Food and beverage to Hungary

(Last updated: 13 Jul 2007)

Trends and opportunities

The market

Hungary has a population of 10 million, and attracts around 30 million tourists each year. Budapest is a modern city with huge shopping malls and all the international brand names available. Although some sections of the Hungarian population remain economically disadvantaged, living standards and aspirations are rising.

Hungary is one of the new members of the European Union (EU). The process of accession has already had a positive affect on foreign direct investment into Hungary, with high levels of foreign-ownership of supermarkets and food processing operations.

Standards of food production and agriculture, as well as import regulations and tariffs have come into line with EU norms as part of the accession process. 

The European supermarket chains, who have invested heavily in Hungary, brought with them the full range of grocery products. Shoppers in Hungarian stores have a similar range of staples and luxury foods as those across Europe. European and global brands sit alongside domestic Hungarian brands.

Imports remain low, as Hungary has a strong domestic processing sector, much of it foreign-owned. However, as tourism continues to increase, and consumer aspirations rise, the demand for a wider variety of luxury, healthy eating and convenient day-to-day groceries will lead to more imports.

Meat is an important part of the Hungarian diet. Pork and poultry are dominant in the Hungarian diet while beef, lamb and fish consumptions are much lower.

Hungarians have always been high consumers of fresh and preserved fruits and vegetables, because the farmland is so rich. As Hungary must import all exotic products and citrus, there may be opportunities for Australian suppliers as eating patterns slowly move towards counter-seasonal supply.

Being a land-locked country, Hungarians are not big fish and seafood consumers, although local fresh-water varieties such as pike and perch are widely available in supermarkets and restaurants. An increased awareness of healthy eating and a desire for more choice has driven more interest in sea and fresh-water fish. Consumption remains low in comparison to other European countries, with the main opportunity being for the supply of frozen product to the burgeoning restaurant and hotel trade.

(Source: Hungarian Ministry of Economy and Transport)

As a change with the EU membership Hungary has adopted the EU's duty system, TARIC, which significantly lowers the duty rates for Australian alcoholic products in Hungary, providing excellent opportunities for Australian wine producers.

Opportunities

The following opportunities exist for Australian exporters interested in the Hungarian food and beverage industry:

• red meat
• counter-seasonal and exotic fruits
• vegetables and nuts
• health foods
• convenience foods
• luxury goods
• wines and spirits

Wine celebrations in Budapest

On September 6-10 the terraces of the historic Buda Castle (a UNESCO World Heritage site) were transformed into a Bacchanalian village where wine importers, wine enthusiasts, serious buffs and regular consumers mingled with glasses, chatting and sipping wine from over 150 different wineries.

For the last three years the organisers decided to pay tribute to the fine wines of global community and this year's specially honoured guest country was Australia. Gosia Hill, STC Central Europe, had the pleasure of officially opening the Festival together with the Hungarian Minister for Agriculture and Rural Affairs, Mr Josef Graff.

Although Hungary has a long tradition of winemaking and the domestic production represents a significant share in the total consumption, there is a strong demand for foreign wines which is good news for Australian wine exporters.

The special status of Australia as this years guest country created an excellent opportunity for Austrade Budapest to introduce more Australian wines to key importers, distributors and general public.

Erika Palfi, from Austrade's Budapest Post ensured that Australian wines from 18 wineries were showcased not only at the Australian national stand but also at the gala dinner and at the many tastings that went well into the night in Hungarian restaurants, with special attraction being the performances of Aboriginal didgeridoo player and indigenous artist, Turtle.

For more information on wine opportunities in Hungary and Central Europe, please email Erika.Palfi@austrade.gov.au

Tariffs, regulations and customs

Hungary, a member of the Europen Union (EU), adopted TARIC, the EU import duty system.

It is vital to receive advice before shipping any products or samples to Hungary.  As in most other countries, the sale of foodstuffs is highly regulated.

Hungary operates a system of quotas on many food items. Products covered by quota must be imported by a licensed quota holder.

Excise duty is payable on alcoholic drinks. Most food products are liable for Value Added Tax (VAT) at 15 per cent, with additional consumption tax payable on some ‘luxury’ products. VAT for imported products is calculated at the landed cost, plus duties and consumption tax (if applicable).

Advice should be obtained before designing packaging for the Hungarian market, or before shipping samples or products.

Industry standards

All processed foods must comply with the regulations set down by the National Institute for Food and Nutrition (OETI). This organisation tests and licenses all processed food products entering the Hungarian market. Approved products receive an OETI number which must be displayed on the product label.

All products are required to have labelling and relevant information in the Hungarian language. Labels in English must have a Hungarian language sticker attached. Labelling must include approval symbols from OETI or the Commercial Quality Testing Institute (KERMI) as well as:

• Product description and name
• Ingredients and additives listing
• Energy content and nutritional information
• Name and address of producer or local importer
• Storage instructions, production and use-by dates
• OETI license number and approval symbols from OETI and/or KERMI
• Consumption expiry date
• Net quantity
• Country of origin

All processed foods and beverages must have an in-date OETI number, showing that have been approved.

Marketing your products and services

Market entry

There are three main market entry strategies:

• Work with a wholesale partnership
• Work with an independent importer/distributor
• Set-up an office or manufacturing presence in Hungary

It is vital to have a local presence to succeed in the market. This can be a Hungarian partner, or your own local office.  Having a local presence will give you credibility with your customers, and help you to adapt your product offerings to meet local opportunities.

Many German and other European companies supply commodities such as meat, nuts, cereals and fresh produce into Hungary.  It may be worth looking at alliances with this type of operation in order to take advantage of the cheaper freight into Western Europe.

Wholesalers

Around 70 per cent of food for retail sale in Hungary is supplied by a small number of wholesale partnerships. These companies are able to influence the products offered by the retailers, and the prices charged. They offer a valuable service to the retailer, by centralising purchasing decisions, so it is usually hard to contact the retailer direct.

Importers and distributors

There are import and distribution companies operating outside of the wholesalers, some of whom have nationwide distribution, others are more specialised. It is important to research the market carefully, and to meet a number of different companies before you sign any form of agreement. Always have a local and Australian lawyer check any formal agreement.

Local office - this is usually a more long-term option and is not recommended for companies with no experience in Hungary.

A high volume of food retail is done by international hypermarkets and cash and carry chains. These organisations preferably do not deal with importing food items, they source imported products from local importers or wholesalers.

Except for well-known luxury products, suppliers cannot rely on brand power to sell their food. Hungarian consumers do not seek out brands, and there is often confusion between the supplier’s name, food name and brand. 

Hypermarkets do not deal with the importing process, instead they buy from importers and quote different marketing fees for listing items. Some of the hypermarkets prefer private label products, which may mean another opportunity for Australian suppliers.

High-end products tend to be marketed on their quality and packaging design, whereas mass-market products are usually sold on price.

Hungary is becoming more like other European countries in marketing methods and consumer aspirations, although it retains a strong individuality. It is important to research the market and to take local advice before launching any products. Do not assume that your Hungarian consumers share similar tastes and lifestyles to your Australian consumers.

Distribution channels

Retail

The food retail environment in Hungary has changed rapidly in the last five years. Hypermarkets, supermarkets, cash and carry stores now account for around 60 per cent of market share, compared with 40 per cent just five years ago. As in other European countries, retailing is becoming more concentrated, with multiple chains taking over from specialist and independent stores. Many of the leading names in European retail are now expanding rapidly in Hungary.

Leading food retailers include:

• Auchan – French owned
• CBA – local purchasing allience 
• Cora – match establishing purchasing group Provera, French owned
• Coop Hungary – local
• Metro – German owned
• Plus – German owned
• Spar – Swiss franchise
• Tesco – UK owned
• Tempo – local

The retails have their own regulations and charges which may make your product more expensive.

Food processing

Hungary is a major agricultural producer, with two-thirds of production being processed locally. The Hungarian food processing sector has undergone radical change since the 1990s, with privatisation, high levels of foreign direct investment and the move to accession to the European Union all driving improvement.

Like the retail sector, food processing companies are a mix of well known multinationals, subsidiaries of large European processors and local Hungarian companies. Big names such as Nestle, Unilever and Bernard Matthews have state-of-the-art factories in Hungary. 

Links and industry contacts

Food and beverage–related resources

Ministry of Agriculture – www.fvm.hu
Ministry of Economy and Transport – www.gkm.hu
Commercial Quality Testing Institute (KERMI) – www.kermi.hu
International Food Trade Fair – www.foodapest.hu
International Food Exhibition – www.ifehungary.com

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

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