and demand in Hungary and, equally importantly, office fitout?

Designing an Award-winning Office

13

Tenants Keep Requirements High in a Booming Office Market

14

Property Developers see Tech as a Blessing, Not a Curse

16

Market Talk: Flexible Working, Digital Support a Must in High Value-added Industries

18

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Budapest Business Journal | March 1 – March 17, 2019

Designing an Award-winning Office Creativity prevailed at this year’s Office of the Year Awards, organized for the ninth time by iroda. hu, part of ingatlan. com group. Original ideas abounded: among the winners was a company that recreated the atmosphere of foreign metropolises, another that created an office from a ruin pub and some that even managed to attract employees back from abroad.

ZSÓFIA VÉGH

For young jobseekers, the second most important consideration when it comes to picking their future workplace, right after salary, is the office environment. Since the ratio of Millennials and Generation Z employees is growing, companies are starting to pay more attention to the office element of the job offer. They simply cannot afford not to, or else they could easily lose a prospective candidate.

Employers in Hungary are not spared by these global trends either; the labor shortage and a younger workforce are forcing them come up with original ideas.

It may take more time and money to create something unique, but it usually pays off, and not only for the client.

For last year’s grand prize winner, communication agency ACG, the award brought more prestige and a cover page on design magazine Octogon. For the designer studio it worked with, less well known before this job, it brought publicity and a real entry to the market. It is the philosophy of ACG to support young talents, be them artists, fashion designers or architects.

“This is a lot of responsibility but because of the commitment, creativity and the enthusiasm they had for this project, it was well worth it,” Nikolett Blaskó CEO of ACG says.

One of the major challenges today is retaining employees, alongside attracting young talents, and money alone won’t suffice.

But ACG’s new office has worked out in this sense; it even helped attract back some people who left the country earlier, the CEO says.

Finding the perfect location and building, a tram-depot, took more than two years.

Blaskó says the company did not want to settle earlier, but she acknowledges there are many companies that cannot wait that long. Less time can limit the design

possibilities , which may result in concepts that won’t fit the given company entirely.

“Prior to moving, architects spent days with us at our previous headquarters, studying the company structure and culture, how people interact, making us fill in surveys,” she recalls.

Comfortable and Playful

The wait proved worth it. Besides providing a comfortable and playful space for workers, the new environment has an impact on how the agency is perceived. The location allows for some elements not generally seen in offices. Do you want to bring your pets in? No problem! Want to take a break in the skateboard park inside? You can.

The walls are also tall enough to allow the flying of drones, so don’t be surprised to see a few circling above your head. Plus they have a beer tap, a coke machine, big, bright, spacious rooms, functional and highquality chairs to prevent backache; the list goes on. Aesthetics were important as well; the brand-building function of the design for a communication agency is a must.

There are other positives to the new office.

“Our colleagues used to spend a lot of time commuting; now clients come here to have meetings,” Blaskó says. Even passers-by come in sometimes to have a look.

The year’s winning project also has something to do with traveling, though workers don’t actually need to leave the office to do that. Designed by architecture firm Stay in Hungary Kft. and interior design studio Mashroom Design, the U.S. software firm ION-Dealogic Planet’s new Budapest office won the grand prize this year.

The company’s existing office, created by the same designers, also won the grand prize two years ago. Then the designers wanted to demonstrate the fast-paced development of the Dealogic, which became a listed company in

20 years,

by designing a city with buses, library, market, etc., everything a busy city can offer.

When Dealogic was bought up by ION and needed to expand its office space, it again commissioned the winning team.

This time around, the designers drew

Special Report | 13 from the nine cities in the world where the company has offices, from London to Mumbai to Sao Paolo.

“We wanted to bring those nine cities to the Budapest office and see how we could incorporate them into the design,” designer Gábor Szegő told the Budapest Business Journal.

When it comes to designing an office, Szegő says his team usually start off by having the client tell them what they want. Beyond some fixed elements such as the number of people the company wants to seat or the number of meeting rooms it wishes to have, they are given leeway to create a concept they think is in line with the client’s needs. In this case, workstations were separated with lounges, meeting areas were named after cities.

In “Mumbai”, colorful wall paintings – street art done by Hungarian artists – green plants, pink neon lights were used to recreate a bustling city environment.

“Beijing”, a separate meeting room, uses traditional patterns, modernist arches and clear, muted colors. The “Tokyo” meeting room has the local metro as its main element, while “London” has grey brick walls and dark front doors with golden door handles.

Each maintains a district character while separating different functions of the office.

Category Winners 2018 • Office of the Year Grand Prize: ION-Dealogic Planet • Office of the Year Design award: Neuschloss Palota, Redwood Holding Iroda • Office of the Year Small business award: Antavo • Office of the Year Large company award: BlackRock • Office of the Year Evolution award: ION-Dealogic Planet • Office of the Year Employer Branding: Ericsson House • Co-working space of the Year: Egis Közösségi Munkatér • Co-working space of the Year Special award: Belvárosi Közösségi Tér

14 | 3

Special Report

www.bbj.hu

Budapest Business Journal | March 1 – March 17, 2019

Tenants Keep Requirements High in a Booming Office Market The office property sector has seen the vacancy rate dropping to record lows.

Tenants are still, however, raising the bar high in their demands, as offering the best facilities for their employees is a game changer in the battle for attracting and then keeping the best talents in an ever tighter labor market.

CHRISTIAN KESZTHELYI

Last year saw an outstanding performance in the capital’s office market. With a record high annual volume of 385,787 sqm in supply, the total completion volume reached 230,575 sqm, according to figures Atenor sent the Budapest Business Journal.

An impressive 98% is already pre-leased and there is already an approximately 50% occupancy rate for those projects which are due to be

delivered in

2019,

employers must offer state-of-the-facilities for their future employees to win them over, and to keep existing staff. This also has a knock-on effect for developers.

“Increasingly higher requirements are tightly linked to human resources,” Atenor tells the BBJ. The dropping unemployment rate and growing demand for talents result in a true challenge.

“Occupiers need to attract and satisfy the new younger generation who have a very different attitude and value system.

Therefore the location, the infrastructure, the services and amenities are the most important factors ever. This generation is searching for messages that we have to define carefully and that appear constantly,” Atenor adds.

Today, tenants require good-quality, green office buildings, which are becoming a standard on the market, Property Market tells the BBJ.

Atenor adds. By the end of 2018, the Budapest office market vacancy rate had reached a record low level of 7.3%.

The aforementioned figures would suggest that property developers have never seen an easier time. However, the devil is in the detail, and the office market has a handful More Focus of factors that cannot be ignored. The labor “The way they structure their offices, the shortage is creating challenges Europelayouts/space plans, are what has changed wide in many sectors. The lack of talents a lot in the last years. While earlier offices translates to the office market simply:

very more functional, nowadays, creating the work environment is receives more focus. This is a tool for recruiting or retaining employees. The pressure it puts on the market is not really in terms of technical requirement but regarding the timing,” says Bori Telekesi-Csuhay, sales and asset management director of Property Market. She says that tenants often are not aware of the lack of space, and do not make quick enough decisions for relocation or renting in time.

Tenants looking for office space need not only to focus on how quickly they can grab a vacant spot, but also have to factor in increasing rental prices.

“In 2018, the vacancy rates continued to decline [… and] this trend has also been reflected in the office rental prices. As a result, the EUR 16 per sqm is an average rental price on the domestic market, while in downtown Budapest it can reach

up to

EUR 20.

This year, we expect a further drop in the vacancy rate,” Tibor Tatár, CEO of Futureal tells the BBJ. However, and surprisingly, this might not necessarily spark fierce competition in the market. “We do not believe that increasing rental rates would result in enormous competition for office spaces,” says Atenor.

“As mentioned earlier, we experience that our existing and future potential tenants now fully understand that being accommodated in a top-quality green environment and in an efficient building can result in long-term benefits for them and for their employees. For this, they are definitely ready to pay more,” Atenor explains.

Do tenants really need to pay gradually increasing rents? What are the factors driving this price hike? “In reality, the Budapest office market is characterized by significant tenant fluctuation paired

with tenants’ higher demands. Although higher rental prices may suggest that there is huge competition, the increase can be caused by higher construction and fitting-out costs as well, due to creative and innovative solutions in the office,” TriGranit tells the BBJ.

Building Costs

It appears the dropping vacancy rate is not the only factor pushing rents higher.

“The rents are not only increasing due to the fact that there is a very low vacancy on the market; it is mainly due to a huge lack of workforce in the construction market, therefore the cost of building an office building are significantly higher than it used to be. Even though yields are

“The rents are not only increasing due to the fact that there is a very low vacancy on the market; it is mainly due to a huge lack of workforce in the construction market, therefore the cost of building an office building are significantly higher than it used to be. Even though yields are decreasing, the change in the yields does not compensate for this additional cost.”

decreasing, the change in the yields does not compensate for this additional cost,” adds Telekesi-Csuhay of Property Market.

The past years have seen the emergence of a new type of office environment: coworking spaces and service hubs. Digital nomadism is the new black; grabbing a laptop and sitting down to work for a few hours wherever there is connectivity can look truly tempting.

Does this pose a threat to the office market?

“Digital nomads can work from anywhere, but they prefer working in a place that has proper infrastructure,” Atenor says.

“That is how we finally end up again at the importance of a good and professional working environment,” Atenor adds.

“The popularity of serviced offices, coworking spaces and hubs is still unbroken in Budapest, but we cannot disregard the importance of location regarding these offices,” says TriGranit.

“Flexible workplace covers an increasingly wide spectrum from traditional serviced office operators to coworking spaces, while embracing both managed and virtual offices,” TriGranit adds.

At the end of the day, coworking spaces occupy the very same office market, rather than stealing the industry’s momentum.

“Generally, we have classic office buildings with flexible components for our tenants; we help when space requirements change by offering certain limited options for the uncomplicated reduction or expansion of space. Regarding coworking spaces, we are aware that demand is rising and we are working on further flexible solutions,” Viktor Nagy, country manager for operations at White House by GTC in Budapest. Immofinanz Hungary says.

www.bbj.hu

Budapest Business Journal | March 1 – March 17, 2019

PRESENTED CONTENT

3

Microsoft: 25 Years at the Heart of a Developing, Growing Community Bence Orbán, Customer Success Product Manager at Microsoft Hungary, talks about the software giant’s plans and targets, and its “Modern Workplace” platform.

BBJ STAFF

BBJ: What are the business targets for Microsoft Hungary for 2019?

Bence Orbán: Microsoft Hungary is the engine of a developing, constantly growing community that consists of partners, suppliers, students, teachers and clients. During the 25 years Microsoft has been in Hungary, it has become a leader in digital rejuvenation.

Our aim is to develop the digital world with consistent innovation. Microsoft isn’t just a leading technological and efficiency provider worldwide, but also has the safest infrastructure in the world.

Microsoft spends over USD 1 billion on security-related R&D. Our data centers, and our quantum computers that are under development, meet the strict data protection regulations of the United States and the European Union; that assures people in the economy and public service can trust Microsoft with their data.

We are a unique cloud service provider, giving our customers the infrastructure and platform to develop their own applications, while also providing a unique set of Software as a Service solutions. We would like to have every single SME, corporate and enterprise customer use our unique “Modern

Bence Orbán Workplace” platform, which provides an all-in, end-to-end package of solutions, consisting of well-known productivity and content creation software, enterprise grade e-mail service, secure document management, enterprise social network, task and project management and, last but not least, a brand new collaboration platform, which integrates all the services into one single interface.

Our leading solution is Office 365, in both consumer and commercial versions; however, we’re seeing growing demand, especially in the corporate and enterprise segments, for our newest platform solution, Microsoft 365. Our “Modern Workplace” solution integrates Windows, as an operating system with Office 365, and also adds an intelligent and enterprise grade security solution, Enterprise Mobility BBJ: What are your leading products and Security. Microsoft 365 is also sold in Hungary? available for SMEs, where demand is BO: Of course, Microsoft’s best-known also building; however due to market products are the Windows operating maturity, we expect that the demand in system and the Microsoft Office business this space for will definitely be higher productivity software. However, we’re in the coming years. One of the most making a huge shift from license selling important pillars is teamwork and to providing cloud-based services to our collaboration, and definitely the new consumer and commercial customers. “star” of our platform is Microsoft Teams, Therefore we also see a shift in the a single user interface that integrates demand towards our “Modern Workplace” every productivity solution from solutions, instead of just looking for communication, online conferencing and and buying the current Windows or task management to data visualization, Office products. into the same user experience. The

Special Report | 15 demand for this solution is already hot, and the majority of it is coming from the SME space. The reason for that is Microsoft Teams has a colorful, easy to understand user interface, with great smartphone applications (both Android and iOS are supported), therefore it requires minimal user training and adoption.

We do not have specific numbers for Hungary, but we performed well in Q2 as new and existing customers continue to adopt our cloud services. The investments we’ve been making in these products (including greater integration with data, intelligence and machine learning) are driving increased usage.

BBJ: What are the upcoming trends for business software in Hungary?

BO: The Hungarian business market more or less follows international trends, namely cloud and mobility continue to be the biggest drivers for enterprise spend, providing significant opportunity for Microsoft in Hungary, too. We continue to outline the “Modern Workplace”, which is about a new way of work, mobility and employee engagement, including Firstline workers scenarios, where even employees without computer access (e.g. employees in manufacturing or in retail) have the ability to connect with the “outer loop” of the company, so they can access information, do training on the go, and talk to anyone in the company with the help of our powerful collaboration platform. We definitely put more emphasis in the near future on scenarios like mobility, chatbot/ AI-assisted conversations, machine learning and security. The unique value of the “Modern Workplace” platform is that it’s independent from regions, countries and cultures, so exactly the same, professional and enterprise grade software and services are available in Hungary as in the United States, for example.

BBJ: Hungary has a good reputation for producing IT engineers. What contributions do they make to Microsoft internationally?

BO: The latest contribution to Microsoft from Hungary is coming from a developer company, 360world, working on HoloLens. Currently they are working on a holographic version of Skype, together with HoloLens product team in Redmond, in the States.

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16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | March 1 – March 17, 2019

Property Developers see Tech as a Blessing, Not a Curse You might think disruptive technological solutions increase the challenges for property developers in order to meet the requirements of offering topnotch office spaces for tenants, but innovation rather offers them leeway to lure companies wanting to rent with a wide selection of connectivity services.

CHRISTIAN KESZTHELYI

Connectivity is changing the way we think not only about our private lives, but also how we do business. Innovation has become an integral part of our work life, a fact that gives property developers endless possibilities in fitting out offices in order to satiate the technological hunger of companies buying and renting office spaces.

“Due to changing customer demands, the lack of workforce and the rise of digitalization, the office, retail and residential property sectors are taking advantage of innovation and emerging technologies,” Gábor Radványi, chief architect at Futureal, tells the Budapest Business Journal.

“Disruptive technologies have reshaped customer expectations; therefore, they have become more open to innovative and sustainable solutions, whether it comes to buying a new property or renting commercial or office spaces,” he explains.

Technological solutions are not a “must” anymore, they have evolved into something much more important. They are a point of reference for comfort, as we are connected to digital ecosystems, and increasingly adopting smart solutions as part of our everyday lives.

“Trends are going in the direction of sustainable and green solutions providing comfort for the employees of the office building. In development, prefabrication and modularization is a strengthening trend that requires creativity and smart engineering to make the right balance between increasing cost and faster implementation,” Radványi adds.

“In operating real estate, digitalization aims to increase comfort and optimize energy consumption as a result of increasing environmental awareness. Smart solutions become part of the everyday of our business in the field of operation, maintenance, sustainability, comfort and services.”

Digitalization is transforming our business processes by the day, while it also substantially changes how customers communicate.

Reorganized CRM

“In view of these developments, we have completely reorganized our customer relations management (CRM). That means:

employees, customers and services are now all on the same platform. And we can now act even faster with a better focus on our tenants, which leads to the further improvement of our customer service,” Viktor Nagy, country manager of operations at Immofinanz Hungary, tells the BBJ. The most visible trends dictate that the everyday life of tenants must simultaneously be made easier, and more cost-effective. Developers are in effect compelled to keep pace with the continuous innovations, and deliver technological developments, in addition to the evergreen matter of wellbeing.

“Our specially designed ‘myhive’ office app, for example, provides a wide range of information on events in the respective office building and in the ‘myhive’ community. It also supports Immofinanz’s central services, for example through a direct feedback tool. In this way, our tenants register for events, submit suggestions and requests, and also file damage reports quickly, easily and at any time,” Nagy says.

In a statement sent to the BBJ, developer Skanska said it places a special emphasis on connectivity. Each of its projects is realized using smart infrastructure, which it says is beneficial for all tenants. This infrastructure links building functions, including activity-based parking, mobile access control, office space management tools as well as a virtual reception with

a community aspect, such as social feed, public transport and a building guide.

Offering optional services, tenants can get hold of features such as indoor positioning, room booking integration, and a work environment management and optimization system, as well as green education and Skanska’s support in interior LEED and WELL certification, the developer says.

On the other hand, more modern technology does not necessarily mean less green areas. “Companies nowadays put a huge emphasis on designing a green environment, which means office complexes have inner gardens and a roof terraces for example,” Futureal’s Radványi explains.

“Buildings can be equipped with automated shading technology, energyefficient mechanical systems, bicycle storage, showers, and electric car chargers.

The immediate vicinity of the office building has an impact the health of the employees working in the building. An urban space with a statue, fountain and seating features awaits passers-by and makes the employees feel good as they walk in and out of the building,” he adds.

Due to the increasing number of IT companies the latest office building has been designed to meet the requirements of the digital age. “Features that are crucial for tech companies, such as higher electrical capacity and dual power supply providing continuous, uninterrupted operation, also receive special attention,” Radványi notes.

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Leave the Flipchart Behind: 21st CENTURY MEETING ROOMS As work practices change, the need to effectively communicate and share information becomes even more crucial to the efficiency of running a company. We work together with people from different time zones and continents around the world, we use a third language instead of our own, and various technologies help us in communication; all of these can cause difficulties in understanding. In the last few years, LG has developed several professional display solutions especially for meeting rooms, to make company operations faster and more efficient, whether you use the cutting-edge digital technologies for video conferences, training sessions or meetings.

Powerful Collaboration Tools The Cisco Spark Room Kit and Room Kit Plus are powerful collaboration solutions. The kits, integrated with LG’s compatible commercial displays, bring more intelligence and usability to small- or large-sized meeting rooms, whether registered on the premises or through the cloud.

The Room Kit, which includes camera, codec, speakers, and microphones integrated into a single device, is ideal for rooms that seat up to seven people. The Room Kit Plus, with a separate quad-camera bar, can accommodate larger and deeper rooms of up to 14 people. Both products offer sophisticated camera technologies that bring speaker-tracking capabilities to every room.

When coupled with LG displays, they offer an outstanding, crystal clear, turnkey conferencing solution, and ensure that the user experience is simple, straightforward, eye catching and engaging.

Inbuilt features enable smarter meetings, presentation capabilities and device integrations. Both kits offer seamless and unified control of displays via the Cisco Touch 10 control unit, with global and coordinated support of LG and Cisco behind it.

Don’t Worrying About the Technical Side LG offers professional Ultra HD business displays in various sizes from 49-98 inches. These 4K displays deliver an immersive viewing experience with four-times higher definition picture quality than full HD for outstanding picture quality. LG’s panels use on average 31% less power compared to conventional RGB panels for lower power consumption, lower running costs and superior

eco credentials. Utilizing IPS display technology means colors are more vivid, sharper and offer a wide viewing angle as well as being durable and guaranteed for 24/7 use.

These video conferencing display solutions are optimized for low latency video content and offer effective and accurate real time content delivery for the best possible presentation and accurate display of information. All of the features of the Cisco Spark Room Kit solution are supported, meaning you need spend less time worrying about the technical side of presentation, and more time on fine tuning your delivery.

Furthermore, a host of innovative features ensure you can get our content across in a straightforward fashion with absolute assurance and simplicity. With the two solutions – Cisco Spark and a compatible 4K display – coupled, you can share control from a desktop or a wireless source and stream video, live content or simple face-to-face conversation.

130-inch Meeting Room LED Screen without bezels Another solution debuted this year is the LAA series bezel-less 130-inch Meeting Room LED Screen. With its 1.5 mm pixel pitch, the display was designed for mid- to large-sized conference rooms.

The embedded audio system allows users to communicate and share images without the need for external speakers, which offers unique possibilities for rooms with a clear, minimalist design.

With optional software, this display solution is compatible with Crestron’s professional room control system.

4K Digital Board With Active Pen LG’s brand new, 86-inch 4K Interactive Digital Board with active pen boasts IPS In-cell Touch technology with a sleek 29 mm bezel design. The display employs an innovative direct bonding process to eliminate the gap between the LCD panel and protective glass.

This combination delivers a faster response time for a realistic writing experience that is perfect for corporate conference rooms.

The digital solution can take the place of outdated flipcharts and post-its, and make meetings and training sessions more effective with seamless and realistic user experience. The Digital Board debuted this year globally, but is already available in the CEE region.

Cisco Spark Room Kits, Professional UHD Commercial Displays, LAA series Meeting Room LED Screens and the 4K Digital Board of LG are all already available in Hungary.

For more information, visit lg.com/global/business

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | March 1 – March 17, 2019

Market Talk: Flexible Working, Digital Support a Must in High Value-added Industries In a recent episode of “The way we work”, a TED Talk video series where thinkers offer practical wisdom and insight into how we can adapt and thrive amid changing workplace conventions, Matt Mullenweg, the CEO of Automattic talks about why working from home is good for business.

ZSÓFIA VÉGH

The company has over 800 employees spread across the United States and the globe. Some of them choose not even to have a home base; they are nomads traveling through Airbnbs, they are in new places every day, week or month. Others work from home, from co-working offices or cafés. They even get a co-working stipend that they can put towards a co-working space or just to buy coffee, so they don’t get kicked out of the coffee shop.

All of this is not by chance; the company purposefully chooses to give people the freedom to create their own workspace. Automattic, the company behind WordPress.com, Jetpack and WooasCommerce, pointedly does not refer to a remote workforce, as that word sets

up the expectation that some people are essential, while others are not. It prefers the term “distributed workforce”, which suggests that everyone is on an equal playing field, Mullenweg says.

People do meet in person: they gather every year for a short burst of time contrary to normal offices where people are together for the most part. The CEO mentions a number of other positives to this form of employment, but the main takeaway is that giving people the flexibility to make their own work environment will result in better performance.

Sensible as that may sound, apart from a handful of companies, most still require people to show up almost every day. On a brighter note, they are doing a lot more than years ago to make them feel at home.

Literally. Offices today are starting to look more like a living room than a working space, says Diána Sebestyén, business development manager at Swedish office furniture supplier Kinnarps. Comfy couches, upholstered armchairs, fluffy rugs, vibrant and colorful wallpapers; all give the impression of a stylish home.

“Offices are beginning to move away from

rigid business environments,” Réka Varjú, head of office furniture department at Basic Collection, a supplier of contract furniture, told the Budapest Business Journal. The company has a strong presence in the HoReCa segment (it has a wide selection of soft sittings, upholstered colorful pieces of furniture) but it is also a significant player in the office market abroad.

It furnished several MySpace co-working offices across Europe including Frankfurt, Munich, Berlin, and Amsterdam.

That experience and the booming office market was the logic behind Basic Collection deciding to move into the office field in Hungary as well.

Less Crowded, More Comfortable Contrary to previous practices where companies prioritized maximizing the use of space, trying to seat as many people in a room as possible, they are now making an effort to make it more comfortable. This also means that the trinity of table-chairstorage unit is “accessorized” with, say, leather sofas, green walls, or, if the client wants it, swings, Varjú says.

Style gets more emphasis too: from oldschool to minimalist to colors applied in a way that also reflects the company’s philosophy, as offices are now a tool of employer branding as well. In a job market turned into a seller’s market, this is more important than ever. Highly-skilled workforce in particular can now afford to pick between offers and their decision is not based solely on the money.

In fact, a good salary alone won’t make the cut. Employers that can’t offer an attractive working environment will have a hard time compensating quality workforce with a higher salary, says Gábor Borbély, head of research and business development at CBRE. The office itself is a highly motivational environment and is critical to

attracting and retaining workforce, he adds.

Ever more companies are acknowledging this and have started to think of office spaces and design more lavishly. This process is, of course, supported by the economy; most players had a good year, so rationalization of office space is no longer the default norm, Borbély says.

Multifunctional use of spaces is also becoming critical, says Varjú. For example, meetings can take place in an informal

“Our clients’ offices are practically paperless – as a result much less storage capacity is required. In connection with the shared desk concept, easy, quick to personalize motorized tables are gaining more ground.” way, arranged, around a meeting point in several locations of the office, in community spaces.

Rise of the Work Café

“The so-called ‘work café’ areas, which are homey, relaxed, but also the venue for work-related discussions, have strong team-building effect. This is the place where co-workers who do not meet on a regular basis can talk, helping informal flow of information, or where one can ‘get hold of’ a manager and ask them something rather than in their offices.”

With the way we work changing, gravitating towards a more homey look and feel makes sense. It is not “presence” but “performance” that matters, Sebestyén notes. There is more moving around, the

3

www.bbj.hu

Budapest Business Journal | March 1 – March 17, 2019

ratio of individual and project work is shifting more towards the latter. “[Working in] a comfortable environment is indeed good and is definitely better than working in a white, sterile office space”, Sebestyén says. However, from an ergonomics viewpoint, office furniture is designed in a way that supports someone sitting for eight hours without compromising their health, she adds.

Health and sustainable production are just as important as the actual function, experts agree. “Using harm-free materials, for example glues during the manufacturing process, is a basic,” agrees Sebestyén.

Prospective candidates look at companies’ sustainability practices and, especially in the case of the younger generation, this could entail conscious furniture.

“Offices are beginning to move away from rigid business environments.”

The floor, too, can be a source of health problems if not done properly. “Office flooring is supposed to meet a number of strict criteria,” says Tirza Ress, marketing manager of Décor Floor Kft., a wall and floor covering supplier. “Should it not, it can be the source of several health issues.”

Keeping it Quiet

They also have a role in managing acoustics, still a hot topic given to the high number ADVERTISEMENT

Réka Varjú of open-space offices. Depending on the type of covering used, they can dampen sounds, or have noise insulation properties.

With careful design, many of the issues of an open-space structure can be resolved, says Sebestyén. These include, for example, creating so-called silent zones that allows for work requiring more focus, or furniture such as phone booths, paravanes, etc.

Digitization and the use of informationsharing tools has completely changed trends in meeting area design, says Anna Horváth, a sales executive of Blue Business Interior, a supplier with clients including Skanska, SAP, Exxon and Valeo.

“Our clients’ offices are practically paperless – as a result much less storage capacity is required. In connection with the shared desk concept, easy, quick to personalize motorized tables are gaining more ground,” she says. Chairs are also more user-friendly, but the ergonomic design is a prerequisite.

In open offices, the importance of separated spaces that allow for focused, small-team work is also on the rise, she adds.

According to the expectations of the younger generations, the spread of colorful, straightline, convertible furniture is also in demand.

The homey feeling is supported by thick rugs made of softer fabric, and many green plants are added in the spirit of biophilia.

The essence of the office providing a physical space for work remains, but is being challenged, says Gábor Borbély, head of research and business development at CBRE. Many functions can be replaced with a smartphone or other technologydriven solutions. For example, meetings can be done in a virtual space using artificial intelligence, face and voice identification tools, so the tendency is that workflow is separating from the actual space, Borbély says.

Special Report | 19 generally doable. This is where project management can essentially help to deliver results on budget and in time, extended by change management, that helps employees to reset to the new work environment and improves employee retention.

Not all business sectors keep track of the changes in office market trends at the same pace.

“The future is already here, it’s just not evenly distributed,” says Borbély. The IT sector, where labor shortage and the chances of losing the workforce is the highest, is overrepresented in digital workplace solutions and state-of-the-art

Traditional HQ

The traditional headquarters building will become more of a hub where the employees can benefit from the technology or other solutions that are not available at home or in a co-working space, he adds.

Since corporate structure and size keeps changing, an essential requirement from offices today is that they are able to keep up with these developments. When new developments are built, fit-out is started at a much more earlier stage, Borbély says, especially for longer leases or larger foot space.

When it comes to existing buildings apart from a few exceptions, refitting a space to the needs of a new tenant is

Gábor Borbély office design. Yet what counts is not the spectacular office design of firms such as Google, but the flexibility a company can give to its employees. Flexible working and digital support is a must in high-valueadded industries.

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | March 1 – March 17, 2019

Digital hardware producers Ranked by total net revenue in 2017

seRveR

bRands RepResented

yeaR establisHed

www.samsung.com

tablet

samsung eleCtRoniCs magyaR ZRt.

oWneRsHip (%) HungaRian non-HungaRian

laptop

1

Company Website

pC

Rank

pRoduCed ComputeR types

694,760

–

–

✓

✓

Samsung

1989

– Samsung Electronics Co. (100)

Hwanseog Choi – –

1138 Budapest, Dunavirág utca 2.

(1) 453-1100 –

304,168

✓

–

–

✓

Ÿ

2007

– FOXTEQ Integration Holding (100)

péter tálos – –

2900 Komárom, Bánki Donát utca 1.

(34) 886-069 komarom@emea.foxconn.com

total net Revenue in 2017 (HuF mln)

pCe paRagon solutions kFt. 2

www.foxconn.hu

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

3

lg eleCtRoniCs magyaR keReskedelmi kFt.

109,128

–

–

✓

–

LG

1992

– LG Electronics European Holding B.V. (100)

kim Hyeong tae – –

1097 Budapest, Könyves Kálmán körút 3/A (1) 455-6060 kapcsolat@lge.com

4

HuaWei teCHnologies HungaRy kFt.

57,720

–

–

✓

–

Huawei

2005

– Huawei Technologies Cooperatief U.A. (100)

li Jian, shi yanli – –

1138 Budapest, Népfürdő utca 22.

(1) 555-2300 peter.hegedus@huawei.com

5

ibm data stoRage systems kFt.

34,961

–

–

–

✓

IBM

1995

– IBM Ireland Product Distribution Limited (100)

péter mohácsi – –

2600 Vác, Deákvári fasor 16–18 (27) 500-400 info@hu.ibm.com

6

HeWlett-paCkaRd inFoRmatikai kFt.

23,840

✓

✓

✓

✓

HP

2008

– Gatriam Holding B.V. (100)

bálint bartl, gábor gonda – –

1117 Budapest, Alíz utca 1.

(1) 229-9999 info@hp.com

7

oRaCle HungaRy kFt.

21,247

–

–

–

✓

Oracle

1993

– Oracle Nederland B.V. (100)

titusz Csaba puskár – –

1095 Budapest, Lechner Ödön fasor 7.

(1) 224-1700 –

8

ibm magyaRoRsZági kFt.

16,284

–

–

–

✓

IBM

1936

– IBM Ireland Product Distribution Limited (100)

péter szalay Árpád Koncz Svetlana Stavreva

1117 Budapest, Neumann János utca 1.

(1) 382-5500 info@hu.ibm.com

6,202

✓

✓

✓

✓

Fujitsu

1999

– Fujitsu Technology Solutions Holding B.V. (100)

krisztina batári Krisztina Batári –

1143 Budapest, Gizella utca 51–57.

(1) 471-2111 info@fujitsu.hu

www.lg.hu

www.huawei.hu

www.ibm.com/hu

www.hp.com

www.oracle.com

www.ibm.com/hu

FuJitsu teCHnology solutions kFt. www.fujitsu.com 9

10

dell magyaRoRsZág Műszaki Megoldások kft.

910

✓

✓

✓

✓

Dell

2007

– Dell International Holdings VIII B.V. (100)

tivadar dienes-oehm – –

1062 Budapest, Váci út 1–3.

(1) 888-0550 attila_marosvari@dell.com

11

asus magyaRoRsZág kFt.

340

✓

✓

✓

✓

Asus

2007

– ASUS Technology Holland B.V., ASUS Europe B.V. (100)

Zoltán gyöngyösi – –

1075 Budapest, Wesselényi utca 16.

(1) 505-4561 backoffice_hu@asus.com

296

✓

–

–

✓

–

2017

– Focus PC Enterprises Ltd. (100)

péter tálos – –

2900 Komárom, Bánki Donát utca 1.

(34) 886-069 komarom@emea.foxconn.com

www.dell.hu

www.asus.hu

Cloud netWoRk teCHnology kFt. 12

www.foxconn.hu

NR

aCeR sales inteRnational s.a.

HungaRian bRanCH oFFiCe

Ÿ

✓

✓

✓

✓

Acer

2016

– Individuals (100)

tamás József borhi – –

1023 Budapest, Árpád fejedelem útja 26–28.

(1) 336-3300 info.hu@acer.com

NR

lenovo teCHnology b.v.

HungaRian bRanCH oFFiCe

Ÿ

✓

✓

✓

✓

Lenovo

2005

– Invididuals (100)

anita lukács – –

1037 Budapest, Montevideo utca 16/A (1) 211-1402 iarva@lenovo.hu

takashi Furumoto – –

1117 Budapest, Alíz utca 4.

(1) 382-6060 reception.psee@ eu.panasonic.com

Fujioka yoshiyuki – –

1138 Budapest, Váci út 144–150.

(1) 777-9151 yoshiyuki.fujioka@sony.com

NR

www.acer.hu

www.lenovo.com/hu

panasoniC maRketing euRope gmbH soutH-east euRope HungaRian bRanCH oFFiCe

Ÿ

–

✓

✓

–

Panasonic

2010

– Laurent Abadie (100)

Ÿ

–

–

✓

–

Sony

2002

– Individuals (100)

www.panasonic.com

NR

sony euRope limited HungaRian bRanCH oFFiCe www.sony.hu

3

www.bbj.hu

Budapest Business Journal | March 1 – March 17, 2019

Special Report | 21

Office equipment manufacturers' branch offices

sHReddeRs

multiFunCtional maCHines

visual teCHnology

sCanneRs

otHeR

Canon HungaRia kFt.

10,267 (2017)

✓

–

✓

✓

✓

✓

✓

✓

–

Canon, Therefore, Iris, UniFlow, Insta, Lifecake, hdbook

2

Hp inC magyaRoRszág kFt.

8,900 (2017)

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

–

HP

8,609

✓

–

Konica Minolta, Develop, KIP

3

www.hp.com/hu/hu

koniCa minolta magyaRoRszág Üzleti megoldások kFt.

–

✓

–

–

✓

–

–

paRts supply

Rental

Consulting

Home deliveRy

aCCessoRies

www.canon.hu

bRands CaRRied

RepaiR

Company Website

✓

✓

✓

✓

–

–

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

✓

✓

✓

✓

–

✓

yeaR establisHed no. oF Full-time employees on jan. 1, 2019

Fax maCHines

1

Rank

digital CopieRs

seRviCes

optiCal image CopieRs

pRoduCts

laseR pRinteRs

total net Revenue in 2018 (HuF mln)

Ranked by total net revenue in 2018

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

1994 127

– Canon Europa N.V. (100)

jaap van't ooster Orsolya Földi Csaba Kátai

1037 Budapest, Záhony utca 7.

(1) 237-5900 info@canon.hu

Ÿ

– Alpha Holding Two B.V. (100)

kristóf takáts Zoltán Szalai –

1117 Budapest, Alíz utca 1.

(1) 485-6580 –

Ÿ

1990 198

– Konica Minolta Business Solutions Europe GmbH (100)

dániel székely Viktor Soós Attila Kószás

1117 Budapest, Galvani utca 4.

(1) 464-9000 ugyfel@ konicaminolta.hu

– XEROX Ltd. (100)

veronika brazdilova Emőke Vass Ádám Katona

1138 Budapest, Madarász Viktor utca 47-49.

(1) 436-8800 info@xerox.hu

majoR Clients in 2018

Ÿ

Ÿ

2014

www.konicaminolta.hu

4

xeRox magyaRoRszág kFt.

6,992 (2017)

✓

–

✓

–

–

✓

–

✓

–

Xerox

✓

✓

✓

✓

✓

✓

Ÿ

1992 140 (approx.)

5

RiCoH HungaRy kFt.

3,550

–

✓

✓

–

–

✓

✓

–

–

Ricoh

✓

✓

✓

✓

✓

✓

Ÿ

1990 80

– Ricoh Europe Holdings Plc. (100)

michael Raberger Péter Eperjesi Mihály Eszes

2040 Budaörs, Puskás Tivadar út 14.

(23) 806-800 info@ricoh.hu

✓

3D printers, matrix and label printers, accessories

CraftBot, 3D Systems, HP, Lexmark, Brother, UTAX, Tally Dascom, Printronix

✓

✓

✓

✓

✓

✓

Ÿ

1991 26

Individuals (100) –

zoltán schneider – –

1089 Budapest, Delej utca 41.

(1) 477-4050 posta@kvint-r.hu

✓

Document management softwares, banknote counters and testers, coin counters, enveloping and folding machines, business card cutters

KYOCERA Document Solutions, GEMSYS

✓

TV2, Knorr Bremse, Richter Gedeon, Libri, Lufthansa Systems, Bárdi Autó

1992 21

László Juhász (90), Anikó Szabó Juhászné (10) –

lászló juhász Orsolya Jámbor Dorottya Juhász

1172 Budapest, Rétifarkas utca 16.

(1) 273-0100 global@ globalunion.hu

Brother

Ÿ

– Stefka Grozeva, Takashi Tomonaga (100)

toru osawa – –

1117 Budapest, Budafoki út 209.

(1) 382-7450 sales@brother.hu

6

7

www.xerox.hu

www.ricoh.hu

kvint-R kFt.

1,140

www.kvint-r.hu

global union kFt. www.globalunion.hu

bRotHeR CentRal&easteRn euRope gmbH NR HungaRian bRanCH oFFiCe

105

✓

–

–

–

✓

–

✓

✓

–

✓

✓

✓

–

–

epson euRope b.v.

HungaRian bRanCH oFFiCe

✓

✓

✓

✓

Ÿ

✓

–

–

✓

–

–

–

✓

Portable printers and scanners, labelling equipment

Ÿ

✓

–

✓

–

–

✓

✓

✓

–

Epson

–

–

–

–

–

–

Ÿ

2008 11

– (100)

miklós Fábián – –

1092 Budapest, Köztelek utca 6.

(1) 382-7680 info@epson.hu

Ÿ

✓

–

✓

✓

–

✓

–

–

Accessories

OKI

–

✓

✓

✓

–

✓

Ÿ

1992 4

– Shigeru Ogasawara (100)

miroslav tyburec – –

1016 Budapest, Aladár utca 4. building B (1) 814-8000 askoki@okihu.hu

Ÿ

✓

–

✓

✓

–

✓

✓

–

Interactive boards

Sharp

✓

✓

✓

✓

✓

✓

Ÿ

2008 8

– Sharp Electronics (Europe) GmbH (100)

lászló Horváth – –

1117 Budapest, Infopark sétány 1.

(1) 815-2500 info.sehu@sharp.eu

www.brother.hu

NR

✓

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

Ÿ

www.epson.hu

NR

oki euRope ltd.

HungaRian bRanCH oFFiCe www.oki.com/hu

sHaRp eleCtRoniCs (euRope) gmbH NR HungaRian bRanCH oFFiCe www.sharp.hu

Ÿ= would not disclose, NR = not ranked, NA = not applicable

1994

This list was compiled from responses to questionnaires received by February 27, 2019 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

4

www.bbj.hu

Budapest Business Journal | March 1 – March 17, 2019

Socialite Budapest Photo Festival Enters its Third Year With a CEE First From February 28 to April 20, the capital becomes the City of Photography, thanks to the Budapest Photo Festival. This year, the opening international show is David Lynch’s “Small Stories”, an exhibition of photos by the highly regarded film and television director of “The Elephant Man”, “Blue Velvet” and the “Twin Peaks” TV series.

DAVID HOLZER

Obtaining “Small Stories” is somewhat of a coup for Budapest, as the photos have never been shown in Central Europe.

The fact that Budapest Photo Festival is now in its third year is also cause for celebration. There’s always something heartening about any festival of any kind surviving beyond its first year. But when it’s an event so thoroughly in the great Hungarian photographic spirit, it’s especially satisfying.

It’s important to remember that, apart from the great Hungarian Robert Capa, Hungary has also produced André Kertész, Lászlo Moholy-Nagy and Brassaï. (Like me, you may have believed Brassaï to be French, but he was born in Brassó – then in Hungary, now Romania – in 1889. He moved to Paris, the city with which he is most associated, in 1924.)

I’m not so up on contemporary Hungarian photographers, but I’m a great admirer of Transylvanian photographer Péter Korniss. His 2017 “Continuing Memories” exhibition at the Hungarian National Gallery was visited by well over 40,000 people. This is a Gallery record for

When “Small Stories” was first exhibited, contemporary arts magazine Studio International described the photos as very much in the Surrealistic tradition, “cinematic and dreamlike, otherworld and yet disquietingly familiar”. “Small Stories” is at the Műcsarnok/Kunsthalle.

As an admirer of Lynch’s movies, I’m very much looking forward to seeing his show.

As he said in an interview with the BBC, “I think films should have a surface story but underneath there should be things that are abstract [….] things that resonate in areas where words can’t help you.”

Lynch’s photography uses recognizable images such as dolls and toys but, as Studio International puts it, their “great strength [….] comes from the intentionally mystifying nature of the imagery. He allows his stories to be created within the viewer’s imagination.”

Today, when we’re bombarded with images that so often offer themselves up as truth, the opportunity to appreciate photographs that are clearly not what they appear to be is highly appealing.

Hungarian Themes

an exhibition of work by a single living artist and suggests that Hungarians still appreciate great photography.

Szilvia Mucsy began her photographic career at Young Photographers Hungary, is a graduate of Moholy-Nagy University of Art and Design’s photography department, and studied at the Athens School of Fine Arts. She’s also the chair of RANDOM – the Association of Contemporary Hungarian Photographers. Her work has been exhibited solo and in group shows in cities that include New York, Athens and Rome.

City-wide

I spoke to Mucsy about what the third Budapest Photo Festival promises.

“It’s a city-wide series of exhibitions drawn from the Hungarian and international art scene, designed to represent contemporary and classical photographic values,” she explained.

“The exhibition is framed by the opening international show and an overview of contemporary Hungarian photography.

Supporting these showpiece exhibitions are others in some of the biggest galleries, museums and art schools of Budapest, as well as its international cultural institutes.

We also have lectures, workshops, educational events and a photomarathon.

A portfolio review and photobook show will take place at the Festivalcenter Budapest Project Gallery.”

Hungarian-themed exhibitions include “Perspectives”, contemporary Hungarian landscape at Kiscell Museum, and “Fresh Meat” at Hybridart Gallery, representing the younger generation. The Hungarian dimension to the festival has also been boosted by partnering with the Robert Capa Contemporary Photography Center and Petőfi Literary Museum.

On the international front, Mucsy recommends “Giles Roudiere: En Silence and Changing Landscape” (modern Portuguese photography), at the Budapest Project Gallery at Festivalcenter. Alain Laboile’s “La Famille”, described as a “realistic depiction of their atypical lifestyle” by online photography magazine Lens Culture is also well worth checking out.

This will be the first time Laboile’s work will be exhibited in Hungary.

David Lynch: Small Stories Interior #5 You can also view “Inshallah” by Michele Borzoni at Istituto Italiano di Cultura di Budapest, a food design exhibition, Is there a particular theme to the revolutionary photography at the Austrian festival, I wondered? “There’s no specific Cultural Forum and “Excessocenus”, a theme for the overall festival,” Mucsy Greenpeace Photo award-winning project. explained. “But the Hungarian national I was curious to know how Mucsy felt open call exhibition, where we choose a the festival had developed since its launch.

“Every year, more and more partners are involved. Cultural institutes or galleries, and so on.” she said.

“We would love it if “This helps us create a greater number of professional events which, in turn, enables Budapest became known us to appeal to a larger audience eager to as the City of Photography, experience great photography.” did the festival organizers hope reflecting Hungary’s unique toWhat achieve this year? “Our goal is to photographic history but entertain more people and to really show how colorful, artistic, deep and meaningful also the wealth of talent photography can be.” there is in the city and And looking to the future? “We would love it if Budapest became known as the country today.”

City of Photography, reflecting Hungary’s unique photographic history but also the wealth of talent there is in the city and genre to inspire contemporary Hungarian country today. Apart from entertaining photographers, focuses on landscape.” the public, Hungarians and visitors to What are the highlights of the festival the city, we would like to offer more this year and how were they chosen? “The possibilities for professional photographers opening exhibition is the premiere of and offer a showcase for young, upcoming “David Lynch: Small Stories”, a collection of photographers to make their debut.”

40 black and white photographs originally exhibited at the prestigious Maison Européenne de la Photographie, Paris Find out more about the in 2014 and specifically created for the Budapest Photographic Festival at gallery. We’re proud that this is a Central budapestphotofestival.hu European premiere.”

4

www.bbj.hu

Budapest Business Journal | March 1 – March 17, 2019

Socialite | 23

Bikavér Hits the Bullseye in 2016 After flattering to deceive many times over previously released vintages as a collective herd, Bikavér wine from 2016 is already showing great promise, with the wines already drinking very nicely, displaying both good balance and depth. This applies to wines from both the Bikavér-producing regions of Eger and Szekszárd, with the latter especially appearing to have got its act together.

ROBERT SMYTH

After flattering to deceive many times over previously released vintages as a collective herd, Bikavér from 2016 are already showing great promise, with the wines already drinking very nicely, displaying both good balance and depth. This applies to wines from both the Bikavér-producing regions of Eger and Szekszárd, with the latter especially appearing to have got its act together.

Bikavér is a key red wine category for Hungary, but it has for so long been a problematic one due to negative associations with the mass-produced (albeit successful on foreign bottom shelves) plonk of the former system that has still not been completely killed off; so much so that many producers eschew the use of the wine’s English moniker of Bull’s Blood.

Personally, I feel that a checkered history is better than no history at all and at least has some traction on foreign markets; indeed, what’s wrong in selling a new-improved version?

Bikavér enables the edgy and distinctive local grape heroes Kékfrankos and Kadarka (the latter mainly in Szekszárd but increasingly in Eger) to be tastily tamed and rounded out by international heavyweights. This combination of local and foreign talent makes for a big, bold yet balanced blend that oozes local flavor but yet isn’t too off the radar for international imbibers. As such, it

can also serve as a launchpad for single varietal Kékfrankos and Kadarka.

The growing season for 2016 was quite rainy and cool without wide temperature differences, resulting in slow, steady ripening, according to wine expert Gabriella Mészáros, who led a masterclass on the

2016 vintage

as part of this year’s Eger-Szekszárd Bikavér párbaj (duel), held at the Corinthia Hotel Budapest on February 22.

The wines featured in this article were either tasted in the masterclass or in the walk around tasting that followed. The 2016 weather conditions appear to have prevented the Bull’s Blood from becoming too thick and intense, which is also the case with 2015.

Less is More

In wine, less can often be more when it comes to power and intensity, and the cooler vintages may have played into the winemakers’ hands, although I suspect vintners are also seeking measured restraint over sheer weight by harvesting before the grapes are overripe and using less in the way of oak.

Bikavérs from earlier vintages have tended to throw a bit too much at the palate. If the experience could be liked to a bullfight, then it is an encounter in which a timid toreador is slaughtered in seconds by a raging bull.

Bikavér is usually built on a backbone of half or a touch more from the two local K grapes. The blend is then fleshed out delightfully by fuller bodied and more intense grape varieties like Cabernet Franc (particularly good in Hungary), Cabernet Sauvignon and Merlot, among others, although Zweigelt and Blauburger, both parented by Kékfrankos can also put in an appearance.

Takler’s 2016 Bikavér (HUF 4,650 at Bortársaság) from Szekszárd is fruity (still oozing primary red fruit), fun and flavorsome, and follows up nicely on its predecessor’s pleasantly restrained bottling.

While at

14% alcohol

it is 0.5% higher than the previous vintage, it is really well integrated and doesn’t give any burn.

Consistency is also the name of the game with Tibor Gál’s fresh, focused, fruity and spicy Titi Bikavér 2016 (HUF 2,900 from Selection.hu, HUF 3,250 from Bortársaság); it also contains some Pinot Noir, like the 2015.

Incidentally, Gál describes Bikavér from Eger as fruitier, more dynamic, mineral and leaner than the wider, broader and fuller-bodied style from Szekszárd, and his wine is a good example. Cooler Eger, which has volcanic rhyolite tuff and brown forest soils plus some limestone lies 130 km north of warmer Szekszárd, with its loess and red clay with some pockets of limestone.

Bikavér is usually built on a backbone of half or a touch more from the two local K grapes. The blend is then fleshed out delightfully by fuller bodied and more intense grape varieties like Cabernet Franc (particularly good in Hungary), Cabernet Sauvignon and Merlot, among others, although Zweigelt and Blauburger, both parented by Kékfrankos can also put in an appearance.

Hand Harvested

Presented with an attractive new label based on an old watercolor painting of the local hills, Péter Vida’s 2016 from Szekszárd was hand harvested during October 6-15 from vines ranging in age from six to 100 years old. It has a note of green herbs and mixed spices on top of the vibrant red and black fruit.

This is refined and refreshing with zesty acidity, is medium- rather than full-bodied, but is also very long and complex. It was aged in tanks for six months,

then

80%

went into 1,000 liter barrels and 20% into 500-liter used barrels for 20 months. This is currently on sale at a friendly discounted price of HUF 2,690 from Borbolt.hu (it’s usually priced around the HUF 4,000 mark, so snap it up!)

Also from Szekszárd, Tüske Bikavér 2016 was aged in large barrels and is a tad lighter in color than most and also lighter in body, yet it has great drinkability, capturing a fine balance between freshness, fruitiness and spiciness. Made by the modest and unassuming vintner Csaba Halmai, this is remarkable value at HUF 2,650 from Bortársaság. This looks set to be my go-to Bikavér for this year, with Gál’s Titi a close second.

The brother and sister Szekszárd team of Csaba and Csilla Sebestyén consider their Iván-völgy Bikavér to be their most important wine. Csaba has long made powerful rather than elegant wines, but Csilla who worked for many years in a two Michelin-starred restaurant in Scotland and appears to have helped convince her sibling to tone things down.

Sebestyén’s Iván-völgy Bikavér (HUF 6,250 from Bortársaság, HUF 5,700 from the cellar) is a blend of Kékfrankos (50%), Merlot (28%), Kadarka (a high 12%) and Cabernet Franc (10%) that underwent controlled fermentation in open vat, then was aged for 15 months in second-, third and fourth-fill Hungarian, French and Austrian oak barrels. It exudes both red and black fruit fused with subtle spiciness to bring real complexity, with great juice, serious body and ideal balance.

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