Diplomacy&Trade 2021 March

MARCH 2021 HUF 1710

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A SHOTGUN MARRIAGE RUSSIA’S GEOSTRATEGIC POSITION AND VAST NATURAL RESOURCES MAKE THE COUNTRY AN INDISPENSABLE PARTNER FOR THE EU. AT THE SAME TIME, THE EUROPEAN UNION FREQUENTLY LEVELS CRITICISMS AGAINST MOSCOW FOR HUMAN AND CIVIL RIGHTS VIOLATIONS. SO, DEMOCRATIC VALUES OR BUSINESS INTERESTS PREVAIL? SEE ANALYSIS ON page 08

Hungary

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FOCUS

On the occasion of Hungary’s national day, Diplomacy&Trade has prepared a focus on Hungarian companies and brands that have long been known internationally. As to how these have enhanced the image of the ‘Hungarian’ brand, Diplomacy&Trade talks to State Secretary for Financial Affairs at the Hungarian Ministry of Finance, Gábor Gion who also shares his thoughts on the Hungarian economy’s recovery from the crisis caused by the new coronavirus epidemic. see compilation on pages 10-27

Hungarians in CNN’s Top 50 Hungarian gastronomy, including sweets, is well deservedly known abroad and this fact is now confirmed yet again as the country is featured with three items on a list compiled of the world’s best desserts. The admittedly subjective list is based on nine years of travel by a gastronomy writer who is a pastry chef by trade. see more on page 30

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Event guide to the Hungarian capital and outside Budapest

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AND DON’T FORGET

monthly in print - daily on the web

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05 ON THE RECORD 06-07 COMPANY BRIEFS 08 ANALYSIS

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28 DIPLOMACY

New ambassadors 29 WHAT’S ON Concerts, festivals, events and EU-Russia relations: democratic exhibitions in and out of Budapest values or business interests?

30 GASTRONOMY 09 WITTYLEAKS by the Ambassador Top 50 desserts of Kazakhstan 31 BEVERAGES 10-27 HUNGARIAN FOCUS Viper Hard Seltzer Interview with Minister of State Gábor Gion; Market Építő; Tungsram; HELL ENERGY; MOL; Zwack; How to attract (venture) capital?; Törley; Dreher

PUBLISHER: Peter Freed EDITOR: Sándor Laczkó PHOTO EDITOR: Dávid Harangozó SALES & MARKETING DIRECTOR: Tamás Varga ADMINISTRATION: Éva Madarász CONTRIBUTORS: Sándor Laczkó, Tamás Magyarics, Gábor Márky, Zhanibek Abdrashov

DUTCH FOCUS – COMING SOON

PHOTO CONTRIBUTORS: depositphotos.com (Cover), Júlia Trieber (Cover), shutterstock.com, Olivér Hargitay, depositphotos.com, hilti.hu, Roche Hungary, Gedeon Richter Plc., Thies Raetzke/metrans.hu, premium-bacon.hu, Embassy of Kazakhstan, Júlia Trieber, Zsolt Hlinka, Gyula Bartos, Benjámin Bernát, Tungsram, HELL Energy, Péter Lugosi, Géza Talabér, Zwack Unicum, Törley, Máté Czabán, sinco.hu, tarlova.com, Ora Hasenfratz, Danny North, Várkapitányság, Ignat Wiig, Dreher, MTI Photos: Zsolt Szigetváry, Noémi Bruzák

In its June issue, Diplomacy&Trade – in cooperation with the Dutch Embassy in Budapest –presents a special Focus section on relations between Hungary and the Netherlands as the two countries have recently celebrated the 100th anniversary of establishing diplomatic relations. The Netherlands is one of the major distribution and logistics centers in Europe and an important trading partner for Hungary. The combined trade balance of the two countries is about EUR 7 billion. Ever since Hungary became a member of the EU, the number and volume of Dutch investments have increased significantly. Currently, there are over 800 Dutch ventures in Hungary.

The special section includes an extensive interview with Ambassador René van Hell discussing economic ties, cultural and civilian cooperation. We also talk to the Netherlands-Hungarian Chamber of Commerce in Budapest.

Copyright 2004-2020 DUAX Kft., all rights reserved | ISSN 1589-8075 This magazine is produced by DUAX Kft. The opinions published in the magazine do not necessarily reflect the opinions of DUAX Kft.

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Five new ambassadors presented their credentials to the Hungarian President

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Peter Freed

GERGELY RÁKI, SINGAPORE AIRLINES, DÁVID HARANGOZÓ, DEPOSITPHOTOS.COM

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DREHER, DANNY NORTH, NOÉMI BRUZÁK/MTI, DEPOSITPHOTOS.COM

Russia’s geostrategic position, its vast natural resources, especially in energy, makes the country an indispensable partner for the EU. While the latter is promoting democratic and liberal values as well as levels frequent criticisms against Moscow in cases of human and civil rights violations, our international analyst says these should not be taken at face value as business interests often overwrite basic EU values. Also, the Russians seem to be successful in making deals with individual members of the community.

This month, Diplomacy&Trade publishes a Hungarian Focus – concentrating on well-known Hungarian companies and brands – in the month of the national holiday that commemorates the 1848 Hungarian revolution. In the leading article, a Minister of State in the Ministry of Finance talks about ‘Hungarian’ as a brand and the chances of recovery for the Hungarian economy once the pandemic is over.

The compilation presents internationally well-known Hungarian firms and brands, telling about their history and how they cherish their great traditions in the 21st century.

This month, WittyLeaks is authored by the Kazakh ambassador who states that “Hungarians are the westernmost Kazakhs, and Kazakhs are the easternmost Hungarians." He highlights how Kipchak/Kazakh tribes migrated to the Carpathian Basin in the 13th century and settled here between the Danube and Tisza rivers. They were the ancestors of today’s Kun Hungarians.

Our gastronomy page presents the Hungarian items on an admittedly subjective list, compiled for CNN by a pastry chef from Vermont, of the world’s 50 best desserts. The delicacies are put into historical perspective.

Also, we tell you about the Viper hard seltzer, which Dreher Breweries introduces to the Hungarian market this March; it is not beer at all, although it is made using a similar traditional process.

A year ago, at the start of the pandemic, we entered a vast unknown. During the past year, we experienced the highs and lows of the first, then the second, and now the third wave of the crisis. Hopefully, there is light at the end of the tunnel as the vaccines are being rolled out, albeit not without serious issues.

At this time of year as spring blossoms and we are all anxious to break out of our self-imposed lockdown, let’s all be patient and stay safe.

Hard seltzer, a translucent carbonated alcoholic drink

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letter from the publisher

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on the record

PACKAGE OF PROPOSALS TO HELP TOURISM AND HOSPITALITY

The Music Hungary Association, the Hungarian Festival Association and the Hungarian Association of Event Organizers and Service Providers have compiled a package of expert proposals addressed to the Hungarian Tourism Agency to help the Hungarian tourism and hospitality sectors. The proposal also calls for the introduction of a cultural VAT. The package to help businesses in difficulty due to the coronavirus epidemic proposes the introduction of a support system that does not exceed the amount of tax paid by the sectors to the state treasury in 2019.

GOVERNING MAJORITY EXTENDS EMERGENCY REGULATIONS The two-thirds governing majority in Hungarian parliament voted for a further extension of the state of emergency and emergency regulations – with no opposition MPs backing the proposal.

After the expiration of the state of emergency in early February, the government first extended it for fifteen days under its own authority, and then it was brought before Parliament to add another ninety days due to the coronavirus epidemic. As it seems that the third wave has arrived in Hungary, the epidemic situation will last for a long time.

Although serious political debates preceded the vote, in reality, the emergency is ordered and eliminated by the government under the Basic Law, without the need for parliament.

The governing Fidesz has asked MPs for their consent so that previously issued regulations can remain in force for another ninety days.

The organizations request that companies whose turnover due to the pandemic was at least 50% lower than in the same period (from March to March) of the previous year be eligible for a one-off grant calculated on 20% of lost sales.

The proposal also calls for the introduction of a cultural VAT based on an impact assessment. Previously, on behalf of the Music Hungary Association, PwC Hungary prepared a study on the uniform reduction of the VAT rate on concert and festival tickets to 5%. As they wrote, this could prevent the collapse of a sector of more than HUF 40 billion with a huge cultural and social significance.

RENOWNED HUNGARIAN REAL ESTATE DEVELOPER PASSES AWAY

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ZSOLT SZIGETVÁRY/MTI, DEPOSITPHOTOS.COM, SHUTTERSTOCK.COM, OLIVÉR HARGITAY

INCOME GAPS HAVE NOT NARROWED IN THE PAST DECADE

Despite economic growth, the concentration of income of the Hungarian population has remained virtually unchanged over the past ten years, according to the Central Statistical Office.

In 2019 – as in 2010 –, the richest 10% had nearly a quarter (23%) of the total income of the population and the top 30% about half of the total income. Households in the bottom tenth owned only 3% of income and those in the bottom 30% owned 14%. Based on the economic growth of the last ten years, the government's family support measures and the European Union support programs, it was expected that the differences would decrease. This is not how it happened, a study by the Budapest-based Economic Research Institute (GKI) has found. Rather, the data indicate that income disparities have actually been conserved. In reality, the situation is even worse, as the incomes of the fastest enriching strata are only partially included in the statistics (e.g. they were realized abroad).

All this also means that even at the peak of economic growth, more than two million Hungarian citizens had a monthly subsistence income of less than HUF 101,000 (or HUF 81,000 per month in the case of families with one child). While wages have risen by almost 100% in nominal terms since 2010, pensions have risen by only 33%, and social benefits rose almost nothing. Mainly because most of them are linked to the current minimum pension, which has remained unchanged at HUF 28,500 since 2010.

This means that the most vulnerable, retirees and those in need of social care, are moving further and further away from the rest. The main losers in the vision of a “work-based society” often emphasized by PM Viktor Orbán are from these groups, most of them slipping lower and lower in the income ladder after 40-50 years of work. w w w . d t e u r o p e . c o m

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Attila Kovács, founding owner and managing partner of DVM Group and Horizon Development real estate firms, has passed away at the age of 51.

He graduated from the Faculty of Architecture of the Budapest University of Technology in 1994, followed by an internship in international architecture and project management in the United States, Sweden, Italy and the United Kingdom.

Professionally up-todate and progressive knowledge has always been important to him, so he consciously sought to have his vision nurtured by beautiful impulses from all over the world, which he could also see as inspiration in shaping his own projects, his obituary says.

In 1995, he founded DVM Group, an internationally recognized group of companies providing the most complex architectural and construction services in Hungary, and in 2006, he launched his premium real estate development company, the multi-award-winning Horizon Development.

Attila Kovács also considered the urban architecture of Budapest as a professional mission. In recognition of his work in the field of progressive development of Hungarian architectural culture and promotion of the quality of real estate development, he received the Audience Award for Real Estate Player of the Year in 2011 and 2018, the CIJ Leadership Award in 2016 and the ‘For the City of the Future’ award by Budapest’s downtown District 5 in 2018.

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COLD WEATHER BRINGS ELECTRICITY CONSUMPTION RECORD Hungary's electricity consumption record has been broken due to the sharp cooling of the weather that began on February 11, the Hungarian Independent Transmission Operator Company Ltd. (Mavir) said.

According to verified data, the national system load reached 7,119 megawatts on that day between 5:45 p.m. and 6 p.m., a historic record. The previous peak, 7,105 megawatts, was registered on December 5, 2019 by the system operator.

The reasons for the outstanding winter power consumption include the need for longer lighting due to shorter daytime periods and the increased demand for heating in office buildings, public buildings and apartments and in single-family homes due to the cold weather. Also, more and more heating solutions, such as heat pumps, require electricity.

On average, in cold and overcast winter weather, Mavir registers values around 6,900-7,100 megawatts on working days, immediately after sunset.

MORE USED FRYING OIL AND FAT COLLECTED IN HUNGARY Used frying oil (including coconut and palm fat) and frying fat are selectively collected in 240-liter containers in 420 Hungarian settlements. Behind the collection of used oil is BioTrans Ltd., which has so far reached 1.8 million people with its program mainly in smaller municipalities but the company hopes this number will grow significantly. As hvg.hu writes, used frying oil should not be poured down the drain. In addition to environmental considerations, the costs of operating the sewer network are also reduced if no oil and grease enters the system, which means savings for both the operator and the wastewater treatment plants.

It is considered a hazardous waste, yet most people pour used cooking oil down the drain. In Hungary, about 25,000 tons of used cooking oil are generated in households, but only 2% of it is collected for recycling.

It has been calculated that a single drop of used cooking oil can contaminate up to a thousand liters of living water. Used cooking oil is value. As refined, used oil is practically 100% recyclable. With every liter of used cooking oil collected and recycled, our environment can be cleared of as much excess carbon dioxide as if we had driven 90 km less.

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­company briefs ROCHE EXPANDS ITS BUDAPEST BSC PORTFOLIO

HILTI INVESTMENT AT ITS KECSKEMÉT SITE With a new investment, Hilti Szerszám Kft. (Hilti Tool Ltd.) will engage in new activities at its site in Kecskemét, SE of Budapest, including the production of manual power tools and the establishment of a logistical system. The investment value amounts to HUF 7.2 billion (over EUR 20.1 million), of which the Hungarian government subsidy is HUF 1.1 billion (or about 15%).

The parent company Hilti AG, which celebrates its 80-year anniversary this year, is present in more than 120 countries and employs over 30,000 associates worldwide. The company is at the forefront of technology, software and services primarily supplied to the construction industry: their operation covers all areas from design and product software development and the production of tools up to different educational, servicing, testing and consultancy services. Hilti Szerszám Kft. was founded in 1989 with its headquarters in Kecskemét. The company produces tools, chisels, screwdriver bits and cutting discs for use in the construction industry at its manufacturing plant in Kecskemét. Major proportion of the company's production is exported and sold through the parent company's global network.

The new plant next to Kecskemét will manufacture cutting machine parts and assemble machine tools, measurement technology and vacuum systems, however, the investment stretching until 2024 will also facilitate the development of a new logistical system.

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the same, but our area of expertise and the added value of our tasks will grow significantly,” Zoltán Czuprik, P&C Director of Roche Services (Europe) Ltd. stressed. He added that “within our expansion, for most of the new roles we’re looking for people with HR expertise and fluent English, while we’re also seeking colleagues with German, Spanish, Italian and French language skills.”The company offers exceptionally flexible working hours, various benefits and a highly people-focused culture – home office is common practice and its conditions can be tailored for employees according to needs.

MODEST REVENUE INCREASE AT MAGYAR TELEKOM Hungary’s largest telecommunications service provider Magyar Telekom reported its consolidated financial results for the fourth quarter and full year of 2020, in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU. Total revenues increased by 3.6% year-on-year to HUF 188.9 billion in Q4 2020 thanks to increases in telecommunication service revenues in Hungary and North Macedonia coupled with higher equipment sales, and a positive foreign exchange impact stemming from the strengthening of the North Macedonian denar (MKD) compared to the Hungarian forint (HUF). For the full year 2020, revenues were up 1.0% at HUF 673.0 billion.

Direct costs increased by 3.0% year-on-year to HUF 90.9 billion in Q4 2020 mostly driven by higher equipment costs. For 2020, direct costs were up by 1.7% year-on-year at HUF 297.5

NESTLÉ TO BE CARBONNEUTRAL BY 2050 The Swiss multinational food and drink processing conglomerate corporation Nestlé has issued a statement explaining its top priorities for Europe, Middle East, and North Africa to reach its 2050 net-zero climate goal.

Net zero means that the company drastically reduces greenhouse gas emissions throughout the value chain from raw material production to consumption (farm to fork). In addition, Nestlé plans to reduce additional carbon emissions through projects to sequester atmospheric carbon dioxide in soil and trees.

By 2025, it is planned that all of Nestlé’s 800 manufacturing units worldwide will use 100% renewable electricity. In Hungary, the company has been using electricity from renewable sources only in all three of its local plants since 2017, and industrial waste from any of the plants end up in a landfill.

Waste generated during the operation of factories is instead recycled in material or energy.

Nestlé can only achieve its net zero target of 2050 with more sustainable packaging. This requires a higher use of recycled materials, the development of more reusable (refillable, recyclable) packaging or even the complete abandonment of M A R C H

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billion, reflecting increases in telecom tax and other direct costs. Gross profit improved by 4.1% year-on-year to HUF 97.9 billion in Q4 2020 thanks to higher contribution from telecommunication services partly counterbalanced by lower roaming results in both countries of operation. Gross profit was up moderately to HUF 375.6 billion in 2020. certain types of packaging. In France and Switzerland, Nestlé is testing the use of refillable and reusable packaging, which will also help the company use 30% less newly produced plastics to make its packaging by 2025. The Nestlé factories in Hungary will also significantly promote the fulfillment of the commitment, as thanks to the new solutions, the amount of plastic used for packaging decreased by nearly 70 tons in 2020 at the plant in Diósgyőr, which produces hollow chocolate figures.

In addition, all packaging used here is recyclable, i.e. if the appropriate infrastructure is in place in the country, it is easier to recycle this packaging.

Nestlé's plant in Szerencs also produces more and more recyclable packaging products, such as NESQUIK All Natural cocoa powder, which can be recycled in many European countries.

NOÉMI BRUZÁK/MTI, HILTI.HU, ROCHE HUNGARY, DEPOSITPHOTOS.COM

Plywood producer Falco Co. Ltd. invests EUR 25 million to develop numerous production areas at their premise in Szombathely, W Hungary. The development project will conclude in 2024 and it helps in retaining more than 300 jobs. HUF 1.2 billion of the HUF 8.2 billion investment costs will be covered by the Hungarian government.

The company was established in 1937 and has production facilities in Szombathely and Tárnok, SW of Budapest; The firm has been member of the Kronospan enterprise group since 2007. Falco Co. Ltd. is the leading producer of plywood for furniture and construction. Besides other companies in the Kronospan group, they also sell their products to numerous European buyers.

As the Hungarian Investment Promotion Agency (HIPA) reports, the current investment aims to develop the construction plywood machine line by introducing a new waste wood cleaning technology, starting the production of cement-bonded particleboards, establishing an open-air base material storage and also laying down industrial railway tracks.

The plant development will enable faster adaptation to customer demands and increasing manufacturing capacity, which will reduce production costs, thus contributing to the long run competitiveness of the company.

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FALCO INVESTS TO INCREASE CAPACITY

By bringing complex People&Culture (formerly known as Human Resources) positions to Hungary, the Swiss pharma firm Roche expands its services & solutions center in Budapest with 150 new roles. The site provides finance, procurement, HR and IT solutions to more than 60 countries – with the new, more added value positions, the areas of expertise offered by the center broadens even further.

Budapest-based Roche Services (Europe) Ltd. grew in size from 900 to 1,300 employees in the past four years, and is now opening 150 new positions in March, after the global healthcare company decided to transform its People&Culture (P&C) structure. “We’re constantly working on making our solutions more effective and of higher quality. We’re really happy to introduce new functions with these P&C positions - with this change we will offer a complex scope of duties that we believe are unique on the Hungarian service center market,” the General Manager of the Budapest office, Martin Kikstein said.

In practice, this means that Roche’s solution centers – including the Budapest office covering the Europe, Middle East and Africa (EMEA) regions – will broaden their people & culture portfolios with more complex, strategic duties, starting from March.

The new colleagues will join People Support Solutions (PSS), the company’s organization providing regional P&C services.

“Our center in Budapest has been supporting 50,000 Roche employees in more than 60 countries of the region – this remains

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GEDEON RICHTER MAINTAINS STRATEGIC DIRECTION

In its 2020 report to the Budapest Stock Exchange, the Hungarian pharmaceutical company Gedeon Richter Plc. states that it managed to service its customers in full and on time into the last quarter of the reported year despite a sharp increase in COVID-19 case numbers in its countries of operation.

Additional protective measures were implemented in its facilities in line with the tightening security measures imposed by different governments. The health and wellbeing of Gedeon Richter's team remained the focus of the management, while the supply of high quality and affordable medication successfully held up worldwide throughout the entire year reported.

Gedeon Richter's balance sheet remains strong and its cashflow positive, while it’s cautious approach to receivables management further adds to the company's resilience during the global economic turbulence.

According to the company's Chief Executive Officer, Gábor Orbán, "Gedeon Richter delivered on its mission in 2020 ensuring a sustainable supply of high quality and affordable medication for our patients and doctors worldwide. Our vertically integrated operating model and our corporate culture of trust built on a strong pharma tradition have allowed us to maintain our strategic direction in spite of all the difficult conditions created by the pandemic. In order to achieve this, we had to introduce a whole range of measures and also keep higher stock levels throughout the year. Both our sales levels and margins came in at or above target, thanks to the improving margin of our core business and to excellent sales growth recorded by Vraylar® on the US market.”

UPDATED, INTEGRATED LONG-TERM STRATEGY AT MOL The Board of Directors of the Hungarian oil and gas trust MOL reviewed and approved 'MOL Group 2030+', an update of the company’s long-term strategy – which was originally announced in October 2016 –, fully integrated with a new sustainability strategy and complemented with a longer-term vision and ambitions beyond 2030. A statement by the company says that MOL keeps key initiatives as they proved to be progressive and successful, but now accelerates business transformation. The company will transform its traditional businesses for the low-carbon future by making them even more efficient and focused. Downstream will become a highly efficient, sustainable, chemical focused leading downstream player, Consumer Services will become a best in class digitally driven consumer goods retailer, and Upstream will also be a more efficient and sustainable, valuegenerating strategy pillar.

Chairman and CEO Zsolt Hernádi is quoted in the statement by saying that ”the MOL 2030 long-term strategy has so far proved to be progressive, credible and directionally correct. Accordingly, MOL has taken important strategic steps in the right direction over the past five years. However, we have observed an unprecedented pace of changes around us recently, including rapid progress in the green energy transition. Our updated strategy seeks to accelerate our transition process to enhance MOL’s resilience and our ability to shape a sustainable future. We will sharpen our focus, increase our efficiency further, while seeking new opportunities with a new determination.

One thing has not changed since 2016: we remain deeply committed to the transformation of our traditional fossil-fuel-based operations into a low-carbon, sustainable business model.”

METRANS Group is establishing a new rail/road logistics terminal in Zalaegerszeg. The investment of over EUR 44.3 million will grant the Hungarian city a key role in making the Adriatic Corridor become a priority trade route. The container terminal, which is planned to be handed over to operating use in a number of stages as of 2023, will be a significant logistics center in Hungary and the region, creating 120 new jobs, the Hungarian Investment Promotion Agency reports. METRANS Group, which is engaged in intermodal freight transport as a subsidiary to the Germany-based HHLA (Hamburger Hafen und Logistik AG) concern, has been serving the transportation needs of various European countries with its railroad system and container terminal network. The company, with a staff of over 2,000 employees, offers efficient and environment-friendly logistics solutions to its customers in Central and Eastern Europe, as part of the container freight transportation service provided in Europe's leading ports. It was in 2017 that METRANS opened its first fully-owned Hungarian terminal in Budapest. Its international network, however, currently consists of 17 rail terminals. Zalaegerszeg has been selected for the site of the company's second terminal in the country, which is expected to grow into a significant hub in the future, on the transportation line connecting the ports of Southern and South Eastern Europe, namely Trieste, Koper and Rijeka with the European markets. The building of the terminal will support Hungary in becoming one of the most competent logistics centers in Europe.

TAMÁSI HÚS DOUBLING PRODUCTION CAPACITY Tamási Hús Ltd., Hungary's top bacon producer, is expanding its production capacity in Tamási, W Hungary, and improving its service infrastructure through a cumulative investment of EUR 42.6 million.

The project entails the building of a new plant and warehouse, in addition to the installation of a set of new bacon slicers and roasters, a bacon press and an air cleaner. The developments, which are to be completed in 2022, are expected to create 255 new jobs, the Hungarian Investment Promotion Agency reports.

The company's subsidiary, Gierlinger Gmbh was founded in 2000 in Austria. Alongside its unit in Austria, the company also has plants in Hungary, Romania and Serbia. Gierlinger Group is an active player in the meat industry, supplying bacon, frozen meat products, on-demand products as well as sausages and ham to European customers in particular.

The investment will not only help Tamási Hús Ltd. grow its sliced bacon production capacity, but also double the company's output in terms of roast bacon supply. The company sells 60% of its products abroad, and is considered to be a market leader in bacon production both within and beyond the borders of Hungary. Sliced bacon is primarily supplied to retail store chains, while roast bacon is a popular product among European fast food restaurant chains. The new production capacity, as a result of the investment, will significantly expand the company's retail and wholesale product portfolio, produced mainly for export purposes.

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GEDEON RICHTER PLC., THIES RAETZKE/METRANS.HU, DEPOSITPHOTOS.COM, PREMIUM-BACON.HU

INTERMODAL CONTAINER TERMINAL TO BE BUILT IN SW HUNGARY

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analysis

A SHOTGUN MARRIAGE

RELATIONS BETWEEN THE EUROPEAN UNION AND RUSSIA: VALUES OR INTERESTS?

Divide et…

If it is sometimes asserted that Germany is too large for Europe, so is Russia for the Eurasian continent. Russia’s geostrategic position, its vast natural resources, especially in energy, makes the country an indispensable partner for the EU. No matter how serious the EU is about promoting democratic and liberal values (and there are doubts whether they sometimes simply

This issue points towards a so far successful Russian strategy vis-á-vis the EU, i.e. making deals with individual members of the community.

In a broader sense, it also reveals a not so hidden goal of the Kremlin: splitting the unity of the EU as much as possible, and driving a wedge between the individual members of the community. On a global scale, Russia has been

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really diversified its energy imports as it has been trying to do for years. In the broadest sense, the EU should square a circle: it is based on values in the sense of a postmodern interpretation of power, while Russia is practicing a classic balance of power politics; historically speaking, the Russians have known one language, and that is that of power. So long as the EU does not have real unity and real power to support the former, its leverage over Russia will be limited.

Geopolitical Achilles heel The EU-Russia tension has one potential beneficiary: Ukraine. If Russia has a geopolitical Achilles heel, it is its western neighbor. As the saying goes, Russia with Ukraine is a great power, without Ukraine it is only a regional one. The EU, with the support of the Biden administration, is able to decide on a more vigorous program drawing Ukraine closer to the Atlantic community. The ’loss’ of Ukraine would deal a blow to Russia’s geostrategic positions, and would likely to weaken its bargaining positions on the international stage. One of the key questions in the coming years, in this respect too, whether the EU and the US are able to set aside their differences in trade and other issues, and to work closely together in addressing the most important outstanding global affairs, first and foremost the challenges posed by Russia and China.

Violating international norms but…

As for the EU, it has to walk a relatively fine line in its dealings with Russia. First, as we have seen, strong – almost vital – economic interests prevent the major EU members from imposing real crippling sanctions on Russia for her violation of international norms. Second, even if the EU were willing to do that, one potential consequence would be a strategic and geopolitical nightmare for the EU and the US alike, and that would be pushing Russia and China closer together. In reality, China poses a bigger threat to Russia in the long run, but they may team up against the ’West’ for tactical reasons in the short and medium term. The fact is that they have institutionalized their cooperation in such real or virtual organizations as the Shanghai Cooperation Organization (SCO) and the BRICS. China also offers an alternative market for Russian energy exports if the EU M A R C H

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Lip service vs. own interests

doing everything in its capacity to figuratively widen the Atlantic Ocean, and sowing seeds of distrust among the members of the Atlantic community. Overall, these attempts are rational from Russia’s point of view, as President Putin is aware of the fact that Russia is not in the peer group of the U.S. and the EU. Therefore, what Moscow is doing can be labelled as a classic act of soft balancing by trying to exploit any potential rift in the EU. A part of this strategy is offering favorable deals to countries within the EU which are not excessively happy with the power grab of the bureaucrats in Brussels.

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Russia is here, and it plans to be here.

The EU can only ignore Russia at its own peril – not even speaking of turning Moscow against itself. However, the other side of the coin is that the EU is Russia’s neighbor, and the Kremlin can only ignore the EU at its own peril – not even speaking of turning Brussels against itself. In fact, as we’ll see later on, it is not really Brussels that is a real challenge to Russia, but Berlin and Paris. This distinction is important when we are discussing the relations between the 'European Union' and Russia. In fact, Russia, as well as the other outside major powers, such as the U.S. and China, know it only too well that a common European foreign and security policy is, for all intents and purposes, is a fiction. If you want to do business with the ’Europeans’, you’d better visit the German and/or the French capital. One glaring example is the Minsk Protocol (Minsk 1 and 2), negotiated to stop the Russian-Ukrainian conflict by the German Chancellor and the French President besides the two sides involved in the conflict.

hide raw interests), this card is rather weak in its dealings with Russia. The cool power politics pursued by Vladimir Putin calculates, so far quite successfully, that the frequent criticisms leveled against Moscow in cases of human and civil rights violations should not be taken at face value. One outstanding example is Germany’s attitude towards Russia. After the violation of the territorial sovereignty of Ukraine in 2014, including the occupation of Crimea, the EU countries imposed various sanctions on Russia in general. Nevertheless, German business and trade contacts are as intimate with Russia as ever, while the construction of the Nord Stream 2 pipeline also means, among others, that Germany – metaphorically – pulls the rug under the feet of a few East and Central European countries, foremost among them is Ukraine.

Though German leaders repeatedly pay lip service to Ukraine’s independence, Nord Stream 2 will take billions of dollars in transit fees out of the pockets of the Ukrainians, and – in addition – makes the bargaining position of the gas and oil transit countries from Russia to the EU weaker.

BY TAMÁS MAGYARICS

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witty leaks WITTY

IN THIS SERIES, DIPLOMATS SHARE PERSONAL ACCOUNTS OF THEIR EXPERIENCES ON “EXCURSIONS” into Hungarian culture, art, gastronomy & scenery.

LE A K S

HUNGARY – FEELS LIKE AT HOME

"HUNGARIANS ARE THE WESTERNMOST KAZAKHS, AND KAZAKHS ARE THE EASTERNMOST HUNGARIANS"

BY THE AMBASSADOR OF KAZAKHSTAN, ZHANIBEK ABDRASHOV

In October 2019, arriving as my country's Ambassador Extraordinary and Plenipotentiary in Budapest after my work in the United States, it felt like I had arrived in my native land. I think that this feeling is connected with the historical and genetic roots of the Magyars, who migrated from Asia to Europe and continue to preserve their identity.

Archaeological, linguistic, ethnographic and anthropological studies have proved that the anthropological features and traditions of the Magyars still retain features that have Hunnic roots and are characteristic of all the Turkic peoples of Central Asia.

In the 13th century, ten Kipchak tribes under the leadership of Khan Kotyan came from the territory of Kazakhstan to Hungary and settled in the center of Europe, making a significant contribution to the development of the region and to the fight against external enemies. They were adopted by the Hungarian King Béla IV and formed the elite of his horse army. For several centuries, the KipchakKuns preserved their identity and language.

The memory of that stored in the historical regions of Hungary Nagykunság and the Kiskunság (Big and Small Kipchaks).

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Karcag

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In addition, the Kazakh delegations regularly participate in the Kurultai of the Turkic Peoples, which is held annually in Hungary, and we know how Hungary actively supports this initiative.

We hope that in this year the next Kurultai will be held in August, organized by the MagyarTuran Foundation headed by András Bíró.

Today, scientists and public figures of the two countries are actively studying the common historical roots, and we, from our part, provide them with full support.

One of the great contributions to the development of cultural relations between the two countries was made by the meeting of the First President of the Republic of Kazakhstan – Elbasy Nursultan Nazarbayev with representatives of the ‘Union of Kipchaks of Hungary’, which elected him as their Honorary Leader.

Cherishing kinship ties

The origin of the Kuns

Today, more than a hundred thousand inhabitants of Hungary consider themselves descendants of the Kipchaks, many of them live in the town of Karcag (meaning ‘steppe fox’ in the Kazakh language).

In that town, there is a monument to Kipchak Khan Kotyan. By the way, this city was the first after Budapest, which I visited upon arrival to Hungary.

Then, I met with the hereditary Kipchaks: Deputy Prime Minister, Minister of Finance of Hungary Mr. Mihály Varga, deputies of the Parliament of Hungary like the Honorary Chairman of the ‘Union of the Kipchaks’, Sándor Fazekas or the current President of the Union of the Kipchaks, Sándor Kovács who are natives of the town of Karcag, as well as with the since deceased mayor of the town of Karcag, László Dobos.

Also, I visited the museum named after local ethnographer István Györffy, which presents exhibits of the Kipchak heritage.

Studying the common historical roots

Kipchak heritage Generally, there are 300 sites in Hungary with traditional Kipchak burials, in which objects of various origins were found, including the steppes of Eastern Europe.

Of the things of Western European origin, the belts of warriors that were given to them by the crusaders are often marked. The crosses on the burials,

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which were used by the Kipchaks as amulets, testified to the Christianity and baptism of the Kipchaks. Weapons and jewelry were placed in the graves.

Despite the loss of their native language at the end of the 16th century and presently belonging to the Hungarian nation, many of them culturally and ethnically feel kinship with the Kipchaks – an ancient Kazakh family.

Today, the relations between Kazakhstan and Hungary are characterized by full mutual understanding and focus on strengthening cooperation, and our positions on the most pressing international issues coincide.

I would like to emphasize that next year, we will celebrate the 30th Anniversary of the establishment of diplomatic relations between Kazakhstan and Hungary, which are strategic.

As a deputy Chairman of the State Assembly of Hungary, Sándor Lezsák told me at the meeting: "the greatest value in bilateral relations is the kinship ties between the peoples of Kazakhstan and Hungary".

This year, Kazakhstan is celebrating the 30th Anniversary of its Independence. Today, Kazakhstan is undergoing political reforms initiated by President Kassym-Jomart Tokayev in terms of protecting human rights, building a democratic society and implementing the concept of a ‘Hearing State’. Among the current achievements, I would like to mention the adoption of a new law on peaceful meetings, the decriminalization of libel, the humanization of certain articles of the criminal code, the introduction of a 30% electoral quota for women and young people, as well as Kazakhstan's accession to the Second Optional Protocol on the Abolition of the death penalty.

In general, the historical closeness of the two peoples and their desire to revive their national culture and traditions contribute to the active development of cultural and humanitarian relations. As the Kazakh writer Abish Kekilbayev noted: "Hungarians are the westernmost Kazakhs, and Kazakhs are the easternmost Hungarians".

In conclusion, I would like to quote the dictum of Count István Széchenyi (17911860), a Hungarian reformer and writer who made a significant contribution to the rise of the national spirit in Hungary: «Tiszteld a múltat, hogy érthesd a jelent, és munkálkodhass a jövőn» «To understand the present and secure the future – need to respect the past».

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HUNGARIAN INTELLECTUAL ASSETS INCREASINGLY RECOGNIZED

BY FOREIGN INVESTORS

The State Secretary highlights that these companies and brands listed do enhance Hungary’s image and ‘Hungarian’ as a brand and he would welcome more such brands emerging in Hungary, brands that are first known in this East Central European region and then perhaps globally. He adds that he usually looks at brands in broader terms, pointing out that the Hungarian business environment, Hungary, and including Budapest, as a destination for international tourism is a brand. Of course, this has changed with the pandemic but he hopes that things will change for the better in a couple of months. He believes that when talking about brands, it is particularly important that one looks at them in a broader

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scale – not just as a product but also as a place to live, as a place to visit, as a place to do business in, as a place to invest in. He is of the view that in the past couple of years or decade, Hungary has further emerged as a brand in these areas.

Intellectual assets Regarding Hungarian intellectual potential and how much this contributes to the country’s economic development internationally, Gábor Gion stresses that when talking about Hungarian intellectual achievements, there are these usual and true mantras about Hungarian Nobel Prize winners, Hungarian inventions. Hungarian intellectual potential is well-known and is important. If translated into modern economic terms, the Hungarian intellectual potential is being discovered

Pandemic priorities

by foreign investors as well. In the 1990s, Hungary was kind of a place or destination for investments built on cheap labor, intense manufacturing. Now, this has gradually shifted to higher value-added segments of the economy such as professional services. Regarding the number of shared service centers that operate in Hungary, they are well over a hundred and still expanding. Also, there are more and more domestic and foreign companies investing in research and development, establishing R&D centers in this country, harvesting specifically on the Hungarian intellectual potential, which is wellknown to Hungarians but it looks like it is becoming more of a common knowledge globally also, turning gradually into a Hungarian brand, which is good news for the country and good news for its economy.

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The COVID-19 pandemic struck economies worldwide, prompting different responses in different countries. When touching on the policy of the Hungarian government in tackling this economic, social and health crisis, the State Secretary stresses that Hungary, just like the rest of the world, faces an economic and social crisis that is actually caused by a health issue, the root cause of the current problems. He underlines that first and foremost, the Hungarian government’s aim is to address this healthcare issue, combatting the pandemic and saving lives. That is the No. 1 priority.

Another priority is to mitigate the negative effects of the economic downturn and work heavily on maintaining the output level of the economy. Also, it is to protect jobs, and even creating new ones.

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HUNGARIAN AS A BRAND

Companies and brands like Tungsram, MOL or OTP have long been known internationally.

As to how much these and other similar firms have enhanced the image of the ‘Hungarian’ brand, Diplomacy&Trade talks to the State Secretary for Financial Affairs at the Hungarian Ministry of Finance, Gábor Gion who also shares his thoughts on the Hungarian economy’s recovery from the crisis caused by the new coronavirus epidemic.

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hungarian focus As regards successful measures by the Hungarian government in the past 10-12 months to help people and companies, Gábor Gion is of the view that it is a bit premature to actually rank the various measures by their success because the downturn and the crisis is not yet over. One has to take an inventory of the effectiveness of these steps after the crisis. The Hungarian measures taken include tax reliefs, direct subsidies, monetary stimulus – all adding up to 30% of the GDP, one of the highest levels of response in Europe. As for the unemployment figure, which was 3.5% before the pandemic, it went up to 4.7% by December 2020, which is an increase but at the beginning of the crisis, everybody expected a much worse situation and a much higher level of unemployment. When it comes to actually protecting jobs, the State Secretary believes that the country has been very successful, so far, and hopefully, this will last.

mentions as the largest and more imminent funding the recovery and resilience facility where Hungary is entitled to about EUR 6 million of non-refundable grants and EUR 9-10 billion of preferential loans. In order to actually access these funds, the Hungarian government has submitted what is called a national reform program that the European Commission needs to approve – this is a work in progress. Once the Commission’s guidance is received on how to use these funds, green and digital elements of this program will be applied and more can be said about this probably in a month or two.

Continued recovery expected

Competitiveness

Minister of Finance Mihály Varga inaugurating a plant that manufactures Favipiravir, an antiviral medication to treat new coronavirus patients

to measuring competitiveness from the angle of attractiveness, Hungary is doing really well. It is also beneficial to the competitiveness of Hungarian companies, especially in the SME sector.

To complement investment dynamics, targeted policy support is provided to strategic sectors, most notably the health industry. An ambitious Egészségipari Támogatási Program (ETP/Health Industry Funding Scheme) has been designed to address some vulnerabilities identified during the COVID-19 crisis, Gábor Gion adds. It provides for HUF 68.0 billion to be allocated to domestic

healthcare manufacturers to ensure that the procurement and manufacturing of sanitizers, masks, surgical gloves and ventilators among others can be carried out through Hungarian investments.

EU funding Minister Varga also mentioned at that conference that the majority of EU aid had already been committed by the government. Speaking about the main considerations when allocating European Union funds in Hungary, the State Secretary

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Two major aims appearing in government declarations is the protection of jobs and the maintenance of competitiveness. At the conference of the Hungarian Business Leaders Forum (HBLF) last October, the Minister of Finance, Mihály Varga stated that “it is up to the jobs to maintain economic performance, to which the government must contribute by improving competitiveness.”

As the State Secretary puts it, competitiveness domestically and internationally is a complex issue, stating that improving competitiveness is a never-ending job because there is always room for improvement. When it comes to Hungary and being competitive in terms of attracting businesses and investments, he is of the view that the country is very successful in that. When considering the amount of new foreign direct investments, the amount private investors have been committing to new production capacities since the start of the pandemic is HUF 2,500 billion. At the moment, investments in progress in manufacturing capacities amount to HUF 6,500 billion. When these investment projects will be up and running and actually in operation, that could add 20-25% points to the GDP. This shows that when it comes

When asked about the recovery chances of the Hungarian economy from the crisis caused by the pandemic, Gábor Gion says it is very hard to provide any prediction concerning this new coronavirus pandemic as there is great uncertainty about the situation and it is all subject to the behavior of the virus. If one looks at the country’s economic performance in 2020, the Hungarian economy contracted by 5.1%, which is clearly better than had been expected. The Finance Ministry actually foresaw a decline of over 6%, so, this is clearly good news, which indicates that the economy was resilient and strong and it recovered at least in most of the segments. There are, of course, segments that have not recovered and they will not recover as long as the healthcare situation is not settled reassuringly. Industry has recovered, consumption has recovered, some of the service sectors have recovered. That is the good news, Gábor Gion says.

For this year, the Ministry expects to achieve economic growth. As the State Secretary mentioned earlier, all this very much depends on the behavior of the virus, which is an issue of great uncertainty, so, the estimate might change as the situation evolves. For the first quarter of this year, they still estimate a slightly worse performance than what was recorded in the first quarter of last year – that of the first three months of 2020 could still be considered to be a good performance. As for this year, a significant additional rebound is expected and return to the previous levels of economic performance, Gábor Gion concludes, striking an optimistic note.

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THE CONSTRUCTION BUSINESS IS A MATTER OF TRUST MARKET ÉPÍTŐ IS KNOWN FOR RELIABILITY, QUALITY WORK, DESIGN AND COMPETENCE

Market Építő Plc. that celebrates its 25th anniversary this year has become the leading high-rise construction company in Hungary. The company, which attaches importance to the application of innovative solutions and the comprehensive use of quality, health and safety and energy management systems, also earned the title of ‘Construction Company of the Year’ in 2019.

Market Építő Plc. is the flagship of a group of companies, the general contractor company that controls the operation of the other members of the group and it is also the one that provides the background services like accounting, legal affairs, HR, IT and other such areas.

Working in a competitive environment

The founder and CEO of Market Építő, Sándor Scheer has often emphasized that the characteristic that probably helped make Market Építő a successful company was diligence.

Speaking to Diplomacy&Trade, he points out that the work they do must be characterized by diligence and humility. “I believe this is one of our strengths.” He also retained employees even under less favorable economic circumstances so that he would have the human resources to restart after the crisis. “We insist on keeping our employees because they represent a real value for us, the special knowledge and professionalism are very important for the company. This is why I hold on to them now as I did in the past.

We continue to build this company together.”

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Another issue often emphasized by the CEO is the importance of competitiveness. “The variety of the work we do requires that we are competitive.

Most of the work we do is commissioned by the private sector under very competitive conditions. Multinational companies, real estate developers and institutional investors, who are frequent players in real estate development, are well aware of the going prices. Competition keeps us focused on bringing out our best effort. Beyond that, we continuously examine and analyze our own operation, trying to focus on all elements where we can improve our efficiency, our competitiveness,” the CEO explains.

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Valued employees

ZSOLT HLINKA, GYULA BARTOS, BENJÁMIN BERNÁT

Market Építő as a brand is widely known in Hungary. Sándor Scheer is of the view that “the notions associated in the mind of the public with our company are reliability, quality work, design and competence. In order to build this company and build this brand, we have to be aware of what the public and people in our profession think about us.”

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MOL Campus A fine example of a competitive environment is the new office complex of the Hungarian oil and gas group MOL in Budapest. The constructor of the MOL Campus was selected in an international tender of four rounds, a tender won by Market Építő.

Given MOL’s disciplined and well-structured procurement system, Sándor Scheer believes the decisive factor must have been the price “but I hope that apart from that, it was a point of consideration that every construction project is a matter of trust. Investing in construction is very important for the person or business that commissions this activity, be it headquarters, a factory or even’s someone’s house. For this

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reason, it is an issue of mutual trust – the client must trust the builder and vice versa. In such projects, the contractor and its client are interdependent on each other.”

There has never been such a tall building in Budapest. However, it is not just the height but there are also other characteristics that make the MOL Campus stand out on the Hungarian office market: automation, corporate governance, building engineering, lighting, fire safety, elevators – these are all unique solutions that have not yet been applied in this country. He also highlights MOL’s professional approach. “We have built hundreds of thousands of square meters of office space but we have never worked on a project

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where the management of the client company took the whole thing so seriously with the involvement of studies and professionals at such a high level. In preparation for building this office complex, MOL thoroughly screened its operation model, bringing office space and operation to a common denominator. This became the fundamentals of the work we do there,” he adds.

Innovation serves the future Innovation is important for the development of most companies. From this point of view, Market Építő is a unique firm on the Hungarian office building market. Sándor Scheer highlights that “studying the operation of and structure of foreign construction companies, we found 4-5 years ago that we lack a position that serves the future: that of a development director, an innovation leader, a person whose sole responsibility is how to improve the operation of our firm, how to introduce novelties, how to keep pace with the world in this profession and how not to be constrained by our Hungarian thinking.”

Therefore, they created a new department, whose head is ranked as deputy CEO, and earmarked a substantial amount of funding for its operation. “Practically, the task of this area is to continuously modernize our operation and bring innovative ideas into our everyday life. What this means is that our thinking has changed and innovation starts where one begins to think about this and is involved in this day by day. As a result, we now have a subsidiary tasked with pre-fabrication, we are contemplating semi-finished products, we are following all exhibitions that are worth visiting in this profession, which is not easy nowadays

under these pandemic conditions, monitoring all innovations and try to include them in our projects. I daresay that we are ahead of our competitors in this respect,” he points out.

Striving for sustainable operation The company celebrates its 25th anniversary this year. As regards future goals, based on the fiveyear plan under preparation at Market Építő, the CEO says the emphasis is not on growing but on “making our operation as professional and efficient as possible while keeping an eye on sustainability.

By the latter, I mean green ideas, innovation, maintaining the level of remuneration for our colleagues and keeping up the level of operation that I consider healthy and professional.”

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hungarian focus BUILDING ON THE VALUES OF THE GLORIOUS PAST 125-YEAR-OLD TUNGSRAM IS A BRAINCHILD OF THE SECOND INDUSTRIAL REVOLUTION

rate of the technology is higher. We are using the financial aspect of energy efficiency so many of our customers are opting to get those solutions, e.g. modernizing buildings in which we take full responsibility for the project up to a 10-15-year warranty period and they don’t have to put their own money on the table. The benefit is having a healthier building for the tenants, the citizens,” he explains.

Partnering with diplomats The Tungsram President & CEO says he has a lot of interactions with Hungarian diplomats abroad and foreign diplomats in Hungary. Highlighting just two of them, he mentions two recently departed ambassadors accredited to Hungary. “We had close cooperation with British ambassador Iain Lindsay, in e.g. doing research programs with British universities in agriculture and farming, and we share the passion of learning the Hungarian language that we both managed to a certain extent.”

The other example is that of Saudi ambassador Mohammed A. Almatrafi. Joerg Bauer was also working with him in his capacity as the Hungarian Co-President of the Saudi-Hungarian Business Council. (He holds that post in the EgyptianHungarian Business Council as well.) “We had close interaction with the Saudi and Egyptian ambassadors and their teams,” he adds.

The Tungsram President & CEO is of the view that Hungarian ambassadors and their teams can also consider themselves as business outposts.

“Their activities are very useful in opening doors in their respective host countries for businesses like us. You can see a lot of business opportunities in various countries and if a Hungarian company, like us, wishes to explore those, you can’t just call up and say ‘I’m Mr. Bauer from Hungary…’, it is much easier and smoother if the Hungarian ambassador there helps set up a meeting with decision makers.”

Regarding a new initiative, he says it is only logical that Hungary has just set up a diplomatic academy where business and diplomacy meet.

“We are very proud that we are one of the first companies to contribute to this program. We are also sending our own people to be trained there. This role of diplomats to be cultural bridges between their home state and host country is very important. Add to it the business understanding and we have the winning formula!”

Hungary’s internationally renowned lighting company Tungsram celebrates the 125th anniversary of its foundation this year. Its President & CEO Joerg Bauer tells Diplomacy&Trade about the firm, the brand and how this history was intertwined with that of Hungary.

After World War I, in which Hungary had been on the losing side, Tungsram was cut off from many of its traditional markets. So, people like Lipót Aschner were needed. Building on innovation, he not only founded the famous industrial lab of Tungsram, the first of its kind on the continent, following Thomas Edison’s example in the U.S., attracting scientists to run it but he also founded the institute for radioactive research at the Technical University of Budapest in the middle of the global financial crisis. “He understood – and that was the first

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phase of international expansion – that we have to be present in other countries. He very deliberately chose countries, established trade offices and even factories in other parts of the world. Interestingly enough, we are getting to a very similar phase now. The first phase, if you want, of globalization seems to be coming to an end. This was happening before the pandemic but the coronavirus situation accelerated the process and to some extent exposed the weaknesses like the fragility of global supply systems. So, our strategy building on the past is to deliberately find partner countries – some of those countries we have been present in for more than a hundred years – and go deep in our relationship with those countries. So, we would like to be a global company that is also a local company on those markets. On the other hand, we have a unique company-in-the-box offering for investors entering the EU with minimal up-front investment enabled by shared Tungsram infrastructure and resources in Hungary,” Joerg Bauer points out.

Caring for the environment “Our employees have long been active members in their respective communities. We are trying to contribute to the well-being of communities, e.g. helping to build playgrounds, cleaning green areas.

It is a natural feeling, our colleagues do not expect any special reward for it,” Joerg Bauer stresses.

“We are now looking at the environmental impact of our business. If you reduce energy consumption, it is obviously good for the environment but also for the profit-and-loss statement as you produce more with the same amount of resources. It means that caring for the environment and profitability do not contradict each other. We also do that by choosing the activities we are investing in: food security, healthy and livable environment, smart buildings, smart cities where the big focus is on energy efficiency. The latter has two positive impacts: it reduces pollution, the ecological footprint and on the other hand, it reduces costs.

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Rebuilding international ties

Joerg Bauer

He mentions the Middle East and North Africa as examples. Tungsram announced investing in Abu Dhabi: into local factory and local agricultural technology showcase, into training local employees, into connecting local universities with Hungarian ones and into pushing the boundaries of this technology. “So, basically, we are doing what was done in the first golden age of Tungsram,” he adds.

Then, after World War II, the situation changed but still, Tungsram, now behind the Iron Curtain, was able to maintain its global competitive position even after being cut off from most of the modern technology, having lost its Western subsidiaries and investments. Between the end of WWII and 1989, the start of the regime change in Hungary, Tungsram managed to compete not just in the Eastern Bloc but also in many of the ‘capitalist’ countries. Celebrating this glorious past inspires today’s management and staff as they are getting ready for the next 125 years.

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“We have been very much looking forward to celebrating this anniversary.

Under the present circumstances, we will celebrate modestly and mostly in the second half of the year, hoping that by then, we can organize an in-person celebration. In the meantime, we are also planning some online events and initiatives”, the President & CEO highlights.

Looking at the history of the company that started in 1896, he is of the view that “practically, Tungsram is a brainchild of the second industrial revolution sometimes defined by electrification and combustion engine. If you look at Hungary, it is a kind of intertwinedness between the country and Tungsram. Hungary was booming at the end of the 19th century, Budapest was the world’s second most dynamic city after Chicago, with another boom coming with the millennium celebrations of the Hungarian state. In this great period of optimism, a lot of great brands of Hungarian industrial history were born: Ganz, Láng, Rába, Ikarus, etc. – and obviously, Tungsram. Those companies were the disrupters of their time. Tungsram was one of the very first companies to use the idea of Thomas Edison to produce electric light and made it available to everyday people that could enjoy the light in their homes. This is the same spirit when we are facing the fourth industrial revolution, the same spirit we are leaning back to and building on.”

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HELL: A DEVILISH HUNGARIAN DRINK FOR THE WORLD INFINITELY RECYCLABLE ALUMINUM CANS MAKE HELL’S PREMIUM QUALITY DRINKS EVEN MORE PRESTIGIOUS

One of the world’s fastest-growing beverage brands puts the capabilities of Hungary’s manufacturing in the international spotlight: HELL ENERGY. As of this February 1, its XIXO carbonated soft drinks are packaged solely in 100% recyclable aluminum cans, which can be recycled an infinite number of times.

HELL ENERGY’s dynamic expansion shows no sign of slowing: the firm has continuously seen doubledigit annual growth to reach revenues of over USD 170 million in 2019 and, despite the COVID-19 pandemic, its 2020 sales rose by another 20%.

The vision driving the firm has not changed since day one, according to Managing Director Barnabás Csereklye. “The owners recognized they could create

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HELL ENERGY

Hellishly good

a premium-quality energy drink that tastes good at an affordable price. They developed a recipe and, at a tasting, someone described it as ‘hellishly good’.

That gave the brand its name and, within four years, it was market leader in Hungary,” he says. The quality of HELL’s products is reflected in the fact that they contain only top-quality ingredients. “For example, we don’t use artificial sweeteners, only best-quality granulated sugar as this ensures real energy and, unlike some competitors, the longer shelf life of our drinks is due to pasteurization not artificial preservatives,” he stresses.

International presence In addition to quality, HELL’s products are characterized by innovation. Every year, new products are launched to meet the needs of different audiences.

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Established 15 years ago, family-owned HELL ENERGY has achieved explosive domestic and export success to become the third biggest energy drink manufacturer in the world behind Austria’s Red Bull and the American Monster Energy, according to estimations, with a presence in over 50 countries on five continents and market leadership in ten of those countries.

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hungarian focus Today, the range that is almost exclusively packaged in aluminum cans includes energy drinks with varying levels of caffeine, beverages for active lives, milk-based energy coffees and other functional drinks enriched with beneficial ingredients such as vitamins. “As an illustration, one of our products, FOCUS, has been proven to enhance attention capability by 26%,” the Managing Director notes.

Ensuring wide availability has been central to HELL’s export success, he explains.

can produce 50,000 cans of premium energy coffees an hour using Hungarian milk.

A previous milestone came in 2017 when HELL opened Hungary’s first can-making plant with the help of U.S. leader Stolle Machinery. Already one of the largest of its kind in the world, its capacity is set to double in 2021. “We have also invested in the most modern technology for warehousing and logistics – there are only three other factories in Europe that have our kind of wall-to-wall production. We strive for excellence in terms of best-practice manufacturing: our factories are certified to the highest level in our sector, FSSC 22000, and we were rewarded by many industry awards,” the Managing Director reveals.

Committed to the environment HELL is also leading the global sector toward circular economies and sustainability. In June 2020, it signed a contract with Norway’s Hydro to move production of its drinks into cans made of Hydro CIRCAL, the world’s greenest aluminum, according to the Managing Director. “It contains at least 75% recycled post-consumer scrap and we are the first beverage company in the world using this very environmentally friendly material. By utilizing Hydro CIRCAL, as well as through advances we have made in reducing can thickness, we are decreasing our carbon footprint by 60%,” Barnabás Csereklye concludes.

Sustainability as core strategy “Our vision is to become market leader in every country in which we are playing.

When we arrive in a new market, we build our presence, and invest in local marketing and sales.

This is how we became leaders in Hungary, Croatia, Serbia, Macedonia, Slovakia, Romania, Bulgaria, Greece, Cyprus and Azerbaijan. In some countries we set up a subsidiary, in others, we work with a distributor that can give HELL its full attention.” Countries the company has recently entered where this approach is paying dividends include India and the U.K., while its next expansion could be into Africa. HELL’s marketing communications are equally effective. It established international awareness by sponsoring the AT&T Williams Formula 1 team in 2009 and, since 2018, has centered its prominent advertising campaigns on a man who embodies the brand’s energy, strength and quality: Bruce Willis.

The latest press release by the soft drink brand XIXO confirms that HELL ENERGY Hungary Ltd. is one of the few Hungarian companies that treat sustainability not only as an abstract business philosophy, but a significant part of its core strategy that shows itself in its actions.

“Consumers have a right to expect from the market leader that it will protect the planet with environmentally conscious decisions, and lead other companies by its example. The use of Hydro CIRCAL is a milestone in sustainability for the entire industry, and is a great alternative solution to stopping the unacceptable levels of plastic waste that are being generated every day,” the company statement says.

No more plastic bottles Thanks to the company’s long-term sustainability program, it has been making ongoing improvements in the percentage of its portfolio

HELL GAMER EDITION

that is packaged in aluminum cans, so that by last year, over 95% of its products were sold in aluminum cans. The company has also committed to reducing its total number of plastic bottles to under 1% by 2025, and has stayed true to its word as it has now permanently stopped manufacturing plastic bottles for its carbonated soft drinks.

“Starting now, we are ceasing use of plastic bottles even in the largest global product category, namely carbonated soft drinks, since we do indeed keep our word! Besides the environmental benefits, it is important to keep in mind that 250ml aluminum cans are equivalent to one portion, which is about the right amount to drink at a time, so in contrast with plastic bottles, this form of packaging does not lead to excessive unsustainable consumption,” XIXO’s brand manager Márton Vecsei is quoted in the statement.

Infinite recycling Unlike plastic bottles, aluminum cans – when properly collected and handled – may be recycled fully and an infinite number of times without any loss in quality. It is the most valuable of all waste packaging as well, meaning it gets collected and recycled most easily and most often. Some 75% of all the aluminum ever manufactured is still in circulation today, and thanks to an efficient closed loop recycling, within as little as 60 days of when a consumer throws out a can into the recycling bin, another aluminum can may be made out of it. This is very different from plastic waste, most of which ends up posing an environmental hazard for hundreds of years. According to a study by the Ellen MacArthur Foundation, out of 78 million tons of plastic packaging used each year, only a tiny 2% gets recycled within a closed loop.

Experience shows that HELL works tirelessly to make its sustainability a reality – as a part of their campaign with XIXO, promoting recycling, they helped their consumers re-collect more than 400,000 aluminum cans in the summer of 2020.

HELL ENERGY is launching a new product line, its latest family of energy drinks, HELL Gamer Edition, specifically for video game enthusiasts. Game-evoking name and design, three refreshing flavors, amino acids, B vitamins and 32 mg/100 ml caffeine ensure everything is good for a good game.

In Hungary, 3.8 million people play on computers, consoles or mobile devices, more than 500,000 of them can be considered hardcore gamers.

They are the ones who play e-sports games, are contestants or have already attended an offline e-sports event. They are characterized by spending a lot of time in front of a machine, an average of 3.5 hours on weekdays, but this can be as high as six hours on weekends.

A good gamer must meet a number of expectations, like concentrating on the game for long hours, even at night.

Creative Marketing Director of HELL ENERGY Hungary Ltd., Krisztián Schmidt says that “as our consumers have become accustomed to, as a domestic market-leading manufacturer, we like to come up with constant innovations and always offer more to our brand lovers. We have created the design of our new drinks specifically with the gamers in mind and we are proud to present the HELL ENERGY Gamer energy drink family, which is making its debut on the Hungarian and international stage."

The composition of HELL Gamer Edition drinks contributes to the reduction of fatigue due to the added amino acids, the usual caffeine content of energy drinks and the B vitamin content.

The time spent playing the game now comes in 3 special flavors: ARCADE Tropical Bomb with its exotic taste, it brings the atmosphere of the jungle; NOVA Cherry Beam you can enjoy the refreshing taste of black cherry during a more difficult quest or battle; PvP Coco Split it flies the gamer to the tropics with its coconut flavor.

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HELL ENERGY

Milestones of development Another reason HELL stands out is that it is a fully integrated vertical company. “We are self-sufficient: we do our own can-making, filling, warehousing and logistics. No other soft and energy drink manufacturer in the world has these capabilities,” Barnabás Csereklye says. The company built its first filling factory in northern Hungary in 2010.

Since then, it has invested over EUR 280 million in expanding its facilities in order to keep up with the exponential growth in demand and reliably guarantee the highest production standards. Today, it boasts three ultra-modern high-speed filling factories. The first two of these can fill nearly three billion cans a year and are fitted with cutting-edge equipment from Germany’s KRONES. In September, 2020 Hungary’s Minister of Finance cut the tape at the opening of HELL’s third filling factory, a 13,000-square-meter facility that w w w . d t e u r o p e . c o m

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hungarian focus FOR A LOW-CARBON CIRCULAR ECONOMY IN CENTRAL EUROPE MOL’S TRADITIONAL FOSSIL-FUEL-BASED OPERATIONS TRANSFORMED INTO A LOW-CARBON, SUSTAINABLE BUSINESS MODEL The Hungarian oil and gas company MOL is not only one of the best-known Hungarian brands, but has been expanding in the region for a good quarter of a century, followed by the acquisition of positions in Asia and a role in the North Sea. Keeping up with the times, the company diversifies its operations and develop into the region’s leading chemical and consumer goods and services company while keeping an eye on sustainability

MOL is one of the few internationally recognized growth success stories of the region, which story has been built for 30 years, since it started right after the democratic changes. Continuously enlarging and modernizing its asset base and market coverage enabled MOL to provide better products and services for our consumers and operate with higher efficiency. “Our purpose is to take care of our consumers, to meet their needs and to drive the progress of the region every day. This business mindset is our heritage we want to build upon it, but we realized that we have to further increase the focus on sustainability and especially on climate change,” the Senior Vice President adds.

On February 24 this year, MOL Group announced its 2030+ ‘Shape Tomorrow’ strategy. This sets the path for MOL Group to become a key player of the low-carbon circular economy in the region. Thus, György Bacsa is of the view that “MOL is not only an efficient oil and gas company any more, but also an engine of the green energy transition in Central-Eastern Europe.”

Unceasing expansion In the middle of the 1990s, MOL began to expand in the Central Eastern European region and as the Senior Vice President puts it, they

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Improving the integrated business model The regional expansion was followed by wider international one and today, MOL Group is present in numerous locations from the North Sea to Pakistan. As György Bacsa explains, the key factor in international (non-CEE) investments was to replace the crude oil and natural gas reserves that MOL have produced for decades in the CEE region, slowly but inevitably depleting these legacy fields. “As an optimal level of hydrocarbon production improves the stability of MOL Group’s profit generation and therefore improves its resilience to the external environment, exploration and production (E&P) is an important pillar of our integrated business model. In the updated strategy, we did not set volumetric targets for upstream though. One of the reasons behind this is the recent acquisition of close to 10% in the giant ACG oil field in Azerbaijan, which solves the reserve replacement for several years; and the other one is

PÉTER LUGOSI, GÉZA TALABÉR

An engine of the green energy transition

have not stopped the regional growth and they will continue to thrive for leading role in all their main businesses in the region. “The key task for us is that the expansions shall be sustainable, and we shall be able to manage the new businesses efficiently. As opposed to the large global players, our role in the region has always been associated with long-term local responsibilities: in addition to profit generation, we have to ensure supply security primarily for energy, fuel, chemicals, we have to fulfill the mobility needs, we have to take care of our talents, environment and people. Following the successful regional market consolidation, we focused on the integrated management of the asset portfolio and – especially in the recent crisis situation with parallel demand and supply shocks and frictions in global value chains caused by the lockdowns –, the benefits of this model became clearly proven,” he highlights.

This responsible regional focus remained unchanged in the updated strategy, MOL aims to make new investments and transformational projects here in its core area, in Central-Eastern Europe, and to fuel the regional economies.

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This year, it will be 30 years that MOL Plc, better known as MOL Group, was established as legal successor to Hungarian state-owned oil and gas companies, giving also birth to the MOL brand. As the Senior Vice President of Strategic Operations and Corporate Development at MOL Group, György Bacsa explains to Diplomacy&Trade, “strengthened by the well-known local brands (e.g. INA and SLOVNAFT), MOL brand represents for us our common traditions, values and our success story of developing a sustainable regional champion in the benefit of our customers, stakeholders and countries.”

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the speeding up of green energy transition, which implies significant capital expenditure need for the transformation of our downstream business to fit the low-carbon circular economy. Still, despite the strong regional focus of our strategy, we will selectively look for good investment opportunities in international E&P as well, but not for reserve replacement, rather for value creation purposes.”

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PÉTER LUGOSI, GÉZA TALABÉR

Diversification Over the past five years, MOL Group has been diversifying its classical oil and gas business portfolio and develop into the region’s leading chemical and consumer goods and services company. “Looking back to the progressive targets announced in 2016, in my opinion – despite the serious external headwinds –, we are on good track of delivering them. Our flagship transformational project, the polyol investment at Tiszaújváros, NE Hungary, is in final phase of construction and with the successful acquisition of the ACG field in Azerbaijan, the reserve replacement challenge has been met. We made the first steps of entering into the recycling sector and a complex mobility service portfolio (car sharing, fleet management, EV chargers) has been launched and available to the customers.

We also made significant progress in the fuelto-chemical transformation and identified the three technologies with the best fit to our existing portfolio, with which we can decrease our fossil fuel output by up to two million tons per annum by 2030. These directions are proved to be valid and with the updated strategy, we aim to accelerate the transformation of our traditional fossil-fuel-based operations into a low-carbon, sustainable business model,” the Senior Vice President points out.

He adds that the diversified and integrated portfolio was one of the key characteristics of MOL’s business model in the past decades. The golden age of the downstream division supported to fund the international E&P growth in the beginning of the century and our upstream segment successfully balanced the decline in the downstream in the 2008-2009 global crisis resulting in stable liquidity and only moderate decrease in MOL’s consolidated w w w . d t e u r o p e . c o m

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profitability compared to the pure-play competitors.

This business model proved to be successful and the goal is to keep it in the future. However, to keep this resilience, the portfolio will also have to be adjusted in line with the evolving green energy transition. “We will have to decrease the carbon footprint of our own operations and more importantly, continuously grow the share of sustainable, circular economy related businesses in our portfolio, such as waste management and utilization, carbon capture and storage, second generation biofuels, low carbon energy and hydrogen related opportunities,” he stresses.

Notable achievements in sustainability At a conference in November 2019, György Bacsa pointed out that the goal of making the EU carbon neutral by 2050 presupposes a huge improvement in energy efficiency in buildings and everywhere else, and companies need to offset their own CO2 emissions. As to what MOL Group is doing to offset its carbon footprint, he now highlights that “sustainability was an integral part of our 2030 targets and we made notable

achievements both in the fields of green energy generation, recycling and energy efficiency.”

The company installed solar power plants on its unused industrial sites and targeted the extension of this portfolio with additional acquisitions. In the downstream segment, they established strategic partnerships for recycling (APK, Meraxis) and entered the plastic recycling sector through the purchase of the firm Aurora in Germany in 2019.

The capacity extension of the existing rubber bitumen plant in Hungary was completed in 2020 allowing to recycle appr. 10% of used tires in the country. The second generation biorefinery project is in preparatory phase. MOL concluded smaller scale investments into innovative green tech companies via venture capital funds.

“All of these successful actions represent only the beginning of our strategic commitments in connection with decarbonization. However, in our strategy update, we further increased the focus on sustainability and on carbon emissions. In the next five years, we will spend USD one billion on new, low-carbon and sustainable projects (such as waste integration and utilization, recycling, carbon capture, utilization and storage, advanced biofuels and potentially hydrogen-related opportunities) to become a key player in the CEE region in the circular economy.

We will decrease our own assets’ carbon emission by 30% in the next ten years. This is a very ambitious goal and we will largely rely on carbon capture and storage and we will also reduce the emission of our assets to achieve it. We have also set full carbon neutrality by 2050 as an ambition in line with EU goals. We see this as a huge challenge, such as the green energy transition is but definitely not mission impossible,” the Senior Vice President concludes.

Helping out in the pandemic One of the ‘fruits’ of this diversification was the production of hand sanitizers after the pandemic set in last year. As György Bacsa explains, MOL has a complex responsibility in the region towards the different stakeholders and this role became very important during the pandemic.

“Despite the extreme market volatility in 2020 and the sudden collapse of global supply chains, we decided to continue majority of the ongoing largescale investment programs which contributed significantly to the local GDP and employment.

We had to ensure that our employees can work safely not only for their own, but for the whole region’s interest as well. MOL has one of the strictest protective measures introduced, and we continuously looked for the opportunities where we can help our people, societies. The disinfectant MOL HYGI is one of these things and it was a success story in the most difficult time. We developed and put to the market a product at large scale from scratch in a few weeks’ time, during lockdown when every day counted and when global supply chains collapsed and there was a serious shortage of all kind of sanitization. It is less known, but MOL also donated respirators to places where they were in need. Recently, MOL and INA Group have supported the earthquake victims and the renovation works in Croatia not only with money, but with equipment as well.”

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ZWACK: TRADITION AND INNOVATION THE COMPANY DOES ITS BEST TO RENEW THE ZWACK UNICUM BRAND FROM TIME TO TIME Zwack is not only one of the most well-known Hungarian brands, but also one with a history of over two centuries, of which the last nearly 130 years have been associated with Hungary. Chairman of the Board of Directors at Zwack Unicum Plc., Sándor Zwack, explains how this great past of the company is cherished today.

The Zwack factory in Budapest was destroyed in World War II and the brand was carried on in the United States by the family before Péter Zwack returned to Hungary in 1988.

His son, Sándor Zwack, highlights that World War II and the subsequent nationalization had the biggest impact on the distillery because the family had to flee the country. When the distillery was nationalized, authorities forced the family to hand over the secret recipe, but Béla Zwack – who was one of the two brothers running the distillery at the time – gave them a fake recipe. This way, only a liqueur with fewer ingredients could be produced.

“It was quite an adventure how the original recipe was taken out of the country: Béla’s brother, János – my grandfather – took the original recipe to the United States, where he emigrated, hidden under an oil barrel, in a lorry.

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Zwack Unicum Plc. is committed to transparent operation and has been providing information on its sustainability performance for many years. As the Chairman explains, “sustainable development has been the principle of our company's operation for more than twenty years. It is a well-balanced combination of economic efficiency, social responsibility and environmental efforts, which we can ensure with an innovative mindset, preserving our values and traditions, and acting ethically to all our stakeholders. The training and development of our employees are also very important to us. In the 2019/20 fiscal year, we announced new focus areas: environmental protection and economical operation. During the campaign, we organized lectures quarterly to which we invited the best experts in the field.”

He believes that environmental education and attitudes have a prominent role to play in solving environmental problems. By leading the habits of consumers to a positive direction, Zwack Unicum Plc. can preserve and protect the health of the environment. “In the spirit of this, we wanted to draw the attention of our colleagues to those small things and practices that could make everyone's environment livable and more sustainable in the long run.

We support this approach in all aspects of our work: innovation, production processes, promotions, and also in our everyday behavior,” Sándor Zwack concludes.

Sándor Zwack

In the U.S., Béla and János continued the hard work and they even won a court case against the Hungarian state, after which it was not allowed to use the name ’Zwack’ and ’Unicum’ in the West. Later on, my father, Péter Zwack inherited the secret recipe. In 1964 in New York, he founded a separate company, which imported wine. Two years later, he became Export Director of another liqueur company.

My father returned to Europe in 1970 and settled down in Italy where he met my mother.

The production of Unicum was relaunched there. After that, it took my father 18 years to return to Hungary where, as a result of the privatization program, he managed to repurchase the family business in 1992,” he explains.

Zwack as a brand The brand name Zwack has a special meaning in Hungary: Unicum means a lot to Hungarians, “it reminds us of our past and history. Our leading brand is still Unicum, which is a Hungarikum (part of the collection of Hungarian values). Technology has unequivocally changed but the recipe of Unicum remained the same for more than 225 years. Everyone has a personal memory

connected to Unicum and the heritage made it even more delicious. Unicum stands for Hungarian tradition and history on the international liqueur market, it has a specific place in every heart and stomach. Our most important markets are those that have an outstanding history of bitter consumption, for example Italy, where we grew up with my sister, Izabella,” Sándor Zwack adds.

Value chain and portfolio In a recent speech, Minister of Finance Mihály Varga mentioned Zwack as one of the Hungarian companies and brands that can organize value chains. The Zwack Chairman agrees that companies that are known at the regional level need to be introduced to the world more widely. “We are constantly working to make the reputation of Zwack well-known among more and more people around the world. In 2019-2020, we continued to focus on export markets; building up the brand in Italy and improve the brand awareness in Germany. Thanks to these activities, we achieved an increase in export sales last year.”

Zwack’s current product portfolio has also been developed along with building the brand. As Sándor Zwack says, Unicum is still the strongest M A R C H

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Transparency and sustainability

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“We are the 6th generation running this prestigious company. While we try to keep up the tradition as much as possible, we focus on innovation too. We believe that a company can only persist for centuries if it renews itself while the traditions are respected,” he points out to Diplomacy&Trade.

This is what happened in January 2017, when – after years of experimenting – the company reached an important milestone, presenting the double-barrel aged Unicum Riserva in which the familiar taste of Unicum meets the unique character of Tokaj. With this innovation, they were the first ones to enter the market of super-premium herbal liqueurs, not only in Hungary but in Europe as well. After nearly three years of development, in 2020, the company presented the newest member of the Unicum family, the Unicum Barista. Coffee and bitters have both been consumed for centuries. These two traditions are united in a very innovative way in the bottles of Unicum Barista in which the main components are Unicum and Arabica coffee. Just like in the case of traditional Unicum, the unique character of Unicum Barista comes from the oak barrel in which it is aged. “These stories demonstrate that we try to renew the brand from time to time,” the Chairman adds.

product. “Unicum represents the respect of traditions and courage, which is essential when we try new flavors and ingredients to keep Unicum exciting. We need years of experimenting to develop a new product, but the real question is not that how often we can introduce a new liqueur, but rather how often can we create a truly unique spirit. For example, the success of Unicum Plum has continued since its release and it was able to reach a new audience. Four years ago, when we created Unicum Riserva, our purpose was to come up with a spirit, which combines in perfect harmony the exciting and exotic herbs with the seductive honeyed essence of Tokaji. Once the familiar bittersweet taste of Unicum encounters the sensuous sweetness of Tokaji, Unicum Riserva becomes mellower but at the same time spicy and fruity, with hints of dried apricots and an elusively herbal, minty taste like a cool breeze. With Unicum Plum, Riserva and Barista, we can get a new audience, as more and more people are interested in bitter liqueurs with a softer taste. In addition to Unicum, we are responsible for the production of popular spirit brands such as Fütyülős, Vilmos, St. Hubertus and Kalinka, among others.

In 2018, after several years of development, we introduced Kalumba Madagascar Spiced Gin, a herbal and spicy gin that combines complex spiciness and citrus freshness, aged in oak barrels on dried figs for months.”

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WITH ARABICA COFFEE AGED IN OAK CASKS

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BEST ADVICE FOR THE MANAGEMENT IS TO ACT IN A DISCIPLINED MANNER

In the current situation dominated by the coronavirus pandemic, the simple observer – at first glance – may think that the economic downturn (or in some cases, freefall) caused by COVID has taken its toll on the world of startups and on venture capital markets as well.

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BY GÁBOR MÁRKY

Despite the troublesome circumstances, the truth is that venture capital markets have hardly ever been in better shape than nowadays. We live the golden age of venture capital investments. Investment value is growing in an unstoppable manner in the European Union, in the United

States, and frankly in all economically developed areas of the world.

The phenomenon itself raises interesting questions and even more interesting answers and shall be subject to detailed analyses.

Nevertheless, if that certain idea has been born, now it is the time for startups to prepare and assess what makes them attractive in the eyes of potential investors beyond the developed solution and the M A R C H

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corresponding business concept. It may sound like a cliché, but our first and foremost advice for the management is to act in a disciplined manner, to know their company and to ensure its fully compliant, legitimate operation. The foregoing is of paramount importance, and in some cases may prove to be difficult to realize, considering that most startup managers are not holding decadelong managerial experience. Although legislation changes quickly and often, it is safe to say that venture capitalists are willing to take a serious risk for the success of an idea, but they prefer order and want to make sure in advance that it indeed exists.

Now let’s take a look at the cornerstones which are handled by investors as priority during a due diligence procedure, and which (or the lack of which) can be decisive factors in making an investment decision, in addition to the attractivity of the idea and the business concept.

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Corporate governance, membership and investment relationships in advance of the transaction

Although we may think that corporate governance as an expression refers to huge corporations, the reality is that in fact every company should have some sort of it. Regardless to the corporate form of the given company, it is essential to familiarize the potential investor with a mature and properly documented corporate governance structure. This structure shall be built in a way that allows the swift insertion of the potential investor’s governance rights if an affirmative decision is made on the investment.

What is meant by that? The basic governance structure of the company is laid down, it is accepted by the current membership (or shareholders), shareholder meetings, shareholder resolutions and managerial decisions are properly documented, and the minutes reflect the decisions made by the company in a detailed manner. All in all, there is order in the company. However, the willingness to invest may be increased in itself by communicating towards the potential investor that the startup holding the idea, know-how and business concept is an entity which is in fact separate from the founders.

This seems to be logical, but in several cases we experience that it is not always an easy thing to differentiate between the relationships of the company, and the private relationships of the founders (especially if there are only one or two shareholders in the company in advance of the investment). To this end, it is important that the founders refrain from showing an attitude towards the potential investors which sends the message that the company will be handled by them as only their own after the investment. The reflection of this attitude may scare away investors, therefore, it is necessary to convince them even in advance that they will be regarded as true partners, not just as silent monetary contributors.

Before coming to the decision on making the investment, the investor will certainly conduct a due diligence investigation at the company. Within the framework of the foregoing, the investor will request from the founders the most important organizational documents, and will pay particular attention

from a legal perspective. It happens often that the IP is in fact not held by the company itself when the startup is targeted by the investor, which complicates or hinders the investment process later. In order to the avoidance of such difficulties, it is strongly advised to have the IP transferred into the company in advance of the investment. Thereby the founders can verify towards the potential investor that the target already owns the IP, which comprises all the know how necessary for succeeding with the business concept. If persons outside the company have also contributed to the development of the IP, founders should expect that the investor will require them to procure their waiver of rights/claims in relation to the IP. In addition, founders can also expect that the investor will investigate whether the IP violates any third party rights, and even in the lack negative conclusions it will prescribe as investment precondition to stipulate the proper warranty and/or indemnity undertakings.

Contractual relations

on familiarizing themselves with the ‘history’ of the company, and on getting to know that who and in what volume made capital or any other sort of contributions to the company in the past. During such a procedure, it is of key importance to point out whether there is any ongoing or expected dispute between current/ former shareholders, or the ownership and investment relationships between members (and former members). If the company has already received investment from third parties in advance of the contemplated transaction, it is a typical investment condition stipulated by venture capitalists to repeal such investment agreements and to re-regulate them in a unified structure with the new venture capital infusion, in the new shareholder agreement.

Term Sheet, Shareholder Agreement Should the venture capitalist decide to enter into the investment, as first step it is strongly advised for the parties to stipulate their agreement in a Term Sheet. The unique nature of a Term Sheet lies in that, although in most cases this type of agreement does not have

legal binding force, the parties often consider Term Sheets as preliminary agreements.

A Term Sheet, in general, contains the agreement of the parties in broad terms: it determines main features like the amount of investment, the method of performance, the decision-making and management rights to be acquired by the investor, and obviously, the planned course of return. With respect to the foregoing, we strongly advise startups to manage the Term Sheet as a priority even if it is concluded as non-binding. The usual way to specify the terms of the agreement laid down in the Term Sheet is to conclude a shareholder agreement (SHA). Typically, the SHA determines specific provisions on voting rights, veto rights of the investor, priority rights pertaining to return on investment, drag-along and tag-along rights, anti-dilution provisions, and several other material conditions without which the venture capitalist would not invest in the company.

Sometimes the parties in cooperation decide to specify their agreement in the deed of foundation, which requires caution as company documents are available to the public in Hungary. If their agreement contains sensitive information which should be qualified as business secret, it may be better to regulate the cooperation in an SHA, the confidentiality of which is secured by the parties.

Intellectual Property (IP) It is a common issue that several companies are not aware of how to protect their intellectual properties. The foregoing may lead to serious difficulties as present times the value of several startups lies in the idea developed by the founders, together with the corresponding business concept, which are held by the know-how. This is specifically true to young companies being in the early stage of their development, and which are mostly targeted by venture capitalists. As in these cases the main or sole holder of company value is the IP, in order to attract investors, it is crucial to ensure that the intellectual property is properly protected, its status is properly settled w w w . d t e u r o p e . c o m

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From investment perspective it definitely increases attractivity if legal relations are arranged. This means that procurement and supply agreements, client agreements and employment agreements as well are properly documented and all of them are available in detailed written form. In advance of investing in the company, the potential investor will likely request these documents as well and include them under the scope of the legal due diligence. It is expedient to act with precaution and involve professional legal assistance during the course of negotiating and concluding these contracts. Some disadvantageous contractual provisions can not only harm our interests in the particular legal relationship, but in bigger perspective they can discourage venture capitalists from allocating their interests in our company and from cooperating with us.

Regulatory matters Even if the idea is very attractive, the investor will not sacrifice money if they do not clearly see that it conforms with the prevailing regulatory environment. With respect to the foregoing, it is crucial to familiarize the potential investor with the idea by way of ensuring them that the whole concept fully complies with law and we are, or we will be in possession of all official licenses that are required for putting into market our invention. So even the best idea, the most innovative business concept and the best corporate strategy can fail if order is lacking from the company, as it causes uncertainty in the eyes of investors.

It is therefore worth the effort to duly regulate shareholder relations, to document every agreement and to allocate resources on protecting the IP and other business secrets.

And finally, if the investor is knocking at our door, it will surely be rewarding to use the best professionals who are well prepared when it comes to representing the interests of startup-owners during the elaboration of investment terms, in the course of Term Sheet and shareholder agreement drafting and negotiations.

(Dr. Gábor Márky is a Senior Associate at Jádi Németh Attorneys at Law)

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hungarian focus

TÖRLEY: RELIABILITY, EXPERIENCE, EXPERTISE, ELEGANCE AND QUALITY THE COMPANY PRODUCES INTERNATIONALLY RENOWNED SPARKLING WINES FROM HUNGARIAN GRAPES Törley Sparkling Wine Cellar can look back on a history of almost one and a half centuries. The company is not only the owner of a well-known historical Hungarian brand, but also enjoys a wide international reputation. Today, the company produces its quality wines and sparkling wines in its original factory as well as in a modern winery. Most of the grapes processed come from Törley’s own vineyards.

Export markets Törley Sparkling Wine Cellar delivers its products to more than 30 countries. The largest export countries are Germany, Sweden, Romania and Estonia. “It is interesting that in Estonia, a country with a population of about 1.3 million people, the consumption of Törley sparkling wine per capita is higher than in Hungary while in Vietnam, Törley Charmant Rouge, a sweet red sparkling wine, is the most popular among our products,” he points out.

In addition to Törley’s own products, the company also sells products of different brands in different export markets. In Sweden, they sell sparkling wines and wines under the name Chapel Hill, and in England, they sell large quantities of products under a wine club’s own label.

Impact of the pandemic

The founder, József Törley, once said that "with great diligence and perseverance, I managed to produce much better champagne wines than hitherto known." Regarding major developments in the wine and sparkling wine selection that are offered to Törley customers today, the Managing Director underlines that they try to design their sparkling wine offer in such a way that it meets the needs of their customers: “everyone will find the type of sparkling wine they like best. We make our sparkling wines with four

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By European standards Today, the company produces its quality wines and sparkling wines in a winery that is modern even by European standards, buying grapes from Hungarian producers. As regards their relationship with their suppliers and their expectations towards winegrowers, György Kovács highlights that all their products are made exclusively from Hungarian grapes, they are really proud of that. “We can cover a significant part of our needs from our own production areas, but, of course, we also buy grapes in very large quantities. We consider it very important to maintain an excellent relationship with the vine growers. Each producer must meet very strict quality requirements, but this is not a problem, as we have been working with most of our partners for several years or decades.”

Törley values Törley, as a brand, is widely known in Hungary and around the world. As for the values the Törley brand embodies and what values customers associate with it, György Kovács explains that according to surveys, the popularity of Törley sparkling wines in Hungary today is close to 100%. “Our consumers associate reliability, experience, expertise, elegance and quality with the Törley brand as one of the most traditional Hungarian brands. This is a great recognition for us, because our goal is really to make our company and the Törley brand valued by our consumers. We work every day to keep these values and add more.”

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different methods, we also use the traditional method (Methode Traditionnelle), the Methode Transvasée, the Methode Charmat as well as the Asti technology. Our products include Brut Nature sparkling wines, Brut, Extra Dry, Dry, Sec, Semi Sec and Doux sparkling wines,” he points out.

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Törley Pezsgőpincészet Kft. (Törley Sparkling Wine Cellar Ltd.) celebrates its 140th anniversary next year.

Managing Director György Kovács explains to Diplomacy&Trade in what way, in what form the spirit of the founders is reflected in the company’s activities today. “Our company is constantly striving to advance the approach of the founder of the company, József Törley, who was a true innovator, one of the most successful entrepreneurs of his time. At the end of the 1800s, he brought to Hungary innovations that were previously unknown here. He used elevators, hoists to move goods between levels, applied the science of disgorging and transported his products by truck, to name just a few of the developments he brought in and applied in this country,” he highlights.

The situation caused by the new coronavirus infection had a different effect on wine and sparkling wine. As the Managing Director explains, in March last year, when the closures started in Hungary, everyone became insecure, not knowing what awaited them in the coming weeks and months. “Of course, this was also felt in our company. In March and April, our most important goal was to protect the workplace of our colleagues, this was helped by the export activity of our company, thanks to which we did not have to stop production. Fortunately, as summer approached, the purchase of sparkling wine in Hungary also revived.”

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hungarian focus

DREHER: AN EXEMPLARY HISTORY BUDAPEST’S BREWERY’S GOAL IS TO MAKE DREHER’S LEGACY RELEVANT FOR HUNGARIANS IN THE 21ST CENTURY TOO

Antal Dreher’s legacy over the past 166 years shows the spirit of a company that is always renewable and mindful of sustainability. The family company, the brand, the factory survived the crises of the 20th century. The large-scale brewery in Kőbánya (Budapest’s District 10) is one of the largest and best-known companies in Hungary today, as well as the only brewery in the capital city.

Quality above all In the 20th century, Dreher became a brand known worldwide, representing values in Hungary and abroad. According to the Marketing Director, it is a great, ‘sexy’ alloy of respect for traditions and of the ability of continuous renewal – an equilibrium that inspires both the brewers and the consumers to make themselves better. So, the brand represents the duality of tradition and modernity. “From the practical point of view, the message is ‘quality above all’: retaining the characteristic Dreher taste loved by millions, we introduce new variants in our portfolio every year, experimenting to see what consumers like,” he says.

Financial and social contribution 89% of suppliers to Dreher Breweries are Hungarians and the brewery produces 480 million pitchers of beer annually, employing 587 people. “However, indirectly, the company contributes to the livelihood of 11,100 families working in sectors like hospitality, logistics or marketing for that matter,” Gábor Wilheim points out. Quantifying this, he stresses that Dreher Breweries contributes to the country’s national budget with HUF 17.1 billion annually through the payments of excise duty, value added tax, environmental surcharge and other fees.

“These are the tangible things but we also set trends that inspire our community by cherishing traditions or introducing innovative elements.

Working in the alcohol industry, one must not forget about the fact that it is an obligation to popularize responsible consumption, which, in itself has a beneficial impact on the communities.

We have a decade-long communication program (‘Ésszel iszom’ – ‘I drink smartly’) and have different campaigns to spread this idea,” he adds.

2021 marks the 225th anniversary of Franz Anton Dreher having bought the Klein-Schwechat Brewery in 1796 and Dreher Breweries can look back at a history of over one and a half centuries in (Buda)Pest. As to how much and in what way this great past of the company is cherished today, Marketing Director Gábor Wilheim, striking a personal note, tells Diplomacy&Trade that “we all feel that we are a small part of a long and exemplary history and that determines our approach to the work we do in cherishing these traditions. We wish to continue to write new chapters of this great history and when we need to pass on the baton, we will be able to do it with the respect that is worthy of the ethos we inherited from our founder. This is our guiding principle. On the corporate level, we also follow this intellectual heritage in our strategy. The founders of our company were the innovators of their era – today you might call them start-ups – combining innovative ideas with brewing traditions. We intend to carry on this spirit, and we believe that our commitment to continuous development on the Hungarian market is also worthy of the Dreher heritage.”

The ‘Beer King’ In the company’s history, the son of Franz Anton Dreher, Antal Dreher is of special importance. It was in the middle of the 19th century that young Antal Dreher’s attention turned towards beer brewing. This was followed in his life by several steps that made Dreher Breweries what this company is today and made him the ‘Beer King’. Following his international travels in England, Scotland, Germany and Czechia, he began to experiment with his beers, creating what is considered as the first pale lager. Then came, in 1862, the acquisition of the Kőbánya Brewery in Pest. “All this is history now but it is still there in every corner of our brewery even today, from a nice old cauldron in the courtyard to the original Zsolnay tiles preserved when the building was renovated in the 1990s. We also remind ourselves with all sorts of old posters and pictures of where we come from and what role Dreher Breweries plays in the life of this district. In 2019, when we celebrated the 165th anniversary of the brewery with

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a series of celebrations, also reaching back to the traditions, recalling the heritage of Antal Dreher,” Gábor Wilheim highlights. It was in that year that Antal Dreher was named ‘Man of the District’ posthumously and the street where the brewery is located was named after him. Also tied to the 165th anniversary, the Dreher brand underwent a refreshment

when the old flagship ‘Dreher Classic’ was replaced by ‘Dreher Gold’, ditching corn grits as an ingredient from the original recipe. Now, the cans and bottles feature an old scenery of Budapest, strengthening the brand’s local ties. “The history of the Dreher family is so rich that basically, every single year is an anniversary of something,” he notes.

THE DREHER PRESENCE

The momentum of 2019 celebrations did not stop in 2020, either. Budapest was enriched with two new mini-statues, in the geometric center of Kőbánya where the characteristic Kolodko figures appeared for the first time. The special sculptures have been inspired by the history of the Brewery and are also closely linked to brewing. The mini-sculptures are presented as part of the company’s beer tours, presented to the general public together with the renewed and soon reopening beer museum. The two mini-sculptures show two iconic scenes. One of these is a statue of a real, contemporary beer keg in the factory courtyard, depicting Antal Dreher, with his characteristic walking stick in his hand, and with one of the most beautiful brewing houses in Europe in the background. In front of the factory stands another statue depicting a beer cart standing on a real limestone bridge, pulled by two Dreher horses. The close cooperation is a tradition in the 166-year relationship between Dreher Breweries and Kőbánya, so the company’s goal is to strengthen the district's involvement in the tourist life of Budapest with these developments, as well as present the past and present of Dreher to beer fans and those interested in beer history.

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Dreher Breweries is committed to transparent operation and has been providing information on its sustainability performance for over a decade. “It is a very important issue for us, not only from the business side of sustainability but also in the interest of the plant and its environment. We have a lot of measures that strengthen corporate social responsibility and help find solutions to environmental problems.

This has long been an important issue as even at the beginning of our operations, Antal Dreher imported a lot of technologies that made it possible to produce beer more efficiently – this has always been a fundamental consideration in our production. We continuously trace the environmental impact of our operations from raw material to consumption. We pay special attention to water management as this is probably the scarcest natural source material needed in beer production, we have in focus our specific energy use as well as the reduction of carbon-dioxide emission and the recycling – or reuse – of packaging materials.

All in all, we have managed to reduce the amount of water in beer production, we have progressed in waste management and we do our best to improve the recycling rate as well,” the Marketing Director concludes.

MÁTÉ CZABÁN

Transparency and sustainability

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LIFE IS WHAT YOU POUR INTO IT

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FOR PEOPLE OVER THE AGE OF 18 ONLY www.alkohol.info.hu

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02. 16.

diplomacy

NEW AMBASSADORS

Abdulkhalig Rashed Abdulkhalig bin Rafaa (the Kingdom of Saudi Arabia) had a BA in Political Science at King Abdulaziz University, a Master's degree from the Fletcher School of Law and Diplomacy at Tufts University in the United States and a Higher Diploma in Diplomatic Studies at the Institute of Diplomatic Studies in Riyadh.

Zenebe Kebede Korcho (Ethiopia), residing in Vienna, is also Ambassador to Austria, Switzerland and Romania as well as Permanent Representative to the United Nations Office and International Organizations in Geneva.

Juan Francisci Facetti, (Paraguay), residing in Vienna, is also Ambassador to Austria as well as Permanent Representative to the United Nations Office and International Organizations with headquarters in the Austrian capital.

Five new ambassadors accredited to Hungary presented their credentials to Hungarian President János Áder at the Sándor Palace in the Buda Castle this February (pictured from left to right): Juan Francisci Facetti from Paraguay; Zenebe Kebede Korcho from Ethiopia; Kang Il Choe from Democratic People's Republic of Korea; Abdulkhalig Rashed Abdulkhalig bin Rafaa from the Kingdom of Saudi Arabia and Igor Cesar from Rwanda.

photo by

NOÉMI BRUZÁK/MTI

Igor Cesar (Rwanda), residing in Berlin, was born in East Germany and moved back to Africa with his parents in 1971. Later, he lived in Germany and Canada and earned a Masters degree at the University of Alberta. In 2005, he founded a center for widows in Kimironko, Rwanda.

Kang Il Choe (Democratic People's Republic of Korea), residing in Vienna, is also the main representative of his country in Austria and Slovenia. Previously, he worked in his country’s Ministry of Foreign Affairs.

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2021. 03. 22. 10:32

what's on

OUTDOOR POSTER INSTALLATION

UNTIL JUNE 30, CASTLE GARDEN BAZAAR, BUDAPEST

A special outdoor installation can be seen on the terrace of the Castle Garden Bazaar In the first decades of the 20th century, a mysterious, colorful and scandalous nightlife took place in the nightclubs and private homes of downtown Budapest. The exciting atmosphere, characters and locations of this period are evoked by the works of one of the most famous Hungarian poster designers, Géza Faragó.

The outdoor installation, which presents 25 works, includes the poster of the Budapest Orpheum, the Holzer Budapest Fashion House, the Törley Sparkling Wine Factory and the Budapest Operetta Theater's Hall America Revue.

As the organizers point out “the poster tells the art of the street with its sincerity and artistic sophistication about the conditions of its own age.” Along this idea, the organizers selected the works of poster artist Géza Faragó, which color the southern panoramic terrace of the Castle Garden Bazaar from March. The works come from the rarities of the special collection of the Map, Poster and Small Print Library with the help of the National Széchenyi Library.

"The typical works of the era, the artistic posters on the billboards provide an insight into one of the most exciting periods of our past as a special history book. visit us and see the diverse works of poster designer Géza Faragó," according to Krisztina Sikota, Deputy CEO of Tourism and Culture at the state-owned asset management firm Várkapitányság Nonprofit Plc. Géza Faragó studied in Paris with the famous poster designer and craftsman Alfons Mucha. After returning to Budapest, which was already a cosmopolitan city, his theatrical and commercial posters, press drawings and caricatures appeared in 1903, and they were also on display in the exhibitions of the Art Gallery, the National Salon and the Ernst Museum. The artist was a well-known figure in the nightlife and café life in Pest.

BARTÓK SPRING

FROM APRIL 2, STREAM PERFORMANCE

In the spring of 2021, on the 140th anniversary of the birth of the 20th century Hungarian composer Béla Bartók, the Palace of Arts (MÜPA) in Budapest will be launching a unique series of events embracing total art. The Bartók Spring International Art Weeks being organized by MÜPA Budapest between April 2 and 18 is getting ready to welcome culture lovers online with international stars, world premières and concerts broadcast from Europe's renowned concert halls.

The festival program offers a glimpse into Bartók's amazing oeuvre, but is not restricted to only music written by the world famous composer. It is much more Bartók's spirit, creativity and artistic outlook that we wish to depict across countless genres ranging from contemporary classical music to world music, jazz, dance, the fine arts and popular music, through works by the very finest artists in Hungary and abroad. Taking the stage will be such luminaries as Vasily Petrenko and the Royal Philharmonic Orchestra, György Kurtág, the Kelemen Quartet, René Jacobs and the Kammerorchester Basel, Makám, the Bagossy Brothers Company, Henrik Nánási, the Hungarian National Philharmonic Orchestra, the Szeged Contemporary Dance Company, Charlie, Ballet Pécs, Riccardo Chailly and the Filarmonica della Scala, the Hungarian National Dance Ensemble, György Vashegyi, the Orfeo Orchestra and the Purcell Choir, Félix Lajkó and the Ballet Company of Győr.

varkertbazar.hu

bartoktavasz.hu

JAMIE CULLUM

JULY 14, HISTÓRIA GARDEN, VESZPRÉM

SINCO.HU, TARLOVA.COM, ORA HASENFRATZ, DANNY NORTH, VÁRKAPITÁNYSÁG, IGNAT WIIG

Jamie Cullum, considered to be the United Kingdom’s best jazz artist of all time, visited Veszprém back in 2016 when he performed an unforgettable concert at the Veszprém Aréna, the musician’s first ever show in Hungary.

The forty-year-old artist, who offers a unique combination of jazz, pop and rock, has performed at prestigious locations such as the Hollywood Bowl and the Carnegie Hall, at Fuji Rock and Glastonbury, and he has also shared the stage with names like Amy Winehouse and Billy Joel.

He is not only successful as a performer, but as a composer too: he has composed for films of John Cusack and Clint Eastwood.

Cullum has released eight studio albums, of which more than 10 million copies have been sold. His last studio album ‘Taller’ was released in 2019, and in 2020, he surprised his fans with his first ever Christmas album ‘The Pianoman at Christmas’.

Besides his stage career, he works as a radio host: he currently has a prime-time, award-winning weekly show on BBC Radio 2, Europe’s most popular radio station, where – as the DJ – he introduced jazz stars such as Gregory Porter or Laura Mvula to his audience.

veszpremfest.hu

DAGNY

JANUARY 27, 2022. AKVÁRIUM KLUB, BUDAPEST

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With each new song and show, Dagny consistently stuns and surprises. Although Dagny Norvoll Sandvik grew up in a musically gifted family in Tromsø, Norway, she truly found her passion for songwriting and music when she moved to London in her early 20’s.

The road to international attention was quite short as her debut single, 2015’s Backbeat rose the charts in multiple territories, resulting in over 40 million cumulative streams. Since then she has grown to become one of Norway’s most exciting artists, live performers and songwriters – over 450 million streams amassed, sold out tours, and critical acclaim by everyone from Nylon and Billboard to The Guardian and Harpers Bazaar, within the span of just a few short years.

Following up Backbeat with songs like Fool’s Gold, Drink About, Wearing Nothing and Love You Like That Dagny proved she was far from a one hit wonder.

In parallel with these hit releases, she’s establishing herself as one of Norway’s best and most popular live artists. From festival spots to sold-out headline shows both locally and internationally.

She confesses that “now – more than ever – am I able to be personal in my music. I want to tell stories that mean something to me, but that others also can relate to. The goal is to pack one specific emotion into a single sentence.” livenation.hu

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gastronomy

HUNGARIAN DESSERTS IN CNN’S TOP 50 INTERNATIONAL LIST OF DELICACIES BASED ON NINE YEARS OF CULINARY EXPERIENCE

Hungarian gastronomy, including sweets, is well deservedly known abroad and this fact is now confirmed yet again as the country is featured with three items on a list compiled of the world’s best desserts.

A pastry chef by trade, Jen Rose Smith from the northeastern U.S. state of Vermont is much better known in the world as a travel and gastronomy writer for media outlets such as National Geographic, Rolling Stone, USA Today or CNN. For the latter, she looked much further than New England and compiled a list of what she considers as the world’s best desserts. After extensive travels for nine years, she first published this list in 2018 and early this year, we have the updated edition.

A subjective list She acknowledges that it is not easy to spot the best dessert on the Earth as everyone has a different favorite. “From childhood treats to a grandparent's favorite recipes, beloved foods are deeply personal. This seems especially true of desserts, which often take pride of place at celebrations and traditional holidays,” she explains the difficulties of finding really the best.

National categorizations are also hard sometimes as “some sweets rise above local flavors” like in the case of Hong Kong's dan tats – don’t blame yourself if you mistake the latter one for the Portuguese treat pastéis de nata since “those eggy tarts traveled with Portuguese traders and colonists to cities around the world.”

Jen Rose Smith admits that this list blends the personal with something more broadly

appealing. “It's the fruit of my nine years in the pastry kitchen, when I traveled to explore new flavors everywhere… But with food, like language or culture, determining what's ‘foreign’ turns out to be complicated.” As an example, she mentions tiramisu that relies on chocolate, coffee and sugar, which arrived in Italy through global trade. Deliberately not ranked, “some” – as she puts it – of the best desserts from around the world are listed in alphabetical order.

Esterházy, kifli and Rigó Jancsi The Top 50 list features six French desserts and six American desserts (Chocolate Mousse, Crème Brûlée, Gâteau Fondant au Chocolat, Kouign Amann, Brittany, Lemon Tart and Tarte Tatin) as well as six Americans (Brownies, Chocolate Chip Cookies, Coconut Cake, Doughnuts, New York Cheesecake and Sour Cherry Pie), followed in number by three Hungarian delicacies: the Esterházy cake, the kifli with sweet filling and the ‘Rigó Jancsi’ cake.

Regarding the Esterházy cake, it bears

(literally: ‘snow croissant’, referring to its white appearance as it is covered by icing sugar). As the CNN compilation puts it, “while the rest of the world eats jam, central Europe enjoys the rich flavor of lekvár, a chunky preserve that retains all the tartness of the region's ripe apricots and plums. The hearty fruit preserve is the delicious prize inside these crescent pastries. A soft, flaky dough is shaped into a plump half-moon that barely contains the sweet filling, then topped with a light blanket of powdered sugar. Not that kifli are limited to fruit preserves. The sweets, which are especially beloved at holiday times, are often stuffed with sweetened walnuts or poppy seeds.”

The third Hungarian delicacy selected for the list of the world’s top desserts is Rigó Jancsi (‘Johnny Rigó’): “fluffy chocolate sponge cake is sandwiched with apricot jam and airy chocolate mousse in this classic treat. Topped with a whisper-thin layer of chocolate glaze then cut into tidy cubes of chocolate, the Rigó Jancsi stands out even in the notably crowded field of fabulous Hungarian desserts.” Jen Rose Smith also provides a background why this name: “beloved for a silky texture and rich flavor, the seductive cake was named for a love story that caught the world's attention with racy images and juicy details. Rigó Jancsi was a Romani violinist who won the heart of the (married) Princesse de Caraman-Chimay of Belgium, and the two made international headlines when they ran off together in 1896.”

We hope that these telling ‘pictures’ of the three Hungarian desserts selected to be among the world’s best make you want to taste them. And when you do, you will realize that there are many more of these culinary delights offered by Hungarian gastronomy – just ask for a Dobos cake, the ‘Somlói galuska’ sponge cake, a Gundel pancake, etc.

the name of a Hungarian noble family with origins in the Middle Ages and loyal to the Habsburgs when Hungary was part of the Austro-Hungarian Empire.

As Jen Rose Smith puts the delicacy into historical perspective, “in its glory days, the Austro-Hungarian Empire stretched across central Europe, and a century after the empire fell its creamy legacy can still be found in pastry shop windows from Vienna to Sarajevo.” According to her description, “for this elegant cake, slim rounds of almond meringue are piled high between stripes of chocolate buttercream, then topped with a marbled spiderweb of chocolate and vanilla fondant. A melting texture and rich sweetness make this old-fashioned cake a perennial favorite in sweets-loving Budapest, but it's just as easy to find in Vienna, the grand city that once led the empire. It remains deeply influenced by a shared culinary tradition.”

What is simply called ‘kifli’ (simply meaning croissant in Hungarian) on the Top 50 list is better described by its Hungarian name, that is, ‘hókifli’

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beverages

HARD SELTZER VIPER EXPLODES INTO THE HUNGARIAN MARKET BY BUILDING A NEW ALCOHOLIC BEVERAGE CATEGORY

Coming straight from the United States is the latest trend in alcoholic beverages: hard seltzer – a translucent carbonated alcoholic drink, typically with a hint of fruit flavoring, where the desired levels of alcohol and carbon dioxide are achieved by fermentation. The Viper hard seltzer, which Dreher Breweries introduces to the Hungarian market this March, is not beer at all, although it is made using a similar traditional process.

While the most significant and well-known alcoholic beverages were born hundreds or even thousands of years ago, hard seltzer had only a few years to completely subvert the alcoholic beverage market overseas.

Yet, according to some sources, the category itself was created by chance by two soda-loving wives: to inspire the muses, two Boston friends and artisanal drink innovators made the homemade alcoholic version of carbonated water back in 2013.

Now, professionals expect USD 2.5 billion in sales in the United States this year, while Canada, Australia and some Western European countries are also experiencing a growing fan base.

New beverage category “Innovation is at the heart of Dreher Breweries’ strategy, whether it’s to continuously expand its existing portfolio or just introduce a new category of beverage. Thanks to Asahi Europe & International and its Hungarian subsidiary, Dreher, which is committed to following innovations and consumer trends, the beverage category between beers and traditional long drinks will appear on the Hungarian market in March,” Gábor Wilheim, Marketing Director of Dreher Breweries points out. The new product is first be found on store shelves in a 0.33-liter can, and then in a glass bottle, containing 96 kilocalories and having an alcohol content of 4%.

A drink for experimenters and trend-seekers

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"We love what is unique and exciting," that is simply the secret of hard seltzer, according to Viper Ambassador Zoltán Nagy, who is the founder-owner of the only Hungarian bar that has earned the World's Best Bars Top 50 recognition.

Southern citrus, cedar, summer flowers – these are the scents that are associated with Viper by the renowned specialist in international bar culture based on his personal experiences.

"The thoroughly chilled Viper is a perfect choice when consumed on its own, filled with ice and served with a little slice of lime, but it can just as well be the perfect starting point for composing your own recipes," he adds.

In the production of the Viper hard seltzer, water from a depth of 100 meters is boiled in a cauldron and then, as it cools, the alcohol-based sugar is added and processed by the yeasts to achieve the desired level of alcohol and carbon dioxide. After that, the resulting drink is filtered to get a clean and translucent end result, which is made exciting by the refreshing lime flavoring.

“Viper can count on a serious fan base among experimenters and trend-seekers who are always open to novelties, as well as among those who keep in mind ingredients without artificial additives and colorings. With its natural taste, trendiness and simplicity, it is a perfect alternative for conscious, quality-seeking and curious consumers,” Rita Hruska, Head of Marketing for International Brands at Dreher 2017. 02. 27. 11:22:30 Breweries, concludes.

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