Budapest Business Journal 3003

VOL. 30. NUMBER 3

FEBRUARY 11 – FEBRUARY 24, 2022

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

SPECIAL REPORT INSIDE THIS ISSUE

FMCG Shifting Environment, Consumer Habits Major players in the fast-moving consumer goods sector are, as you would expect, keeping a close eye on how their market is shaped by rapidly changing consumer habits. What are the latest trends and what is in store for the near future? 16

Reaping Online Fruit of Pandemic Disruption While the pandemic restructured every industry, the online shopping segment of the fast-moving consumer goods sector has surfaced as a significant beneficiary as lockdowns and restrictions sparked new consumer habits. How has the market has evolved? 17

Diving Deep for Share Value

SOCIALITE

Discovering Secret Socialist LGBTQI History in CSEE David Holzer talks with one of the organizers of “Records Uncovered 2.0: LGBTQI+ Histories in Central and Southeastern Europe,” an exhibition that runs throughout February as part of LGBT History Month. 21

NEWS

LogMeIn Rebrands as GoTo, Eyes More Hungary Hires LogMeIn, Inc., based in Boston, Massachusetts but born in Hungary in 2003, has rebranded as GoTo to reflect its “deep dedication” to making IT easy anywhere. 7

BUSINESS

Egon Hajdu of asset management company Eurizon Hungary expects the pandemic, inflation, the tight labor market, supply chain disruptions and tightening monetary policies to drive the market in 2022. 8 BUSINESS

Fitch Affirms Hungary’s Rating in Upbeat, if Cautious, Review U.S. ratings agency Fitch affirms Hungary’s long-term, foreign-currency debt rating at “BBB” with a “stable” outlook at the end of January.  9

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Budapest Business Journal | February 11 – February 24, 2022

IMPRESSUM

THE EDITOR SAYS

SUPERCHARGING ONLINE SALES AND SHUTTLE DIPLOMACY

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Balázs Barabás, Zsófia

Czifra, Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth, Bálint Szőnyi, Zsófia Végh.

LISTS: BBJ Research (research@bbj.hu)

We are hardly revealing a business secret if we tell you that the shopping restrictions and curfew periods of the early lockdowns gave the online businesses of the fast-moving consumer goods sector an unprecedented turbo-boost. What is more interesting is that, while that accelerated pace had dropped off since restrictions were removed, it has not gone away entirely. Indeed, research company GKI Digital reports that online FMCG sales grew by almost 45% in the first nine months of 2021 in Hungary, according to the “Online Retail Big Picture” survey.

According to data from the Central Statistical Office, the average basket value for online FMCG purchases approached gross HUF 21,000 in 2021, which is more than 10% of the monthly Hungarian minimum wage recorded on Jan. 1, 2022.

And more interesting even than that is the revelation that the leading players in the market are scrambling to bring waiting times down as public expectations have risen. Customer care has evolved massively in Hungary in the 23 years I have lived in this country, but that doesn’t mean I am not sometimes still amazed at what a company feels it can get away with. That doesn’t seem to apply here; this is the power of the free market in action. Each player needs to bring their times down or risk seeing customers go elsewhere. After all, pretty much every retail chain has an online presence nowadays. And that also means that quality matters.

If the dispatchers pack the wrong items or they are damaged, online shoppers will vote with their feet.

Or, more appropriately, their keyboard strokes.

As one of our contributors puts it in the FMCG Special Report inside this issue: “Further expanding

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our online business channels is a priority for us this year, responding to customers’ need for a fast and smooth shopping experience.” ******** Sometimes in life, you have to let go of the big stuff, as it almost certainly says on a rubbish heap of Instagram memes somewhere. War in Ukraine will either happen, or it will not (as one respected BBC correspondent put it this week, either way, it will be a conscious decision, nothing is inevitable until it happens), but there is nothing any of us can do about it. Even so, it has been instructive to see how various NATO allies have gone about the business of making their position clear.

The shuttle diplomacy back and forth to Russia from almost all points West included Prime Minister Viktor Orbán, making a near-annual pilgrimage to the Kremlin (to be fair, Vladimir Putin is not an unknown visitor to Budapest). To be clear, Orbán was not going because of Ukraine, but it was inevitable that it would be discussed, and the Prime Minister made sure to speak to EU and NATO heads before he went calling. But on the very day Orbán sat down at that impressively long white table in Moscow, his staunchest EU ally, the Polish Prime Minister, was in Kyiv, along with the British PM. The diametrically opposed optics were as striking as they are impossible to ignore. But as Minister of Foreign Affairs Péter Szijjártó likes to say, nobody feels or fears conflict between the United States and Russia, whether hot or cold, like Central Europe. Let’s hope everyone keeps talking.

Robin Marshall Editor-in-chief

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THEN & NOW

In the black and white image from the Fortepan public archive, choreographer and dance artist Etel Nagy is practicing in 1930. In the color photo by state news agency MTI, dancers perform in Anton Chekhov’s play, “The Seagull,” during rehearsal at the Hungarian National Dance Theater on Feb. 6, 2022.

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Budapest Business Journal | February 11 – February 24, 2022

News macroscope •

Easing Microchip Shortage Could Boost Production This Year

December industrial production data surprised analysts, and if the semi-conductor and microchip shortage eases in the coming months, the full-year performance of industry could be notable.

Industrial Production in Hungary, 2001-2021 Producer volume index

Source:

ZSÓFIA CZIFRA

The alleviation of the chip shortage could already bring a significant increase in production in the industry this year, analysts have commented after seeing the latest industry report released by the Central Statistical Office (KSH) at the beginning of February.

According to the first release of December industrial output data, the volume of industrial production grew by 5.8% on a year-on-year basis. Based on workingday adjusted data, production rose by 3.6%.

According to seasonally and working-day adjusted data, the output was just

0.1% lower

than in November 2021.

As for the manufacturing subsectors, production decreased only in the one representing the most significant weight: the manufacture of transport equipment.

The decline here was mainly caused by the fact that, due to the global semiconductor shortage, factories were working at lower capacity or on a single shift basis, KSH said.

The manufacture of computer, electronic and optical products and food products, beverages and tobacco grew considerably.

According to seasonally and workingday adjusted indices, industrial output in December was 0.1% below the previous month’s level. In 2021 overall, the volume of production was 9.6% higher compared to 2020.

Analysts were pleased to note that the prolonged downturn in the automotive industry had been offset by the performance of sectors with a lower weight.

This confirms that the expected resolution of the chip shortage from the second half of the year could bring substantial growth to the Hungarian industry this year.

Above Expectation

Takarékbank’s senior analyst Gergely Suppan thinks the growth in industrial production in December was above expectations. Chip shortages continue to dampen vehicle production, but he emphasized that this was partially offset by good performance in other sectors.

He estimated that if it was not for the shortage of semi-conductors and other components, the volume of industrial production could exceed current levels by as much as 6-8%. According to his calculations, industrial production grew by 1.5% in the fourth quarter from the third, thus contributing positively to GDP growth.

In the coming months, industrial production may return to its growth path. The semi-conductor shortage may persist, but the situation will likely gradually improve, which could cause a surge in industrial output in the second half of the year. After 9.6% last year, Takarékbank’s analysts expect a

5.5% growth

in industrial production this year, due to base effects and the deployment of new capacities.

According to Gábor Regős, head of the macroeconomic unit at the Századvég Gazdaságkutató, the preliminary data on industrial production in December is a positive surprise; he had expected a slight decline on a year-on-year basis.

He attributed the better-thanexpected data to two factors: the decline in vehicle production may have been smaller than in previous months, while the faster-than-expected output in other industries counterbalanced the decline.

The favorable data for December could also be a good sign for the overall performance in 2022. If the shortage of raw materials affecting vehicle production eases, it could significantly improve production. On the other hand, it also represents a risk: if the deficiency persists, it could delay economic growth this year, he noted.

Less Optimistic

ING Bank analyst Péter Virovácz voiced a less optimistic view. According to him, the fact that production practically stagnated in the last month of the year compared to November was not a surprise.

The excellent performance of the second-largest industrial sector, the electronics industry, could not bring a more robust December for the whole industry, so the decline in the automotive industry may have been even more significant than previously seen, Virovácz said. The nearly 10% increase in production last year as a whole reflects a low base in 2020 rather than a dynamic rise

in

2021,

he opined.

Until the global semi-conductor shortage improves substantially, industry will hardly be able to show dynamic growth, Virovácz warns. Looking ahead to this year, it is encouraging that the

Hungarian industry has been relatively stable, even with the main sectors performing at a lower capacity.

If the good performance of the smaller sectors is maintained and the car industry and the electronics industry can return to the pre-crisis utilization of capacities in the second half of the year, then industrial production might show dynamic growth this year, he said.

János Nagy, a macroeconomic analyst at Erste Bank, said that he was not impressed with the preliminary data on production.

However, he thinks it is a good sign that only the automotive output decreased in December; last month’s data highlights what Hungarian industry can do without the heaviest manufacturing sub-sector.

Looking ahead to this year, it is encouraging that the Hungarian industry has been relatively stable, even with the main sectors performing at a lower capacity. If the good performance of the smaller sectors is maintained and the car industry and the electronics industry can return to the pre-crisis utilization of capacities in the second half of the year, then industrial production might show dynamic growth this year.

Looking ahead, January could bring growth again. As shown by the December data, the automotive industry’s subdued performance may continue to be offset by new capacities in other sub-sectors, which will support output expansion.

The difficulties of the supply chains can be alleviated substantially from the middle of the year at the earliest, after which a significant recovery of industrial exports is expected due to the high order backlog and new capacities, Nagy concludes.

Numbers to Watch in the Coming Weeks Today, Feb. 11, the KSH sheds light on how consumer prices grew in January. The first estimate of the fourth-quarter GDP data will be out on Feb. 15. Construction figures for December and the full year 2021 will be released on the same day.

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Budapest Business Journal | February 11 – February 24, 2022

New ‘Stealthy’ Omicron BA.2 Coronavirus ///roundup Variant Found in Hungary The National Center for Public Health (NNK) announced that a new, more contagious variant of Omicron, called BA.2, had been detected in Hungary on Feb. 4, according to business daily Világgazdaság.

Concurring with NNK’s investigations, Neumann Labs has since identified the new variant domestically in six more cases.

NICHOLAS PONGRATZ

However, the Hungarian laboratory characterized the new subvariant as a rather uncertain, “stealthy” Omicron, as it can fool antigen tests and in some cases the variant test developed for the original Omicron (BA.1). Conventional PCR tests, however, can correctly detect all variants known so far, according to Neumann Labs CEO Miklós Nyíri.

The government has decided to extend the weekend inoculation drives initially launched in November into February, State Secretary István György, according

According to the Russian state institute that developed the Sputnik vaccine, the Russian president informed Prime Minister Viktor Orbán during his visit to Moscow on Feb. 1 that there were no obstacles to the production of the Russian vaccine at the Hungarian National Vaccine Factory, which is expected to be completed by December. Putin recalled that Russia had previously delivered more than two million doses of Sputnik to Hungary.

A sign points the way to a Coronavirus vaccination point at the Saint Rafael Hospital in Zala County on Feb. 8. Photo by György Varga / MTI to the government’s official pandemic website koronavirus.gov.hu.

As was the case in January, people can get COVID jabs at designated hospitals and regional vaccination centers without an appointment on Thursdays and Fridays, between 2-6 p.m. in the evening, and on Saturdays between 10 a.m. and 6 p.m., György recalled. More than 420,000 people had received jabs in the inoculation drive during the first weeks of the year, he added.

Meanwhile, the government has decided to extend the validity of COVID immunity certificates for people who have been inoculated with the first two jabs until May 1, in line with other European Union countries, Gergely Gulyás, the head of the Prime Minister’s Office, said at a weekly press briefing, according to state news agency MTI. Gulyás explained that neither Brussels nor other EU member states had tightened rules on immunity certificates with the emergence of the Omicron variant, so the government

did not want to put Hungarian citizens at a disadvantage compared to their European peers. Earlier, the government had said it would limit the validity of immunity certificates in Hungary from Feb. 15 to people who had their second COVID jab no more than six months earlier or had received their booster jab, a plan it has now abandoned.

Meanwhile, the government has decided to extend the validity of COVID immunity certificates for people who have been inoculated with the first two jabs until May 1, in line with other European Union countries, Gergely Gulyás, the head of the Prime Minister’s Office, said at a weekly press briefing, according to state news agency MTI.

Children’s Vaccine

In the meantime, another two deliveries of the Pfizer-BioNTech coronavirus vaccine for children aged five to 11 had arrived in Hungary over the past two weeks. Some 42,000 jabs were delivered on Feb. 1, while another 38,000 arrived on Feb. 8. Pfizer started delivering the jabs for young children to Hungary in mid-December.

In a further development of Hungary’s own vaccine production capacities, the Gamaleja Institute tweeted that Russia is working to transfer the technology needed to make the two-component Sputnik V coronavirus vaccine, citing Russian President Vladimir Putin.

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With its own vaccine deliveries and potential production in order, Hungary continued its donations to countries in greater need. Hungary gave 150,000 jabs of the AstraZeneca coronavirus vaccine to Ecuador, and 200,000 jabs to Sudan, Minister of Foreign Affairs and Trade Péter Szijjártó posted on his Facebook page.

Additionally, Szijjártó said that Hungary has presented 80 ventilators to cooperating NATO partner countries, at the request of the organization’s Secretary-General.

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News | 5

Hungary Showing Strong Investment Growth However, 57% of completions were in Central Hungary in 2021 and it has 49% of the pipeline under construction.

Western Hungary has a pipeline of 373,000 sqm and Eastern Hungary 190,000 sqm.

In the absence of any shopping center pipeline, owners are undertaking refurbishment. Around 25% of retail mall stock is older than 10 years, with 13% older than

Total investment for Hungary is expected to be in the EUR 1.4 billion-1.5 bln range for the year with most deals for offices, Tim O’Sullivan, head of investment properties at CBRE Hungary, said at “2022 Hungary Market Outlook,” the annual event organized by the consultancy.

20 years;

new stock contributes only 6%, according to Erika Garbutt-Pál, head of retail advisory and transaction services at CBRE Hungary.

The Szervita Square Building in central Budapest, sold by Horizon Development to Union Investment. stable, 5.75% and compressing fast for industrial, with shopping center yields

at

6.25%

GARY J. MORRELL

The office sector has continued to dominate activity, followed by industrial; although properties in this latter sector are highly sought after, the lack of available investmentgrade assets is a limitation.

Office was thus the driver of the investment market in 2021 with 82% of investment activity(worth a total of EUR 1 billion), compared to 9% for industrial. Retail has been the big loser regarding investment since 2019.

CBRE puts current prime office yields for Hungary at 5.25% and

and under pressure. A significant yield gap between Hungary and the Czech Republic and Poland remains.

“The difference between Hungary and Czech and Poland is relatively stable at 100-150 basis points; the yield gap with Czech is larger and there has been no change throughout the pandemic,” commented Gábor Borbély, head of business development and research at CBRE Hungary.

Domestic investors are expected to continue to dominate activity despite increasing interest in the Hungarian markets from international money. Of the EUR 1.17 bln in investment activity recorded for 2021, 70% was undertaken by home players. Of the cross-border investors active in Hungary, 24% were from the Czech Republic, 23% from Austria, 22% from Germany and 14% from the United Kingdom.

On Trend

Large office occupiers are delaying decisions. Demand on the Budapest office market fell by 42% for 2021 compared with 2019, as was the trend throughout major European capitals.

Although there was only 50,000 sqm in completions for 2021, there is currently 512,000 sqm under construction, of which 226,000 sqm is preleased, with a further 435,000 sqm planned. According to Anikó Kovács, head of offices advisory and transaction services at CBRE Hungary, transactions take much longer and there are delays in completions.

The industrial sector is going through a boom in the Greater Budapest area and regional industrial and logistics hubs. Industrial take-up for Hungary increased by a massive 114% in 20192021, while developer-led completions for last year reached 340,000 sqm in Greater Budapest, representing a 165% increase over 2020.

In a significant development for the industrial market, Hungary is seeing growth in the regions outside Budapest.

“The difference between Hungary and Czech and Poland is relatively stable at 100-150 basis points, the yield gap with Czech is larger and there has been no change throughout the pandemic.”

Online penetration into Hungarian retail is expected to continue growing from 10% in 2021 to a forecast of 14% in 2025, according to Euromonitor.

Meanwhile, turnover in Budapest shopping centers is 25% down on 2019 levels, although there was a 20% recovery in footfall and turnover towards the end of 2021 compared to 2019.

Péter Virovácz, a senior economist at ING Hungary, sees the hot topics for the year as inflation, monetary and fiscal consolidation, the general election and politics, the rule of law debate and EU funds, and wages and labor shortages. Economies also need to take green transition and climate action into consideration.

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Budapest Business Journal | February 11 – February 24, 2022

Doktor24 and Union Acquire Largest Countryside Private Hospital

Health Matters

In 2021, the Pécs clinic had more than 42,000 doctor-patient appointments, 39,000 consultations and examinations in outpatient care, and performed 3,200 surgeries; its turnover was HUF 3.6 billion.

Doktor24 and Union Biztosító have announced the acquisition of the Da Vinci Private Clinic in Pécs, the largest private hospital in the Hungarian countryside.

Strong Partner

BENCE GAÁL

The acquisition makes Doktor24 one of the largest healthcare providers in the country. It and its partner Union Biztosító are buying the clinic through their joint subsidiary, Első Magánegészségügyi Hálózat (EMH) Zrt. The deal was signed in the last days of 2021, and the transition has since been approved by the Hungarian Competition Authority (GVH).

“With the acquisition, four million people in Hungary can reach us within an hour at the most. Da Vinci Private Clinic is the largest private healthcare provider outside Budapest, offering professional medical quality at affordable prices,” said Róbert Lancz, CEO of Doktor24 Medicina Zrt. Union Biztosító CEO Gabriella Almássy noted, “Union is the market leader and market shaper in the health insurance segment, and in line with its market position, it is constantly

Semmelweis Uni Partnering With AstraZeneca Semmelweis University, Hungary’s top medical school, and the Hungarian unit of AstraZeneca have signed a strategic partnership agreement, the Anglo-Swedish pharmaceutical company said, according to portfolio.hu.

The deal concerns the extension of joint research and development activity, common programs for treating and diagnosing patients, and studies of diseases such as diabetes, chronic kidney disease, and cardiac failure. The parties said that AstraZeneca has already cooperated with the university in almost two-thirds of its clinical trials, but the percentage could exceed 80% due to the new partnership. Béla Merkely, the university’s rector, said the results of the joint work are expected to be utilized in patient care.

A monthly look at health issues in Hungary and the region

Róbert Lancz, CEO of Doktor24 Medicina Zrt. working to provide better and more comprehensive services to its customers in Budapest and the countryside. I am delighted that thanks to our joint acquisition, we have taken a big step forward in this area in the South Transdanubian region as well.”

The predecessor of the Da Vinci Private Clinic in Pécs was founded in 2005. The panoramic, modern building opened its doors in 2011 and, within a short time, became the most significant private service provider in Transdanubia,

with two operation theaters, 22 inpatient beds, two delivery rooms, 18 specialist clinics and around 120 doctors serving clients in an exclusive environment.

The clinic provides complex and wide-ranging healthcare services: its inpatient multispecialty surgery covers 12 areas, with the highest patient volumes in orthopedic and plastic surgery. Outpatient care offers 47 different services, with gynecology, obstetrics and gastroenterology being the main specialties.

“In 10 years, we have built one of the largest and most successful private hospitals in Hungary in Pécs. To move forward from here, we needed a partner with strong capital and unquestionable expertise. Doktor24 is such a partner: its national infrastructure and insurance background benefits both our clients and our doctors,” says Antal Kovács, managing director of Da Vinci Kft., who will remain at the helm of the company, running the private clinic as a member of Doktor24’s senior management.

After the acquisition, Doktor24 now has a capacity of more than 10,000 surgeries annually. The company is chosen as a healthcare service partner by around 300,000 private clients and more than 1,500 SMEs annually, with the number of doctor-patient encounters reaching 350,000 per year.

Doktor24 started building its national network in 2020 with the acquisition of the Kastélypark Clinic in Tata and the long-established Svábhegyi Pediatric Hospital. Last year, together with Union, the company acquired the Life Health Center in Székesfehérvár.

In the fall of 2021, the company launched the Doktor24 Multiklinika in South Buda, a HUF 3 bln greenfield investment. Last year also saw the opening of the Move rehabilitation and regeneration center in Budapest’s District XIII, and a Doktor24 outpatient center in Paks (127 km south of Budapest by road).

AstraZeneca spends HUF 2 bln a year on R&D activity in Hungary.

AstraZeneca Kereskedelmi és Szolgáltató had revenue of more than HUF 15 bln in 2020, including export sales of HUF 2.5 bln.

4,599. Hungary’s oldest trademark is for mineral water Apenta, which was registered in April 1899.

Baja Hospital Receiving Equipment Worth HUF 300 mln

Pharma Companies Make Most Trademark Applications in 2021

NCP Sees Flu-like Patients Rise 29% According to reports from doctors participating in the monitoring service, between Jan. 15-23, 15,400 people saw their doctor with flulike symptoms, 29% more than in the previous week. Still, there is no flu epidemic in Hungary yet, the National Public Health Center (NCP) said in a report published on its website on Feb. 2. It was stressed that the symptoms of coronavirus infections are not clinically distinguishable from influenza-like syndromes, especially if caused by the fifth wave’s omicron variant.

Virological data clearly shows that a significant proportion of patients who see a doctor with flulike symptoms have a coronavirus infection, the NCP notes.

The St. Rókus Hospital in Baja (160 km south of Budapest) will set up a state-of-the-art gastroenterology examination and purchase tools for the early detection of diseases with an investment of about HUF 300 million, according to Gábor Tóth, the general director of the institution, writes profitline. hu. From the amount, won in a tender set up by the Ministry of Human Capacities, the hospital’s equipment will be modernized, and building renovation works will be started, he added. The hospital will acquire a so-called Spekt-Isotope device, which puts much less strain on the patient’s body than older equipment. It will also provide an extremely comprehensive picture of problems with, for example, the thyroid gland, lymph nodes and bone structure.

There were 4,192 trademark registrations filed with the Hungarian Intellectual Property Office last year, according to a report by news agency MTI. Most applications came from pharmaceutical companies (Egis and Richter), the government (Ministry of Foreign Affairs and Trade, and the Hungarian Tourism Agency), but several other Hungarian companies (such as WeLoveShirts, Lajver Borház) also filed. The number of registrations was the highest since 2012, when there were

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News | 7

LogMeIn Rebrands as GoTo, Eyes More Hungary Hires LogMeIn, Inc., a global leader in remote-work technology that is based in Boston, Massachusetts but was born in Hungary in 2003, has rebranded as GoTo to reflect its “deep dedication” to making IT easy anywhere.

BBJ STAFF

The company says its announcement, made on Feb. 2, goes far beyond a new name and logo. The business is launching a simplified product portfolio with a single application and two flagship products: the all-new IT management & support product, GoTo Resolve, and a new experience for what it calls its “unified-communications-as-a-service” (UCaaS) product, GoTo Connect.

These products are united by a single application, administrative system, and converging user experience. The company says it has also launched a new partner program to further enable its growing ecosystem of partners around the globe.

“Today represents a milestone in our transformation into two dedicated companies focusing on two simplified products. A year of work following our acquisition by private equity investors, who see the significant potential for us and are committed to making us the leading provider of reliable, secure and flexible tools for today’s remote workforce,” said local managing director John Ford.

Mike Kohlsdorf, GoTo president and CEO, says “While many providers in the space only solve for one point solution, GoTo is bringing together IT management and support and communications in one application in a completely new and unique way.

John Ford, VP digital workplace technology and country manager GoTo Hungary.

GoTo and the new portfolio better represent the company and our commitment to SMBs [small and midsize businesses]. We understand their particular challenges and have the focus and resources needed to address these pain points to serve their dynamic working environments better,” Kohlsdorf adds.

Speaking at the Budapest press conference for the rebranding, Ford told journalists GoTo would continue raising headcount in Hungary, predicting 20% growth this year, according to Forbes.hu.

More Than a Name Change Alongside the name change, Ford said GoTo is launching its “100% developedin-Hungary” GoTo Resolve, a flagship IT management tool for system administrators. As previously reported by the Budapest Business Journal, the company has already announced it is “spinning up” its LastPass password management division into a standalone business. (See “LogMeIn to set up

LastPass as Stand-alone Company” in the Jan. 14 issue) Ford noted that LastPass is another product “designed, created and built in Hungary,” with all developers located here.

GoTo has more than 3,000 employees worldwide and more than USD 1 billion in annual revenue. While its largest development base is in Hungary, that accounts for just one-fifth of all GoTo employees, with others based in offices and homes in Brazil, Canada, Germany, Guatemala, India, Ireland, the United States and the United Kingdom.

Ford said Headcount in Hungary has grown

by

20%

in the past two years, but the company still has around 50 openings at any given time. He noted that GoTo’s Budapest office accommodates 150-200 staff but is used mainly for collaboration activities, with most people preferring to work remotely.

He added that developers work in places as varied as Szeged, the university town 170 km southeast of Budapest, and villages in Baranya County in the southwest of the country.

Speaking about the two new flagship products, GoTo Resolve and GoTo Connect, Elka Popova, vice president of connected work at American business consulting firm Frost & Sullivan, said, “The unified and simplified GoTo portfolio is well aligned with the way SMBs like to purchase and use the company’s products. Frost & Sullivan research clearly shows that SMBs typically prefer integrated, easy to use and manage solutions. The harmonization of the company’s branding around the popular GoTo brand will also help better position the portfolio among organizations of all sizes evaluating options to modernize their communications, collaboration, and IT solutions,” she adds.

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Budapest Business Journal | February 11 – February 24, 2022

Business

With Inflation Rising, Asset Manager Eurizon Looks to Deep-value Stocks

Asset management company Eurizon Hungary expects the pandemic, inflation, as well as the tight labor market, supply chain disruptions and tightening monetary policies, will continue to be the leading market drivers in 2022, chief investment officer Egon Hajdu says. In the equity markets, “quality” or “deep-value” shares may be the winners in 2022.

GABRIELLA LOVAS

Inflation will be a critical factor this year: It determines central banks’ policy and has a significant impact on the real economy and capital markets, says Hajdu, who was talking at his company’s yearly preview press conference.

Despite significant upside risks to inflation, he sees global growth at slightly above the trend in 2022. Inflation may decrease a bit but will remain at relatively high levels. The pandemic is expected to

stocks perform well generally, while non-cyclical and growth stocks don’t.

“We have further narrowed value stocks into ‘deep-value’ or ‘quality’ stocks, which include the shares of the companies that can produce stable earnings amid the current economic challenges. These are companies that can provide good answers to the labor market competition, ESG requirements and the Biden administration’s measures to increase competition. We don’t rule out certain growth stocks with solid earnings and balance sheets and we are not afraid of tech stocks, either,” Hajdu explains.

Value stocks in general trade for less than what they are fundamentally worth. Deep value investing is buying stocks that are well below a conservative assessment of their net worth.

Hungarian Assets

Egon Hajdu ease and may turn into an endemic, which tool for printing large sums of money could alleviate supply chain problems and distributing it to the public to spur in the second half of the year. Hajdu economic growth, will disappear in expects four interest rate hikes from the U.S. Federal Reserve and quantitative tightening at yearend.

Besides inflation, the main risks include 2021 was all about inflation and COVID rather than normalization, Hajdu the pandemic, geopolitical conflicts and energy prices. notes. Markets were driven by economic growth and increasing corporate profits.

Selective Approach This year, Hajdu expects growth to to Stocks continue, corporate earnings to grow “So, the headwind is strong for the capital further and overall monetary and fiscal policies to remain supportive, despite the markets and the stock markets as well, as the era of high-liquidity free money could tightening evidenced by the remaining be over this year,” Hajdu says. However, negative real interest rate. this turnaround does not imply a general Labor markets and supply chains stock market downturn; it only requires are expected to improve somewhat. a different approach than before. “We Helicopter money, a monetary policy don’t think that investors should abandon equity markets, only that now they need a more selective approach,” he explains.

“Fortunately for us, fundamentals may be in focus again in the case of stocks, which implies active asset management strategies,” says Hajdu.

During the times of zero-interest money, passive asset management strategies that followed certain indexes worked well; investors didn’t care too much about fundamentals. This is about to change now. Eurizon applies active fund management strategies, the CIO notes.

During times of rising interest rates, earnings rather than valuation contribute to higher stock performance, Hajdu says.

Although this is what happens now, he doesn’t see a major drop in valuations because real interest rates are still negative. In the current inflationary Tibor Komm environment, cyclical sectors and value

2022.

Generally, the strengthening U.S. dollar does not benefit emerging equity markets, including Hungary. Conversely, the expected positive developments in EU markets can be beneficial.

The Hungarian equity market is not in good shape now as most of the macroeconomic indicators are worsening, including the current account deficit and the budget deficit. The macroeconomic environment is not expected to improve much until April. As a result, the Hungarian market is unlikely to outperform other regional markets, the CIO warns.

Hajdu sees further weakness in the bond market in terms of fixed-income assets.

Bond and fixed-income funds will not receive inflows as long as real interest rates remain negative. There is a big question mark over the Hungarian forint, but he suspects it will remain at its current level.

New ESG fund

Eurizon has just launched a capitalprotected derivative fund, the CIB ESG Capital-Protected Derivative Sub-Fund, chairman-CEO Tibor Komm says. The fund was designed to take into account environmental, social and corporate governance (ESG) considerations. Its capital accumulation period started on Jan. 17 and runs until March 18.

“With the increasing inflation, we have seen an easing of the crowding-out effect of the government’s ‘super bond.’

This could have a further positive effect on this segment,” Komm adds.

The assets under management of Eurizon Asset Management Hungary rose 10.5% to HUF 524 billion by the end of 2021, compared to December 2020. Assets managed in equity funds increased 48%

to

HUF 36.6 bln

in 2021, mainly due to high yields.

Eurizon remained the fourth biggest asset management company in the Hungarian market, although its market share dropped slightly.

Eurizon’s predecessor, CIB Investment Fund Management Rt., was set up in 1997 as a member of the CIB Group.

Since 2013, the company has belonged to the Eurizon Capital group. Eurizon is the asset management unit of Italy’s Intesa Sanpaolo Group, of which CIB Bank Zrt. is also a member. In April 2021, the company changed its name to Eurizon.

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Budapest Business Journal | February 11 – February 24, 2022

Fitch Affirms Hungary’s Rating in Upbeat, if Cautious, Review Fitch, the U.S. ratings agency, affirmed Hungary’s long-term, foreign-currency debt rating at “BBB” with a “stable” outlook in its latest review on the country at the end of January. The agency said the assessment “reflects the Hungarian economy’s strong structural indicators relative to peers and record of stable growth fueled by investment.”

However, this has to be balanced against “high public debt, a record of unorthodox fiscal and monetary policy moves, and a worsening of governance indicators in recent years,” the report cautions.

Nonetheless, the outlook is justified by projected sustainable economic growth following on from a stable recovery from the pandemic, plus a fiscal consolidation path that will result from an expected stabilization of the public debt ratio in the coming years, the agency argues.

Fitch estimates economic growth last year at 6.5%, based on strong private consumption and investment.

(This is slightly below the latest government estimates: Minister of Finance Mihály Varga was reported in local media of speaking in early February of a 6.8-6.9% expansion.)

The agency points to supply chain shortages hurting production in the automotive sector, which accounts for about

5% of GDP

and 14.5% of goods exports, but reasoned these bottlenecks are expected to ease in the second half of this year. Combined with the impact of the absorption of European Union structural funds under the 2014-20 cycle, Fitch estimates this will result in real GDP growth averaging 4.4% in 2022-23.

This positive outlook also assumes that what the agency terms “Next Generation EU (NGEU) funds” will kick in from the second half of this year, although it acknowledges that disbursement of these funds “hinges on legal disputes being resolved” between Hungary and the Union.

These disputes, which include Brussels’ concerns over the rule of law, corruption surrounding public procurement and media freedom, have already resulted in delays in payments to Hungary related to the European Commission’s Recovery and Resilience

Facility (RRF) created to offset the effects of the COVID pandemic on member countries’ economies.

Unlocking Funds

However, Fitch appears confident that, following the general election in April, Hungary will “seek to negotiate with the European Commission (EC) over rule-of-law disputes to unlock the first tranche of RRF funds, equivalent to HUF 300 billion, (0.6% of projected 2022 GDP)”. (See box) Furthermore, the agency’s forecast for this year also estimates a stimulus of up to 1.1 percentage points of GDP to household consumption as a result of refunds of personal income tax (PIT) payments to families with children.

Along with this positive scenario, though, Fitch warns that overheating risks are “becoming more evident,” with inflation averaging 5.1%

in

2021,

well above the 2-4% tolerance band of the National Bank of Hungary (MNB).

“High commodity and services prices pose continued upside risks to inflation, although the strengthening of the forint since the start of the year (aided by tight monetary policy domestically) will mitigate risks to some extent. Core

for pensions in 2022, should inflation turn out higher than expected.

Referring to the forthcoming elections, the review notes that the governing Fidesz party “appears set to face a notable challenge to its 12-year stint in power.” However, while it also points out that “the disparate opposition, including the far-right Jobbik party, is backing a common opposition candidate who has opposed the government’s loose fiscal policy and favors closer ties with the EU”, it argues that “the stability of a putative opposition-led coalition is unclear.”

The agency’s projections are largely in line with other independent assessments: for example both Raiffeisen Bank and Hungary’s Equilor brokerage forecast

4.5% GDP

Arvind Ramakrishnan

KESTER EDDY

Business | 9

inflation is also high, reaching 6.4% in December 2021. Fitch expects inflation to peak in 2022 at 5.8% (annual average) before dropping to 3% in 2023,” the review continues.

Among the anti-inflationary measures, Fitch points to the MNB phasing out its quantitative easing program and raising the base rate by a cumulative 230 basis points to 2.9%, along with the one-week collateralized lending rate by 305 basis points, both since June 2021.

Moreover, the bank looks set to tighten policy further, given rising inflation concerns this year. In spite of such moves, the government last December “announced a six-month freeze on mortgage interest rates, raising concerns over policy coordination and predictability,” the review notes.

Government Deficit

Into this mix, the review calls attention to the general government deficit, which it estimates at 7.9% of GDP in 2021, compared to the revised government target 7.5%, a reflection of the impact of personal income tax refunds to households and pandemic-related fiscal measures.

Fitch envisages the deficit falling to 5% in 2022, slightly above the revised budgetary target of 4.9%, warning that some fiscal slippage is possible from higher indexation

growth in Hungary this year.

In contrast, Márton Gyöngyösi, a Jobbik member of the European Parliament, was disdainful of Fitch’s description of his party as “far right.”

“High commodity and services prices pose continued upside risks to inflation, although the strengthening of the forint since the start of the year (aided by tight monetary policy domestically) will mitigate risks to some extent. […] Fitch expects inflation to peak in 2022 at 5.8% (annual average) before dropping to 3% in 2023.”

“I think they would do better updating themselves and getting up-to-date information before they rate and before [they] mislead the international public,” he told the Budapest Business Journal, insisting that Jobbik had rejected former radical policies and branded itself as a “center-right, people’s party” for a number of years, thereby being accepted in the opposition alliance.

Ramakrishnan: ‘Absolutely in Hungary’s Interest to get These Funds.’

Arvind Ramakrishnan, primary sovereign analyst for the Visegrád countries at Fitch Ratings, argued in an online discussion just two days before publishing the review that “it is absolutely in Hungary’s interest to get these funds. They are a substantial source of investment,” he said in response to a question from the BBJ. Noting that in the third quarter of last year, Hungary issued “over USD 4.5 bln worth of foreign exchange denominated debt specifically because they had to make alternative arrangements

because the RRF funds were being delayed,” he said that this indicates “the importance with which they [the Hungarian authorities] take these funds into account in planning for growth estimates.”

As concerns the dispute with the EU, Ramakrishnan said the problems involving Hungary are at a “slightly lesser scale” than they are for Poland, while the country faces a general election in April which he deemed “an important inflection point.”

“If Orbán loses the election, and we don’t have a view on that either

way, and if the opposition comes into power, we can expect a kind of reset in relations between Hungary and the European Union,” Ramakrishnan said.

But if Orbán regains power, Ramakrishnan remains optimistic for a compromise, arguing “He [Orbán] will have made his point with regard to his stance against the European Commission in the run up to the elections, and there will be scope for compromise, so that Hungary is able to unlock at least the first tranche of 13% of these funds in the second half of this year.”

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Budapest Business Journal | February 11 – February 24, 2022

Vast Majority of Hungarians Would opt for new Hybrid or EV Some 72% of Hungarian car buyers say they would pick either a hybrid or electric car the next time they purchase a vehicle, while 28% would still opt for a petrol or diesel car.

What type of vehicle do Hungarians say they will buy next?

The European Investment Bank is the long-term lending institution of the European Union and is owned by the EU member states. It makes long-term finance available for sound investments to contribute to EU policy goals in Europe and beyond.

Despite its HQ being in Luxembourg, the EIB is active in around 160 countries and says it is the world’s largest multilateral lender for climate action projects.

BBJ STAFF

The latest findings from the 2021-2022 EIB Climate Survey explore people’s views on climate change in a rapidly shifting world. Among other results for Hungary: • 79% of Hungarians feel they are doing all they can to fight climate change in their daily lives, but the majority believe that their compatriots are not doing the same • 68% of Hungarians say they consider climate change when choosing a holiday destination • 58% of young Hungarians consider climate change when looking for a job

What type of vehicle do Hungarians say they will buy next?

Source: BVA for the EIB

About the European Investment Bank

Source: BVA for the EIB

• 55% of young Hungarians already buy second-hand clothes instead of new ones

Hybrid, EVs in Demand

When asked about future car purchases, 72% of Hungarian car buyers say they would choose either a hybrid or a fully electric vehicle. This figure is 44 points higher than the percentage of Hungarians who said they would buy a diesel or petrol vehicle (28%). More specifically, 37% would purchase a hybrid auto, while 35% would opt for an EV. Interestingly, Hungarian car buyers aged 65 and older are particularly interested in purchasing an EV (54%), while young respondents are more likely to choose a petrol or diesel vehicle (38%).

This figure is 30 points above the figure for car buyers older than 65 (only 8% of them say they would buy a petrol or diesel vehicle). One possible explanation for this is cost, with EVs having a higher price ticket and seniors having more disposable income.

Hybrid vehicles would be the top choice for Hungarians aged 30-64: 40% would opt for a hybrid car, 13 points above the figure for people younger than 30 (27%).

Meanwhile, 22% of the overall Hungarian population say they do not have a vehicle now and are not planning to buy one

“Despite some clear generational gaps, Hungarian people are increasingly adapting their mobility and consumption habits in a more sustainable manner to tackle climate change.” (nine points above the EU average).

Looking at the regional picture for switching to hybrids or EVs, Hungarians seem as inclined to embrace new car technologies as Croatians (73%) and Poles (73%) but more willing to do so compared to Austrians (51%) and Czech respondents (48%).

More specifically, Hungarian car buyers seem most inclined to choose a hybrid car for their next vehicle, with 37% of them stating their next auto will have this type of engine, similar to Croatians (36%). Hungarians seem more inclined to opt for a hybrid than the Czechs (31%) and Austrians (28%). However, Hungarians appear less ready to choose a hybrid than Poles (46%).

Hungarian auto buyers seem to be as inclined to purchase an EV (35%)

as Croatians (37%). The average figure Eastern Europeans (for this survey including include Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia) is 30%, with Poles (27%), Austrians (23%) and notably Czechs (17%) finding EVs less attractive.

Globally, Chinese car buyers are the most inclined to buy an EV (44%).

European car buyers tend to favor hybrids (39%), while petrol or diesel vehicles are ranked second (33%) and EVs come third (28%). Americans express an almost identical preference: hybrids 38%, petrol or diesel 33%, EVs 29%.

About the EIB Climate Survey This is the fourth edition of the European Investment Bank Climate Survey, a thorough assessment of how people feel about climate change.

Conducted in partnership with market research firm BVA, the latest EIB Climate Survey aims to inform the broader debate on attitudes and expectations in terms of climate action. More than 30,000 respondents participated in the survey between Aug. 26 and Sep. 22, 2021, with a representative panel for each of the 30 countries polled.

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Budapest Business Journal | February 11 – February 24, 2022

What type of car do Europeans say they will buy next?

into consideration when job hunting, compared to 48% of people aged 30-64.

Overall, 53% of Hungarians say they consider climate change when choosing their bank or investing their savings.

EIB vice president Teresa Czerwińska notes that Hungarian habits are clearly changing, albeit with some generational differences evident.

“Despite some clear generational gaps, Hungarian people are

“As the EU climate bank, one of the EIB’s key roles is to finance innovative projects that focus on electric mobility as well as other sustainable mobility solutions that help build a decarbonized future for all.”

increasingly adapting their mobility and consumption habits in a more sustainable manner to tackle climate change,” she says.

“These shifts in individual behavior show that people of all ages are willing to make stronger commitments in their daily lives to help mitigate the climate crisis. These intentions were voiced during [the U.N. Climate Conference in Glasgow] COP26 and are a clear indicator of support for our efforts to foster the green transition,” Czerwińska says.

“Hungary was the first EU member state to ratify the Paris Agreement and the fact that its citizens are also ready to act is a sign of their understanding of the importance of climate action for the safe and sustainable future of our planet,” she adds.

“As the EU climate bank, one of the EIB’s key roles is to finance innovative projects that focus on electric mobility as well as other sustainable mobility solutions that help build a decarbonized future for all,” Czerwińska adds.

Business | 11

About BVA BVA is an opinion research and consulting firm recognized as one of the most innovative in its sector. Specializing in behavioral marketing, BVA combines data science and social science to bring its results to life and make them inspiring.

BVA is a member of the Worldwide Independent Network of Market Research (WIN), a global network of leading market research and survey players, with more than 40 members.

Who buys secondhand clothes in the European Union?

Source: BVA for the EIB

Holiday Flights

Some 68% of Hungarians say they consider climate change when choosing their holiday destination. This concern is even more substantial amongst people younger than 30 at 70%. However, more than one-third of young people (34%) say they will fly for their summer holidays in 2022, compared to 17% for people aged 30-64 and 9% for those 65 and above. More than one-fifth of the under 30s (22%, compared to 9% for people aged 30-64 and 5% for those 65 and above) say they will fly long haul.

Climate Considerations

Elsewhere, 54% of Hungarians say they buy second-hand clothes instead of new ones (12 points above the EU average).

Women are more likely to do so than men (59% for women vs. 47% for men).

Forty-nine percent of Hungarian people consider climate change when searching for a job. This is particularly the case for 15-29 yearolds: 58% of them take climate change

Source: BVA for the EIB

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Budapest Business Journal | February 11 – February 24, 2022

Citi Foundation Invests USD 250,000 in European Disability Forum in Central Europe

this donation as well as with the volunteer work of my colleagues,” Spanarova says.

Priorities

“Building the strength of the Disability Movement in Europe and reaching young people with disabilities is one of EDF’s main priorities,” says Yannis Citi Foundation has announced the launch of a new USD Vardakastanis, the EDF president.

“The pandemic has particularly hit 250,000 community program called “Strengthening the young people. EDF is committed to Disability Movement in CE” to be implemented across five working with our members to ensure all people with disabilities know their rights countries in Central Europe: Bulgaria, the Czech Republic, and can claim them. Europe will be stronger and more inclusive when we can Hungary, Romania and Slovakia, starting in 2022. all participate. We appreciate the strong commitment made by Citi Foundation to support our work,” Vardakastanis adds.

The “Strengthening the Disability policies and programs, as well as boosting BBJ STAFF Movement in CE” program is part of youth leadership and opportunities. Some Citi Foundation’s “Pathways to Progress” 150 people will be directly supported In Hungary, the program, announced Munir Nanji scheme, a global initiative launched in through the Citi Foundation program. across the region on Feb. 3, will support 2014 to build job skills that addresses the “People with disabilities are an the Hungarian National Council of persistent issue of youth unemployment. underserved segment of the population in Associations of People with Disabilities.

Through a combination of Citi Foundation Central Europe. An unacceptable percentage Veronika Spanarova, managing director The regional program will be rolled philanthropic investments, Citi employee of them live in precarious conditions at the and country head for Hungary, points out in partnership with the European volunteers, career development opportunities margins of society,” explains Munir Nanji, out that Citi Hungary has an internal Disability Forum (EDF), an umbrella nonat Citi, and research, “Pathways to Progress” the Central Europe cluster head at Citi.

Disability Network, initiated and led by profit organization led by persons with aims to address the skills mismatch and “It is critical to focus on improving the employee volunteers, intending to make disabilities and their families, representing inclusion of people with disabilities. At Citi, the business an employer of choice for equip young people, particularly those from the interests of more than 100 million underserved communities, with the we are committed to providing support for people with disabilities. The company was persons with disabilities in Europe. better access, appropriation of rights and awarded the Disability-friendly Workplace skills and networks needed to succeed The Citi Foundation program aims to in today’s rapidly changing economy. empowerment. It is an ambitious program Recognition for the third time in 2021. support disabled persons’ organizations Since launch, the Citi Foundation has that aims to tackle an important social “We look forward to supporting in each of the five nations in developing committed more than USD 330 million challenge, and I am very proud that Citi the Hungarian National Council of communication channels, ensuring globally in workforce preparation for Foundation is embarking on this journey Associations of People with Disabilities accessibility to EU-level international the “Pathways” scheme. in Central Europe,” Nanji says. and contributing to their activities with ADVERTISEMENT

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Budapest Business Journal | February 11 – February 24, 2022

The Fragility of the European Banking System

Significant Loses

File photo shows the famous Euro Sign at the European Central Bank in Frankfurt am Main. Photo by muratart / Shutterstock.com

We are currently experiencing a sea change in the financial environment, moving from very low to much higher inflation levels and from a low/negative interest rate to higher levels.

This puts the European Central Bank between the proverbial rock and hard place.

It has unenviable options: it can leave interest rates low, in which case inflation will likely worsen, or it may raise interest rates to curtail inflation, which could trigger a wave of defaults for highly leveraged governments, corporations and individuals, ushering in a recession or depression.

European bond yields have shot up considerably over the past weeks but have much farther to go if the intent of the ECB is truly to curtail inflation. For this to happen, government bond interest rates in more developed countries such as Germany, currently

0%,

would need to move higher than the inflation rate (currently at around 5%, according to official statistics in the Eurozone, and still rising). Bond yields

The Corporate Finance Column

(Warren Buffet, you may recall, called them “weapons of mass destruction.”

Because of inadequate disclosure requirements, it remains difficult to ascertain the precise level of derivative exposure of banks. Such uncertainty can be extremely dangerous in times of crisis, as it was during 2009-2011.)

It is often unappreciated that Europe escaped the 1929 depression that began in the United States until the 1931 collapse of Creditanstalt, a prominent Austrian bank, which unleashed the full brunt of the depression on Europe.

Perhaps history does not repeat itself, but will it rhyme, Les Nemethy wonders?

close to

Business | 13

in peripheral countries such as Greece are skyrocketing as of the beginning of February 2022, already approaching 3%.

I have argued in previous articles that the U.S. Fed is unlikely to raise interest rates to curtail inflation; for the ECB, this would be even more difficult. It simply cannot afford to trigger a wave of defaults in an economic environment that has been more anemic than in America.

Inflate Away

The current negative real interest rate environment does, however, create an opportunity: to inflate away the national debt. Although inflation amounts to a form of legal theft against savers (whose savings will not keep up with inflation, hence the term “financial repression”), inflating the debt away seems to be the lesser of evils when compared to raising interest rates, triggering defaults, and a recession or depression.

A by-product of financial repression will involve adverse effects on European banks. We will take a quick overview of the recent condition of European banks and then speculate on how an inflationary, financial repressive environment may affect them.

European banks were typically much slower to write off bad loans and work out their bad debt portfolios than U.S. banks.

They also have lower returns on equity.

It does not help that macroprudential regulation has encouraged European banks to load up with large amounts of negative-yielding government debt as a means of helping governments finance their deficits. Hence, European banks have difficulty accumulating retained earnings that might help them withstand a future crisis; and must dilute ownership considerably should they need to raise additional capital.

Sociéte Générale, perhaps the weakest G-SIB (Globally Systemically Important Bank) in Europe, according to a recent analyst report by Saxo Bank, has a market capitalization under EUR 10 billion, trades at

only

17%

of its book value, and has a less than 15% Tier 1 ratio (reflecting leverage and the percentage of capital available to withstand losses). Its expected return on equity over the next two years is less than 4%.

Other European G-SIBS, such as Deutsche Bank and Commerzbank, have marginally higher Tier 1 ratios but even lower expected ROE. (In fairness, the Tier 1 ratios are higher than during the 2009-2011 crisis). Deutsche Bank’s share price fell from EUR 100 in 2007 to EUR 13 in 2022. It also has considerable exposure to derivatives.

Rising bond yields in Europe could result in significant losses for banks holding government bonds, suddenly reducing Tier 1 ratios. This was also at the heart of the 2011 European banking crisis.

While certain European G-SIBS have limited ability to withstand a major financial crisis, there are also risks with Europe’s non-globally systematically important banks and non-bank financial institutions. The latter constitute about 40% of financial assets in Europe, are barely regulated, and are highly pro-cyclical.

The International Monetary Fund has stated that the weakest spot of the global financial system is likely European banks.

A default by a European G-SIB would send shock waves around the world. Remember, this is in the context of global debt having reached astronomic portions:

355% of

global GDP. It would also likely trigger an immediate explosion of risk premia on highly indebted/low growth countries like Italy and Greece. The ECB had enough trouble to keep Greece from going off the rails; if it were necessary to rescue a major nation such as Italy, that could be a shock of sufficient magnitude to trigger the demise of the Euro, perhaps even the European Union itself.

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

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Company

News

Air Canada Resuming Flights Between Budapest and Toronto Air Canada will resume direct flights between Budapest and Toronto from May to October, Ferenc Liszt International operator Budapest Airport has said, according to azuzlet.hu

(The Business). Air Canada will operate the flight three times a week in its summer timetable. It will use Boeing 787-9 Dreamliner aircraft on the route, offering 894 seats per week.

(HUF 2.78 billion) last year, which is 8% more than in 2020, in its audited IFRS financial statements for 2021 published on Feb. 7. According to a summary provided to state news agency MTI, the boost was mainly due to the increase in revenue from operating activities. At the end of the year, the bank’s total assets were EUR 1.8 bln, an increase of more than 10% compared to 2020.

B+N Referencia Acquires Polish Peer Hungarian facility management company B+N Referencia said on Feb. 4 it acquired Polish peer Inwemer on Jan. 31, according to napi.hu (Daily). “With this step, following acquisitions in 2021, we have become a leader in the facility management services market in the Central and Eastern European region,” B+N said. The company now has 18,000 staff in six countries and more than 750 clients. It had net revenue of HUF 71 billion in 2020, according to public records.

Magyar Posta Building Package Depot in Nagykanizsa File photo from Feb. 13, 2021, shows an Air Canada Boeing 787-9 Dreamliner, the aircraft type that will be used on the route to Budapest.

Photo by Markus Mainka / Shutterstock.com

Gyulahús Revenue up 8% in 2021 Meat company Gyulahús had revenue of HUF 8.3 billion in 2021, up 8% from a year earlier, managing director Zsolt Daka said on Feb. 4, according to portfolio. hu. Daka attributed the sales increase to the new, more environmentallyfriendly packaging and the new label the company launched last fall, matched by active marketing communication. Export revenue jumped almost 40% from a year earlier, the managing director said. The municipally-owned company exports its products to the Czech Republic, Poland, Slovakia, the United Kingdom,

and, increasingly, Germany. Turnover increased by 6% in volume terms last year, he added. A decision is expected to be taken in the spring on the company’s application for HUF 5 bln in grant money, and, with the involvement of a financial investor, Gyulahús could start building a HUF 13 bln factory, Daka said. The local council of Gyula (215 km southeast of Budapest) invited indicative bids by the end of November last year for a 49% stake in Gyulahús.

IIB Profit up 8% Last Year The Budapest-based International Investment Bank says it achieved a record net profit of EUR 7.9 million

State-owned Hungarian postal company Magyar Posta said on Feb. 7 it is building a package depot in Nagykanizsa (215 km southwest of Budapest) in a greenfield investment worth “several hundred million forints,” according to napi.hu (Daily). About 100 people will work at the 2,800 sqm depot, which will serve an area with close to 140,000 residents. Last year, 133,000 packages were delivered by post in Nagykanizsa. Magyar Posta says it is investing about HUF 50 billion to upgrade and automate its package delivery infrastructure by 2023.

MNB Clears Budapest Bank Merger into MKB Bank The National Bank of Hungary (MNB) has cleared the merger of Budapest Bank and Magyar Takarék Bankholding into MKB Bank on March 31, 2022, MKB Bank said on the website of the Budapest Stock Exchange on Feb. 4. The consolidation is taking place under a merger contract in force from Dec. 15,

2021, MKB said. The three-way tie-up, first announced in 2020, will create Hungary’s second-biggest commercial lender. In a press release, Magyar Bankholding, which is overseeing the fusion, said Budapest Bank will merge with MKB Bank and operate, temporarily, under the name MKB Bank, from March 31. The inclusion in the merger of Magyar Takarék Bankholding, a member of Takarék Group, is a “technical measure,” it said, adding that Takarék Group will join the merger by May 2023.

Rába Signs Agreement With István Széchenyi Uni Majority state-owned automotive industry company Rába said on Feb. 7 it has signed a strategic framework agreement with István Széchenyi University with the aim of filling engineering positions, establishing joint research projects and partnering on innovation and education activities, according to autopro.hu. The agreement will bring theory and practice closer and give students a broader outlook while ensuring career-starters a jump-start, Rába said. Both company and university are based in Győr (120 km northwest of Budapest). The automotive firm already cooperates with the university in vocational training and research, while providing some student programs with financial support.

Gemitech Inaugurates HUF 500 mln Expansion at Pilisvörösvár Base Gemitech inaugurated a HUF 500 million expansion at its base in Pilisvörösvár (20 km northeast of Budapest) on Feb. 7 that will add isolation beds and canopies to its product palette, according to uzletem. hu (My Business). The investment was supported by HUF 400 mln in funding earmarked to increase Hungary's selfsufficiency in the supply of healthcare products, Minister of Finance Mihály Varga said at the ceremony. So far, investments totaling HUF 86 billion have been supported by HUF 66 bln in grant money under the scheme, contributing to the creation or preservation of 5,700 jobs, the minister added. Gemitech had net sales revenue of just under HUF 300 mln in 2020, according to public records.

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3

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Budapest Business Journal | February 11 – February 24, 2022

Special Report FMCG

Market Talk: Players Grapple With Shifting Environment, Consumer Habits

“Through our collaboration with Shell, we are able to offer our customers the right range of products for everyday shopping in a convenient way, and it complements our wide mix of shopping channels from hypermarkets, ‘Express’ stores and online,” she adds. Currently, Tesco

operates

Major players in the fast-moving consumer goods sector are, as you would expect, keeping a close eye on how their market is shaped by rapidly changing consumer habits. The Budapest Business Journal looks at the latest trends and what the industry says is in store for the near future.

CHRISTIAN KESZTHELYI

The FMCG sector has seen its fair share of transformation in the past few years, significantly affected by the Coronavirus pandemic. The outbreak increased the price sensitivity of buyers. Since COVID hit, a shift towards the lower-priced product segment has surfaced.

“This resulted in an accelerated market growth of discount stores and an increased demand for cheaper, ownbrand products in the super- and hypermarket segment,” Nóra Hevesi, head of communications and campaigns at Tesco Hungary, tells the BBJ. The latter tendency still trumps high-quality, more expensive product sales.

When the possibility of a lockdown first appeared on the horizon two years ago, panic buying hit and people emptied grocery stores.

“At the beginning of the COVID pandemic, in

March

2020,

some consumers resorted to stockpiling,” Krisztina Hittner, PR team leader at DM Drogerie Markt Kft., says. She adds that demand for hygienic products also skyrocketed, triggering supply chain problems for the whole sector.

Fear of infection and the introduction of lockdown measures discouraged people from visiting brick and mortar outlets and boosted online shopping, a trend that is here to stay. The availability, safety and convenience of digital shopping have transformed consumer habits. [See “Online FMCGs Reap Fruit of Pandemic’s Disruption,” page 17.]

Buyers’ habits changed beyond a simple move to digital channels, though.

Consumers’ desire for bulk purchases

23

mini shops at gas stations, with plans to expand the network further this year.

Customer’s enhanced price sensitivity has also pushed Tesco to focus more on its loyalty program. “We want to help our customers control their expenditures by making a few hundred products available at lower prices if they use their Tesco loyalty card: the Clubcard. This way, they can save money and participate in loyalty initiatives for extra discounts,” Hevesi says. Registration for the loyalty program is free and open to anyone.

As the uptake of vaccine boosters increases and some European countries at the beginning, coupled with less are optimistic enough to ease restrictions frequent store visits, encouraged bigger Nóra Hevesi, head (Denmark and Sweden being the latest FMCG baskets on checkout both in value of communications to follow the example of the United and product quantity. and campaigns at Kingdom), expectations for a life that is “The average basket value has been Tesco Hungary. less affected by COVID are increasing. increasing since then, influenced now However, the FMCG sector will need to primarily by the growing inflation rate,” remain agile and alert.

Hevesi of Tesco notes. which helped customers get back to a According to a joint global survey by EY Waves Shape Habits shopping routine similar to their former and MIT, consumers are rapidly changing The various pandemic waves swayed one,” Hevesi says. their purchasing habits and opinions consumers’ boats differently. FMCG’s Nevertheless, shoppers still plan focus was on providing customers with in advance today and tend to limit an adequate food supply during the first the frequency of store visits to buy “This [the pandemic] wave, even in the face of bulk buying. everything they need at one go instead “The recruitment of additional of making numerous ad-hoc top-ups. resulted in an accelerated workforce was necessary, so we hired Tesco says it has not experienced market growth of discount 400 extra colleagues with fixed-term performance disruption or fluctuation contracts to help us run the business in the domestic supply chain. However, stores and an increased as smoothly as possible,” Hevesi says. maritime transport issues of non-food demand for cheaper, ownAs team cooperation got stronger, items sourced overseas have generated brand products in the superTesco quickly adapted to the new delays and shipping costs have normal so the British retail giant increased locally. and hypermarket segment.” could speed up developments.

“Even though the [supply chain] With the second wave lacking the situation negatively affects every retailer, outright shock factor of its predecessor, Tesco was able to prepare for the most bulk buying was “replaced by spending about available products. Online reviews intensive periods by negotiating with its restraint from households, and the and social media influencer activity are partners and fixing volumes of transport number of transactions decreased the main drivers for these habit shifts. EY capacities in advance,” Hevesi says. by and MIT found that in this environment, Unlikely Marriage FMCG market players can only plan two FMCGs and gas stations have continued years ahead compared to the previous while the basket value increased to join forces in this new environment, industry standard of five years. proportionally,” according to Hevesi. accelerating a trend that was already EY insists that flexibility is crucial in However, once customers started there. OMW petrol stations have teamed such an environment; the speed of stores adapting to a more consistent and up with Spar, just as Shell has with adapting to market changes is vital for conscious shopping pattern during the Tesco, to offer a shopping experience for maintaining growth and hitting targets. fall of 2020, newly-imposed curfews consumers on the road, navigating the “Business leaders are looking for made the scheduling of shopping more curfews and restrictions. future-proof strategies. However, there difficult. Yet, an emerging scientific “To reach consumers at every is no one-size-fits-all solution. In miracle offered a silver lining. touchpoint, last year we launched a joint this unexpected market environment, “The successful launch of the shopping experience concept with Shell businesses need to come up with a vaccination program resulted in an and opened the first Shell-Tesco mini custom-made operational model, which early ease, and then termination, of shops at Shell service stations across needs to be continuously monitored,” restrictions in Hungary compared to our the country,” Hevesi says. This new warns László Roland, an associate [Tesco’s] other Central European markets, arrangement operates seven days a week. partner at EY Hungary.

15-20%

3

www.bbj.hu

Budapest Business Journal | February 11 – February 24, 2022

Special Report | 17

Online FMCGs Reap Fruit of Pandemic’s Disruption While the pandemic restructured every industry, the online shopping segment of the fast-moving consumer goods sector has surfaced as a significant beneficiary as lockdowns and restrictions sparked new consumer habits. The Budapest Business Journal explores how the market has evolved.

CHRISTIAN KESZTHELYI

“E-commerce was just an option before the pandemic. But it rapidly became the only solution for many people [when the pandemic broke out], and markets had to catch up with its speed,” Krisztina Hittner, PR team leader of DM Drogerie Markt Kft., tells the BBJ. Infrastructure had been ready for some, even before the pandemic. The Hungarian business of U.K.-based retail giant Tesco was among the first here to launch its online shopping experience in 2013. Back then, adoption was slow.

However, what used to be a market rarity has become a must, necessitated by the COVID disruption.

“Online grocery shopping at Tesco achieved single-digit growth before the COVID crisis when customers benefited from it for their bigger weekly shopping.

The pandemic saw us reach our threeyear goal, set at the beginning

of

2020,

in a year, as online sales doubled, sometimes tripled, compared to the previous year’s performance,” Nóra Hevesi, head of communications and campaigns at Tesco Hungary, says.

The “new normal” significantly lifted online sales across the industry.

“During the pandemic, customers turned to other shopping options to reduce the risk of getting ill. It caused a high peak of orders and basket size.

After this peak, the number of orders fell back a bit but kept a constant growth,” explains Miklós Czeglédi, digital director of Auchan Hungary.

The ease, comfort and safety of online shopping resonated well with the masses, many of whom tried it for the first time during the pandemic. The continued high

Visegrád Four peers, the Czech Republic, Poland and Slovakia.

“According to the Europe E-commerce Report 2021, the growth of e-commerce in Hungary was the highest, just a bit ahead of Poland, followed by the Czech Republic and Slovakia,” Czeglédi notes.

“However, the total turnover from this channel is lowest in Hungary, after Slovakia. If we look at the Czech market, which is six times bigger in turnover than Hungary’s, there still is a huge opportunity for us to grow,” he adds.

Trends point towards an optimistic future, however. Online FMCG sales grew by almost 45% in the first nine months of 2021 in Hungary, according to the GKI Digital “Online Retail Big Picture,” a representative survey.

This growth propelled FMCG to become the quickest growing online retail segment in the first three quarters of 2021. During the previous year, the total revenue of online FMCG sales exceeded gross HUF 110 billion, according to a press release issued at the end of January by eMAG. The online Krisztina Hittner, PR team leader of DM Drogerie Markt Kft. retailer was the most popular platform for FMCG purchases in 2021, according to the GKI survey. today, the high share of e-commerce numbers for online orders show that people The average basket value for remains solid. have stuck with this shopping approach online FMCG purchases approached “Therefore, online shop solutions even after the outbreak. But there is more to gross HUF 21,000 in 2021, which have developed rapidly, such as our the service. Quality is essential. is more than 10% of the monthly services,” DM’s Hittner says. “We Hungarian minimum wage recorded introduced fast delivery, which means on Jan. 1, 2022, according to data within three hours [from placing an from the Central Statistical Office.

“During the pandemic, order], customers can collect their order The figures, and industry sentiment, in their chosen store. We also linked our paint a bright, bustling future for customers turned to loyalty program with our online store; online FMCG shopping. other shopping options to therefore, online customers can also enjoy its benefits.” reduce the risk of getting Online grocery shopping also reflects ill. It caused a high peak some new shopping trends, as Czeglédi of orders and basket size. of Auchan explains.

“Conscious eating and nutrition are After this peak, the number trending, which means healthy food from of orders fell back a bit but organic sources without any chemicals.

Also, veganism is popular,” he says. kept a constant growth.”

More Sensitive

“It is easy to attract and acquire new customers, but the real challenge is to keep them and make them loyal to your service. If you fail to deliver what they ordered or your delivery has poor quality, you will lose them faster than you got them,” Czeglédi warns.

Increased Popularity

The increased popularity of online shopping has changed how deliveries operate too. A few years earlier, online grocery shopping was such a novelty that two-to-three- or even five-to-sixday-long delivery windows used to be acceptable in the industry.

“With the digital transformation and globalization, expectations are higher than ever regarding the delivery time.

With the appearance of quick-commerce, a 20-to-30-minute delivery is a real challenge for all players on the online grocery market,” Czeglédi says.

Although shopper frequency in brick and mortar stores is recovering

People are becoming more sensitive to environmental issues. They demand products free of packaging and with less waste during and after delivery of their orders.

“It is also a very important topic for us because Auchan is truly committed to the environment. As proof of this, we are constantly eliminating plastic shopping bags starting from the beginning of this year,” Czeglédi adds.

Tesco says it is adopting a similar approach. “Sustainability is at the core of our activities, encouraging us to switch to green alternatives wherever it is possible,” Hevesi says. “Bagless delivery is a new default option on the Tesco Home platform to avoid the use of shopping bags and deliver products in crates. Unless customers opt-out when they order, no bags will be used other than those mandatory for hygiene reasons,” she adds.

Despite the online shopping boom, Hungary has room for improvement in this regard compared to its three

Miklós Czeglédi, digital director of Auchan Hungary.

“E-commerce will remain important and keep growing. The quintessence of DM commerce will stay the same, though: personalized care and advice to our customers,” Hittner says.

This sentiment is echoed in Tesco’s vision, too. “Further expanding our online business channels is a priority for us this year, responding to customers’ need for a fast and smooth shopping experience,” Hevesi concludes.

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | February 11 – February 24, 2022

Largest Shopping Centers in Hungary Rank

Ranked by total net retail space

Company Website

FaCility manageR, pRopeRty manageR, addRess, phone, Website

eCe projektmanagement budapest kft.

1106 Budapest, Örs vezér tere 25/A (1) 434-8200, (1) 434-8207 www.ece.com

1

ÁRkÁd ÖRs vezéR teRe bevÁsÁRlókÖzpont www.arkadbudapest.hu

2

aRena mall www.arenamall.hu

CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu

kÖki teRminÁl www.kokiterminal.hu

CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu kÖki east end zrt.

1191 Budapest, Vak Bottyán utca 75.

A–C. épület

3

Cushman & Wakefield kft.

1055 Budapest, Deák Ferenc u. 5.

(1) 266-1288, (1) 266-1289 www.cushmanwakefield.com

4

mammut bevÁsÁRlóés szóRakoztató kÖzpont www.mammut.hu

5

etele plaza https://eteleplaza.hu/

Futureal management kft.

1082 Budapest, Futó u. 47.

(1) 266-2181 www.futurealgroup.com

6

savoya paRk www.savoyapark.hu

FoRum savoya park kft.

net Retail spaCe (sqm) net oFFiCe spaCe (sqm) total gRoss building aRea (sqm)

68,000 A A

66,000 A

180,000

58,000 7,000 200,000

56,000 A

105,000

55,000

no. oF levels no. oF Retail units no. oF paRking spaCes

majoR tenants in 2020

addRess phone email

5 220 1,600

C&A, Zara, H&M, Van Graaf, Hervis, Media Markt, New Yorker, Interspar, Reserved, Libri, Douglas, Sinsay, CCC, Deichmann

1106 Budapest, Örs vezér tere 25/A (1) 433-1400 info@arkadbudapest.hu

2 180 2,800

Peek & Cloppenburg, Media Markt, Sportsdirect, Tesco, CCC, New Yorker, C&A, Zara, H&M, Massimo Dutti, Bershka, Stradivarius, Pull&Bear, Zara Home, Springfield, Humanic, Deichmann, Libri, Michael Kors, Nespresso

1087 Budapest, Kerepesi út 9.

(1) 880-7007 info@arenamall.hu

4 150 1,388 parking lots + 334 P+R

Bijou Brigitte, Buono Bistro, Burger King, C&A, Cafe Frei, CCC, Costa Coffee, Deichmann, dm, Euronics, H&M, HÁDA, Hervis, KFC, KIK, Libri Könyvesbolt, Megafitness KÖKI, Müller, New Yorker, OBI, Orsay, PEPCO, Pirex Papír, Pizza Hut, Playersroom, REGIO JÁTÉK, RENO, RETRO JEANS, Sebastiano, Rossmann, Swarovski, Tally Weijl, Tamaris TESCO, Triumph, Yves Rocher

1191 Budapest, Vak Bottyán utca 75/A–C ép.

(1) 919-1300 info@kokiterminal.hu

7 330 1,200

Match, Hervis, Media Markt, Mammut Bowling, UPC, Posta, Cinema City, Mango, Spriengfield, Starbucks, Salamander, Humanic, Douglas, Deichmann, Promod, Marks and Spencer, McDonald’s, Benetton, Esprit, Libri, Alexandra, Okay Italia, Bershka, Butlers, Mammut Egészszségközpont, Euromedic, Bio Sétány, Lite Wellness Club, Burger King, Nordsee

1024 Budapest, Lövőház utca 2–6.

(1) 345-8000 mammut@mammut.hu

A

1119 Budapest, Hadak útja 1.

(70) 652-0000 info@futureal.hu

A

A A

120 1,300

52,000 – 122,000

1–2 80 2,500

Auchan, OBI, MÖBELIX, ALDI, Euronics, Rossmann, CCC, KIK, PEPCO, Deichmann, DM, New Yorker, Flying Tiger, OTP, Raiffeisen, Budmil, Sport Factory, Vision Express, BELFRIT, Fressnapf, Fitness 5

1117 Budapest, Hunyadi János út 19.

(1) 887-1330 office@savoyapark.hu

51,400 16,320 194,000

4 400 1,685

Hugo Boss, Tommy Hilfiger, Guess, Cinema City-4DX, Media Markt, C&A, H&M, CCC, Bershka, Pull&Bear, Stradivarius, Zara, Springfield, Desigual, Spar, Nike, G-Star Raw, Deichmann, Tommy Hilfiger, Vapiano, Starbucks, Humanic, Salamander, Mango, Drogerie Markt, Massimo Dutti, eMag, Under Armour, Calvin Klein, Lacoste, Footlocker

1062 Budapest, Váci út 1–3.

(1) 238-7777 info@westend.hu

50,000 A A

3 400 1,930

Deichmann, Lurdy Rendezvényközpont, Galaxy Játékáruház, Hififutár.hu, dm, KIK, Lurdy Mozi, REÁL Élelmiszer, Office Depot Zoodom, Cosmos City, Háda, Saxoo London, Roland, McDonald’s, Cutler Gold Fitness Center, Aegon Biztosító, OBI, Impulse Leasing, Chipcad

1097 Budapest, Könyves Kálmán körút 12–14.

(1) 456-1100 info@lurdyhaz.hu

9

allee bevÁsÁRlókÖzpont www.allee.hu

multi hungary management kft.

1117 Budapest, Október huszonharmadika u. 8–10.

(1) 279-3520 www.multi.eu

46,600 7,000 118,000

4 150 1,200

Interspar, Cinema City,H&M, Zara, C&A, Van Graaf, DM, Douglas, Libri, New Yorker, Stradivarius, Pull&Bear, Reserved, Deichmann, Humanic, Salamander, Intersport, JYSK, CK Jeans, Nespresso, Best Byte, Life1 Fitness, Pad Thai, Bellozzo, Planet Sushi, Leroy Étterem

1117 Budapest, Október huszonharmadika utca 8–10.

(1) 279 3520 info@allee.hu

10

maRket CentRal FeRihegy www.marketcentral.hu

White star Real estate kft.

1124 Budapest, Csörsz utca 49–51.

(1) 382-5100 www.whitestar-realestate.com

44,201 – 44,201

1 33 1,550

Tesco, Praktiker, Intersport, C&A, H&M, Müller, DM, KIK, Deichmann, CCC, Pepco, Burger King, Jysk

2220 Vecsés, Fő út 246–248.

(29) 557-000 info@marketcentral.hu

44,100 58,000

1 280 2,500

C&A, CCC, Deichmann, H&M, Humanic, Libri, Media Markt, Pólus Mozi, Reno, Reserved, Sportsdirect, Tesco, Starbucks, Hervis, New Yorker, DM

1152 Budapest, Szentmihályi út 131.

(1) 268-1288 polus@cbre.com

CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu Cpi Facility management kft.

41,000 – 60,999

2 160 1,746

Reserved, H&M, NewYorker, C&A, Intimissimi/Calzedonia, Libri, Douglas, Marionnaud, Cinema City, Tropicarium, Humanic, Deichmann, CCC, Kockapark, Regio Játék, House, Cropp, Sinsay, Sportisimo

1222 Budapest, Nagytétényi út 37–43.

(1) 424-3000 info@campona.hu

klepierre management magyarország kft.

1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.klepierre.com

37,000 11,000 55,800

4 146 1,200

H&M, Reserved, Mohito, Orsay, Promod, Intersport, Media Markt, McDonald’s, KFC, Cinema City, Charles Vögele, Libri, Deichmann, CCC, Pirex, Pepco, Príma

1138 Budapest, Váci út 178.

(1) 465-1600 dunaplazasc@klepierre.com

7

8

Westend bevÁsÁRlókÖzpont www.westend.hu

luRdy hÁz bevÁsÁRlóés iRodaCentRum www.lurdyhaz.hu

pólus CenteR bevÁsÁRlókÖzpont https://polus-center.hu 11

Campona bevÁsÁRló- és szóRakoztatókÖzpont www.campona.hu 12

13

duna plaza www.dunaplaza.hu

Westend ingatlanhasznosító és Üzemeltető kft.

1062 Budapest, Váci út 1-3.

(1) 238-7777 www.westend.hu

lurdy-ház kft.

1097 Budapest, Könyves Kálmán krt. 12–14.

(1) 456-1200, (1) 456-1209 www.lurdyhaz.hu

CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu Cpi Facility management kft.

A

3

www.bbj.hu

Budapest Business Journal | February 11 – February 24, 2022

Special Report | 19

net Retail spaCe (sqm) net oFFiCe spaCe (sqm) total gRoss building aRea (sqm)

no. oF levels no. oF Retail units no. oF paRking spaCes

majoR tenants in 2020

addRess phone email

klepierre Corvin kft.

1138 Budapest, Váci út 178.

(1) 577-1100, (1) 577-1101 www.klepierre.com

34,603 – 75,039

4 105 840

H&M, New Yorker, Tatuum, C&A, Libri, Euronics, CCC, Butlers, Camaieu, Deichmann, Ecco, Hervis, Müller, Promod, Pupa, Orsay, Reno, Starbucks, iStyle, Tamaris, Cropp, house, Sinsay, Reserved, DM, Mohito

1082 Budapest, Futó utca 37–45.

(1) 977-7779 info@corvinplaza.hu

Rank

FaCility manageR, pRopeRty manageR, addRess, phone, Website

Company Website

14

CoRvin plaza www.corvinplaza.hu

15

mom paRk bevÁsÁRlókÖzpont www.mompark.hu

mom park mFC kft.

1123 Budapest, Alkotás u. 53.

(1) 487-5501 www.mompark.hu

31,000 18,000 100,000

3 102 1,230

SPAR, Hervis, CCC, H&M, Paulaner, Vapiano, Salamander, Douglas, Reserved, Mohito, Griff, Pirex

1123 Budapest, Alkotás utca 53.

(1) 487-5501 info@mompark.hu

16

napFény paRk bevÁsÁRlókÖzpont www.napfenypark.hu

bnp paribas hungary 1051 Budapest, Széchenyi István tér 7–8.

(1) 374-6333 www.bnpparibas.hu

30,200 – 30,200

1 18 1,253

JYSK, Tesco, KIK, Deichmann, dm, OBI, Fressnapf

6729 Szeged, Szabadkai út 7.

(1) 920-2193 info@napfenypark.hu

17

malompaRk bevÁsÁRlókÖzpont www.malompark.hu

malompark Üzemeltető kft.

(52) 745-600

28,400 – 30,800

3 32 600

Interspar, Praktiker, Euronics, Magnet Divat, G4 Fitness, Háda, M.Posta, Plazma Központ, Malomparki Kispiac, Premium Medical Center

4027 Debrecen, Füredi út 27.

(52) 483-080 malompark@malompark.hu

18

shopmaRk bevÁsÁRlókÖzpont www.shopmark.hu

indotek befektetési zrt.

25,800

2 77 1,000

INTERSPAR, MEDIA MARKT, HERVIS, dm, Libri, Pepco, Deichmann, CCC, Reserved

1191 Budapest, Üllői út 201.

– info@shopmark.hu

19

euRoCenteR óbuda bevÁsÁRló és szóRakoztatókÖzpont www.eurocenterobuda.hu

4 100 400

CIB Bank, Bijou Brigitte, dm, Erste Bank, Interspar, Magyar Posta, Magyar Telekom, MKB Bank, Orsay, OTP Bank, Telenor, Vodafone, Yves Rocher

1032 Budapest, Bécsi út 154.

(1) 437-4600 info-hu@aere.com

22,350

2 20 600

Möbelix, C&A, Deichmann, KIK, Pepco, Calzedonia, Office Depot, Kangaboo, dm, WalterLand, Galaxy játék, Eurofamily, Nike

2120 Dunakeszi, Nádas utca 8.

(1) 268-1288 hungary@cpipg.com

Csaba Center invest kft.

5600 Békéscsaba, Andrássy út 37–43.

(66) 524-530, (66) 524-525 www.csabacenter.hu

21,000 12,000 82,000

4 95 800

Háda, Deichmann, CCC, C&A, Douglas, OTP Bank, Tally Weijl, Spar, Vodafone, Vision Express, Orsay, Unicredit Bank, Telekom, Telenor, New Yorker, dm, Devergo, Media Markt, Hervis, Invitel, Galaxy Játékáruház, Cosmos City, Alexandra, budmil, Playersroom, Center Mozi, Fun City Bowling Bár, Budapest Bank

5600 Békéscsaba, Andrássy út 37–43.

(66) 524-524 csabacenter@csabacenter.hu

CitymaRket dunakeszi https://dunakeszi. citymarketgroup.hu/hu/ 20

manhattan Real estate management kft.

1032 Budapest, Bécsi út 154.

(1) 437-4600

CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu Cpi Facility management kft.

A

30,500 22,059 A

35,900

21,600 A

21

Csaba CenteR bevÁsÁRlóés szóRakoztatókÖzpont www.csabacenter.hu

22

malom kÖzpont www.malom.hu

malom ingatlanhasznosító kft.

6000 Kecskemét, Korona utca 2.

(76) 416-274, (76) 320-504 www.malom.hu

20,000 3,000 46,000

10 95 463

H&M, New Yorker, Douglas, Deichmann, Hervis, Promod, Springfield, Takko, OTP Bank Regionális központja, Provident Zrt. Regionális központja, Calzedonia, Intimissimi, Triumph, GAS, Vision Express, Orex, 576 Kbyte, McDonald’s, Swarovski

6000 Kecskemét, Korona utca 2.

(76) 416-274 kecskemet@malom.hu

23

miskolC plaza www.klepierre.com

miskolc 2002 kft.

3525 Miskolc, Szentpáli út 2–6.

(46) 503-000 www.miskolcplaza.hu

19,926 340 35,855

2 81 420

H&M, CCC, Deichmann, Rossmann, Orsay, Humanic, Skechers, Parfois, Calzedonia, Vision Express, Telekom, Telenor, Vodafone, MKB, KFC, Pizza Hut, McDonald’s, Retro, GAS, Libri

3525 Miskolc, Szentpáli út 2–6.

(1) 577-1100 miskolcplaza@klepierre.com

24

sugÁR ÜzletkÖzpont www.sugar.hu

székhely 2007 kft.

1126 Budapest, Nagy Jenő utca 12.

(1) 487-3746

19,540 – 39,850

4 90 400

Sugár Mozi, Sugár Fitness, Spar, Libri, Háda, EURONICS, Vodafone, Telenor, Unicredit Bank, Telekom, Raiffeisen Bank, Galaxy Játékáruház, CIB Bank, dm, SUGÁR Játszóház, SUGÁR Bowling & Pub, Magyar Posta, Extreme Digital, BÁV, Ofotért

1148 Budapest, Örs vezér tere 24.

(1) 469-5359 sugar@sugar.hu

25

agRia paRk www.agriapark.hu

WpR alfa kft.

1095 Budapest, Máriássy u. 7.

(36) 512 401, (36) 515 156 www.agriapark.hu

19,313 2,448 46,702

2 100 520

Agria Mozi, C&A, CCC, Charles Vögele, Deichmann, dm, Expert, Hervis, KFC, Libri, New Yorker, OTP Bank,Pepco, Springfield, Unicredit Bank, Tesco

3300 Eger, Törvényház utca 4.

(36) 515-401 info@agriapark.hu

26

koRzó bevÁsÁRlókÖzpont www.korzo.hu

ses magyarország kft.

2060 Bicske, SPAR út www.ses-european.com

19,000 3,000 46,000

3 45 640

SPAR, New Yorker, Best Byte, Humanic, Deichmann, Douglas, Orsay, dm, Triumph, Libri, Roland, KIK, Pepco

4400 Nyíregyháza, Nagy Imre tér 1.

(42) 799-111 korzo@korzo.hu

17,733 A A

1 24 617

Interspar, Humanic, Takko, C&A, New Yorker, Orsay, Fressnapf, dm, Intersport, Deichmann, KIK, Hervis, Pepco, Sinsay, Libri

16,500 400 42,429

1 19 685

Aldi, Intersport, dm, Deichmann, Centervirág, Ugripark, Eurofamily, Speedfitness, KIK, Mentavill, Aqualing, Fisch, Pepco

9025 Győr, Csipkegyári utca 11.

(96) 314-746 info@dunacenter.com

16,064 A A

1 62 862

ALDI, Cinema City, H&M, Gym Class Fitnesz, CCC, Pepco, Libri, Rossmann, Retro, Playersroom

6724 Szeged, Kossuth Lajos sugárút 119.

(30) 551-1034 info@szegedplaza.hu

stop shop veszpRém www.stop-shop.com/hu/hu CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu

27

8200 Veszprém, Dornyai Béla utca 4.

A

–

28

duna CenteR www.dunacenter.com

mall management kft.

1148 Budapest, Kerepesi út 52.

29

szeged plaza www.szegedplaza.hu

mall management kft.

1148 Budapest, Kerepesi út 52.

30

győR plaza www.klepierre.com

klepierre management magyarország kft.

1138 Budapest, Váci út 178.

(1) 577-1100 www.klepierre.com

15,881 186 20,159

1 57 455

Cinema City, Auchan, Euronics, Libri, Pepco, Deichmann, CCC, Rossmann, Orsay, HÁDA, REGIO JÁTÉK, Cosmos City, Casino Win, Vision Express, KFC, Pizza Hut, budmil, Sportfactory, Yves Rocher

9024 Győr, Vasvári Pál utca 1/A (1) 577-1100 gyorplaza2@klepierre.com

31

alba plaza www.albaplaza.hu

mall management kft.

1148 Budapest, Kerepesi út 52.

14,971 304 20,252

1 64 450

C&A, Deichmann, Hervis, Rossmann, Humanic, KFC, Intimissimi, Calzedonia, Orsay, Office Shoes, Takko, Promod, Cinema City, H&M, Tally Weijl

8000 Székesfehérvár, Palotai út 1.

(22) 513-300 info@albaplaza.hu

32

debReCen plaza www.debrecenplaza.hu

mall management kft.

1148 Budapest, Kerepesi út 52.

14,672 100 33,000

2 73 436

Cinema City, ALDI, dm, Líra, Cosmos, Takko, Retro, McDonald’s, Raiffeisen Bank, Pepco

4026 Debrecen, Péterfia utca 18.

(30) 738-1780 info@debrecenplaza.hu

Rank

20 | 3

Special Report FaCility manageR, pRopeRty manageR, addRess, phone, Website

Company Website

www.bbj.hu

Budapest Business Journal | February 11 – February 24, 2022

net Retail spaCe (sqm) net oFFiCe spaCe (sqm) total gRoss building aRea (sqm)

no. oF levels no. oF Retail units no. oF paRking spaCes

majoR tenants in 2020

A A

2 22 405

Spar, Media Markt, C&A, Pearl Harbor restaurant & bowling, Mountex, Deichmann, dm, H&M, Fressnapf, Kangaboo, Libri

13,850 200 19,500

2 63 659

H&M, Amnesia, Saxoo London, CCC, dm, Onyx Casino, Pepco, Pepe Jeans, Devergo&Friends, Tally Weijl, Libri, Gas, Cinema City, Cosmos, KIK

4400 Nyíregyháza, Szegfű utca 75.

(42) 508-620 info@nyirplaza.hu

13,783 A A

2 54 288

ALDI, H&M, TallyWeijl, CCC, Libri, Deichmann, Cosmos City, Kultik Cinema, Telekom, Vodafone, Telenor, MKB Bank, Devergo&Friends

1211 Budapest, II. Rákóczi Ferenc út 154–170.

(30) 739-2598 info@csepelplaza.hu

12,000 – 12,300

2 9 420

Media Markt, Mountex, Brendon, Office Depot, Eurofamily, Gigamatrac, Líra

1231 Budapest, Bevásárló utca 8.

(1) 268-1288 hungary@cpipg.com

11,554

2 42 587

Spar, CCC, McDonald’s, New Yorker, dm, Deichmann, KIK, Galaxy Játékáruház, Victory Fitness, Pepco, Takko, Fressnapf

1 18 531

Müller, H&M, Kedvenc Szakáruház, Intersport, Kangaboo, Deichmann, New Yorker, Pepco, Takko, CCC, Sinsay

1 18 449

Müller, C&A, Hervis, KFC, H&M, New Yorker, Fressnapf, dm, KIK, Euronics

1 8 352

Deichmann, KIK, Müller, Pepco, Ecofamily, TESCO

1 13 421

Müller, C&A, CCC, Pepco, Euronics, KIK, Deichmann, Takko, New Yorker

1 9 269

Deichmann, KIK, Müller, Pepco, Ecofamily, C&A, NewYorker, Fressnapf, Takko, Sportfactory

2400 Dunaújváros, Kandó Kálmán tér 11.

– alapkezelo@diofaalapkezelo.hu

6 43 160

CBA Prima, DM, OTP Bank, Sportkontroll, Mészársteak, Bortársaság, Pataki Cuki, Evital Gyógyszertár

1124 Budapest, Apor Vilmos tér 11.

(1) 951-0578 info@hegyvidekkozpont.hu

A

1 '9 245

Deichmann, KIK, Sinsay, Pepco, Ecofamily, Fressnapf, Takko, Háda, Jysk

9700 Szombathely , Szent Gellért utca 66.

– alapkezelo@diofaalapkezelo.hu

5,500 – 6,500

3 18 300

Müller, Biotech USA, Deichmann, Yves Rocher, Fresh Corner, K&H Bank, Pizza Me

1088 Budapest, Blaha Lujza tér 3–5.

(1) 225-6600 hungary@cpipg.com

addRess phone email

stop shop óbuda www.stop-shop.com/hu/hu CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu

33

34

nyíR plaza www.nyirplaza.hu

mall management kft.

1148 Budapest, Kerepesi út 52.

35

Csepel plaza www.csepelplaza.hu

mall management kft.

1148 Budapest, Kerepesi út 52.

CitymaRket soRoksÁR https:// soroksar.citymarketgroup.hu/hu/ 36

CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu Cpi Facility management kft.

14,266

1032 Budapest, Bécsi út 136.

A

–

stop shop éRd www.stop-shop.com/hu/hu CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu

37

A A

2030 Érd, Budai út 13.

A

–

stop shop debReCen www.stop-shop.com/hu/hu CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu

38

11,242 A A

4031 Debrecen, Kishatár út 34/B A

–

stop shop gÖdÖllő www.stop-shop.com/hu/hu CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu

39

40

diófa ingatlankezelő kft.

1148 Budapest, Kerepesi út 52.

(1) 888-4120 www.diofaalapkezelo.hu

budakeszi zone https://zonepark.hu

10,060 A A

9,636 – A

2100 Gödöllő, Bossányi Krisztina utca 2.

A

–

2092 Budakeszi, Bianka utca 1. alapkezelo@diofaalapkezelo.hu

stop shop szolnok www.stop-shop.com/hu/hu CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu

41

42

43

44

dunaújvÁRos zone https://zonepark.hu/ hegyvidék bevÁsÁRlókÖzpont www.hegyvidekkozpont.hu szombathely zone https://zonepark.hu/ euRopeum bevÁsÁRlókÖzpont www.europeum.hu

45

A = would not disclose,

NR = not ranked, NA = not appliacable

diófa ingatlankezelő kft.

1148 Budapest, Kerepesi út 52.

(1) 888-4120 www.diofaalapkezelo.hu Ce land management kft.

1123 Budapest, Alkotás u. 53.

(1) 785-4985 www.celand.hu diófa ingatlankezelő kft.

1148 Budapest, Kerepesi út 52.

(1) 888-4120 www.diofaalapkezelo.hu

CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040 www.cbre.hu Cpi Facility management kft.

9,321 A A

6,817 – A

6,500 1,500 A

5,745 –

5000 Szolnok, Felső Szandai rét 3.

A

–

This list was compiled from responses to questionnaires received by February 9, 2022, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

The list is based on companies’ voluntary data submissions. 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 | February 11 – February 24, 2022

Socialite

Discovering the Secret History of Hungarian LGBTQI Life Under Communism

The Budapest Business Journal talks with Lajos Balázs Szabó, who has helped organize “Records Uncovered 2.0: LGBTQI+ Histories in Central and Southeastern Europe,” an exhibition that runs throughout February as part of LGBT History Month.

DAVID HOLZER

The exhibition is a collaboration between the Vera and Donald Blinken Open Society Archives and the Háttér Archive and Library. The Blinken Open Society Archives is one of the largest Cold War collections. It provides factual historical information to the public, fighting against historical revisionism and the misrepresentation of events of the past under authoritarian rule.

As part of its mission, the Hungarian Háttér Society, founded in 1995, preserves and shares LGBTQI (Lesbian, gay, bisexual, queer, transgender and intersex) heritage and culture. Szabó is part of Háttér.

“We are the oldest, largest LGBTQI organization in Hungary,” he told me.

“Our contribution to the exhibition comes from our archive, which has existed since 1995. We collect books, films and LGBTQI ephemera, mainly focusing on Hungary and Hungarian topics. Our archive also collects historical documents from other LGBTQI organizations.”

The exhibition is an eye-opening insight into the lives of nonheteronormative people in Central and Southeastern Europe – the former

Photos from the “Records Uncovered” exhibition opening by Dániel Végel.

Communist Bloc – in the last half of the 20th century. It includes legal documentation, media reports, private and institutional correspondence, artworks, and ephemera.

It covers countries that commonly shared two different political goals at two distinct periods: the establishment of a new communist society from

the

mid-1940s

and the transition toward a democratic world from the 1990s.

There is also a program of movies and discussions. On Feb. 15, just after this issue is published, the subject will be “Connecting Gays and Lesbians Behind the Iron Curtain: the Role of HOSI,” which considers the history of LGBTQI activism in Central and Eastern European Countries.

Broad Scope

“There’s never been an exhibition with such broad scope, at least in Hungary,” Szabó told me. “It spans the entire former Eastern Bloc from the Soviet Union to Albania and covers subjects like the HIV/ AIDS pandemic, how LGBTQI people self-organized, where they met and what their cultural life was.”

The exhibition was initially planned for February 2021, which would have been

60 years

after homosexuality was decriminalized in Hungary, but COVID-19 put paid to that. When this exhibition could not happen in a real space, it moved online.

It’s still possible to view via the web, but heading down to Centrális Galéria offers a far richer experience.

As Szabó says, “For this iteration of the exhibition, we put out a call for contributions and received a remarkable amount of fascinating material, Continued on page 22 ▶▶▶

22 | 4

Socialite

Continued from page 21 ▶▶▶ including magazines, photos, diary excerpts, festival posters, videos and even copies of the 1980s Hungarian soap operas that featured gay characters.”

Szabó is proud that the exhibition’s broad scope makes it unique. “Even those who don’t belong in this minority will discover a lot of interesting information about the LGBTQI

www.bbj.hu

Budapest Business Journal | February 11 – February 24, 2022

people under communism and after the transition in these countries.”

The history of LGBTQI rights in the former Communist Bloc, in general, is a mix of tolerance and repression.

Although known to be homophobic, Marx and Engels didn’t have a position on homosexuality. In 1917, the heady days of the early Soviet Union, the Communist Party even decriminalized homosexuality.

But, in the early 1920s, especially in the Muslim-dominated Soviet Republics in Central Asia, homosexuality was still a criminal offense. In 1933, Article 154a of the Soviet Union criminal code made homosexuality a crime that could be punished by up to five years in prison.

This law remained on the books until after the dissolution of the Soviet Union in 1993.

Decriminalization

Personally, I was surprised, if not stunned, to discover that Hungary decriminalized homosexuality for men over the age of 20 in 1961. This was way before Britain, which didn’t pass the Sexual Offences Bill decriminalizing homosexuality between men “in private” until 1967.

The U.K. bill was only amended to legalize homosexuality fully in 2000.

France, ever the pioneer, legalized homosexual acts between two consenting adults in 1791 as part of the French Revolution.

“There’s never been an exhibition with such broad scope, at least in Hungary.

It spans the entire former Eastern Bloc from the Soviet Union to Albania and covers subjects like the HIV/AIDS pandemic, how LGBTQI people self-organized, where they met and what their cultural life was.”

The first U.S. state to decriminalize consensual sex between same-sex couples was Illinois

in

1962.

Bizarrely, even though same-sex marriage is legal in all 50 U.S. states, gay sex is still illegal in 17 of them.

Hungary lowered the age of consent for gay sex to 18 in 1978. Apart from Hungary being a pioneer in decriminalization, I was surprised to learn from Szabó that the first truly independent NGO in Hungary was focused on homosexuality.

“The AIDS pandemic in the 1980s strengthened homosexual self-

organization in the Bloc, which at first appears counterintuitive,” Szabó explains. “But, because it was mostly gay men who were becoming infected in the beginning, the Hungarian government and Communist Party realized that a gay organization would be far more likely to educate gay men about safe sex practices and encourage them to get tested,” he says.

“The government and party were acting for purely pragmatic reasons; they simply wanted people to stop spreading AIDS, but it was a major step forward for LGBTQI people in this country. And, don’t forget, this was before the regime change in 1989.”

Since it opened, “Records Uncovered 2.0: LGBTQI+ Histories in Central and Southeastern Europe” has received a steady stream of visitors, but is it mainly young people?

“Not at all; there have been quite a few older people,” Szabó says. “Some of them probably have personal memories of the material we have been exhibiting, especially those related to Hungary.”

The Centrális Galéria is at Arany János utca 32, 1051 Budapest. The exhibition is open Tuesday–Sunday, from 10 a.m.-6 p.m. It is not recommended for children below the age of 18. Find out more at the website osaarchivum.org.

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Budapest Business Journal | February 11 – February 24, 2022

4

Socialite | 23

A Return to Kékfrankos and Kadarka Tasting The local wine tasting scene appears to be returning to something resembling normality, with a couple of bumper tastings coming up, as out columnist Robert Smyth explains.

ROBERT SMYTH

The Budapest calendar ground to a halt last year after the Winelovers’ Bordói November Grand tasting on Nov. 20, with the exception of some smaller sipping sessions.

The classic season opener, the Furmint February Grand Tasting, is not going ahead in the capital this year, with the chief organizer, Dániel Kezdi running a smaller event at his Kálvária Pince in Budakalász the day this issue is published (Feb. 11).

However, some 220 exhibiting winemakers will be pouring more than 1,000 wines at this year’s Borjour Magnum, which will be held at the Budapest Congress Center on Feb. 19.

Whetting the palate for that was Borjour’s Kékfrankos and Kadarka event, held at Manna Lounge on Jan. 29. This bijou tasting featured Hungary’s two leading red wines made from indigenous grape varieties, bringing together a dozen producers from various Hungarian wine regions.

Szekszárd continues to be the Hungarian epicenter of the Kadarka grape (essentially the same variety as Bulgaria’s Gamza). It came to Hungary from the Balkans, supposedly brought by Rascians from presentday Serbia, fleeing Ottoman invaders.

Szekszárd is also a key producer of Kékfrankos, Hungary’s most widely planted grape.

The two grapes also team up to provide the base for Bikavér in Szekszárd (and increasingly in the other Bikavér region of Eger). The fragrant Kadarka contributes a few percent to the Kékfrankos core, with fuller-bodied international varieties then fleshing out the blend.

The concepts of clones is useful in understanding Kadarka, as the given clone has a strong bearing on the kind of wine that is made. Szekszárd winemaker Csaba Vesztergombi, whose wines were served at the Manna

new and used, French and Hungarian oak barrels, and was neither filtered nor fined, is sensational.

It has an inviting purple color, with lively, complex aromas of violet, potpourri and red berries. It has a juicy, herby palate that’s restrained but delicious, and costs HUF 5,400 from grálborpince.hu.

Grál’s Pelzberg Reserve Kékfrankos 2017 spent a whopping 24 months in French oak and is selected from a prime 0.1-hectare micro parcel of the Pelzberg vineyard and Austrian A1 clones.

It has a similar character to the previous wine but more complexity with fabulous fine-grained tannins. It costs HUF 10,000 from the cellar.

From Mátra, Itt és Most Pince’s Tibor Hofmann was another to get a very good result from ageing his Szekszárd winemaker Csaba Vesztergombi. spontaneously fermented Ideje Van Kékfrankos 2018 in used French oak barrels for 13 months. This vintage is the radar. An exciting small producer Lounge tasting, believes the secret is bargain, however, at HUF 3,300 from from that region, who was also to not rely on one clone in channeling ittesmostpince.wineshop.hu. present at Borjour’s Kékfrankos and the best of the grape into the glass.

Kadarka tasting, is Grál Borpince, “The point with Kadarka is to work where the wines are made by owner with different clones; the end result “The point with Kadarka Zalán Mucsi. is better,” he asserts. Vesztergombi’s is to work with He made two soon to be released Kadarka 2019 comes from a mix Kadarkas from the 2020 vintage, ageing of old vines of more than 100 year’s different clones; different clones in different vessels. The old, as well as the widespread Kadarka from the P9 and P13 clones was the end result is better.”

P9 clone and another clone from aged in amphora.

Balla Géza’s vineyards in the Ménesi “The Kadarka clones like amphora, wine region, near the city of Arad, and the fruitiness and terroir come His neighbor in Gyöngyöspata (82 km in present-day Romania. out very well,” says Mucsi. The result northeast of the capital), Hoop Wines, Featherlight is a complex wine that is vibrant with also makes concentrated Kékfrankos as Vesztergombi admits he is not zesty acidity and a delicate structure well as a Pét-Nat from the same grape. a huge fan of P9, which yields yet also deep, with a mélange of Wine blogger turned winemaker Zoltán fragrantly spicy but featherlight aromas and flavors from raspberry Németi is now making his own wine at wine. He had wanted to graft and rosehip, to anise, medicinal Hoop and his first Kékfrankos from the different clones in its place last herbs and earthiness. This wine 2019 vintage, which was also aged in year, but did not have the time. will cost HUF 4,300 from French oak, shows great promise.

“Kadarka needs substance, grálborpince.hu upon release.

Most of the above-mentioned it needs to be red wine,” he explains.

Meanwhile, the sturdier, more intense vintners will also be showing their Mission accomplished in this rich and robust wine from the P147 and wares at Borjour Magnum. After that, take on the grape. Incidentally, P163 clones, which will be labelled as attention will turn to the Winelovers’ Vesztergombi also believes that “Classic,” were matured in oak. Both Grand tasting on March 19, with Kadarka cannot be the main wines were fermented in open vats.

160-plus exhibitors, at the Corinthia grape of the wine region, Hotel Budapest.

Swab Origins especially as it is very sensitive Grál, which cultivates 2.7 hectares and highly susceptible to extreme organically in the village of Gyönk vintage variation.

(147 km southwest of Budapest by While Vesztergombi may not be a fan, road), is renowned for its Kékfrankos the P9 clone can make wine that, at its from the steep Pelzberg vineyard, best, is ethereal and exciting, while also which is located just above the winery exuding fruitiness and spiciness. One and reflects the Swabian German such wine is Lajvér’s Kadarka 2020, origins of the area. which I reviewed in November.

“I’m in love with the color and taste of It has a stunningly vibrant pale Kékfrankos,” says Mucsi. ruby color, with anise, rosehip and Grál, a name which refers to the strawberry aromas and flavors, and Holy Grail, burst onto the Hungarian a delightful lightness of touch on wine scene when its 2012 Pelzberg the light-bodied palate that is Kékfrankos won Borászportál’s nevertheless long and lingering.

Hungary’s Best Kékfrankos medal This wine was made in Flexcubes, in 2015. the increasingly popular and Pelzberg Kékfrankos 2018 comes from contemporary ageing vessel. In an Austrian Blaufränkisch clone from this instance, some oak staves were the vineyards of Burgenland grower/ inserted into the polymer cubes winemaker Ernst Triebaumer, located to add just a hint of woody character. in the village of Rust, and the Austrian The wine is outstanding value Kt1 clone. The resulting wine, which at HUF 2,390 from Bortársaság.

Zalán Mucsi, owner comes from a tiny yield of 0.7 kg of Close to Szekszárd, the region of Grál Borpince. grapes per vine, spent 22 months in of Tolna continues to fly under