Top Manager in Discussion: László Puskás, owner of Vinorium
A wine shop named Vinorium specialising in Eastern European wine has opened in Váci utca. We spoke to its founder and owner László Puskás, who grew up in Austria, about the concept for the shop and the Hungarian wine market.
What prompted you to open a wine shop specialising in wine from southeast Europe?
At the beginning of the year I took a closer look at the selections in Hungarian shops while I was looking at the distribution of vodka in Hungary, and it struck me how one-sided those selections are. The Hungarian wine shops stocked almost no foreign wines at all. There are just a few shops in Budapest that have a selection of Italian wines. It’s no good looking for wine from southeast Europe. Not even Greek base wines such as samos or retsina, which you can even find in many Ukrainian supermarkets, are on sale in Hungary. However, Hungarian consumers are very interested in wine from Bulgaria, for example, for reasons of the past. I thought it would be worth trying to fill this gap in the market.
Which countries are represented in your shop?
We have wines from Slovenia, Serbia, Macedonia, Bulgaria, Greece and Georgia. We will also soon have wines from the Crimea, as well as the famous champagne-style from there. Of course we also sell Hungarian wines. We focus primarily on high-quality winemakers who are not yet so well known. Hungarian wines, however, only make up around 15 per cent of our range. In addition to wines we sell Russian vodka and the famous Armenian cognac Ararat.
That’s an unusual mix.
It results from the profile of my other businesses. I need to go back in time somewhat to explain that: at the beginning of the 1990s, when vodka production in Russia was at rock bottom because of the prohibition policy of Gorbachev, they tried to satisfy the immense demand there by importing. I was involved in that through a Hungarian production firm. Soon we were exporting 100 to 150 lorry-loads of vodka to Russia weekly. Alongside that, my Russian partners also asked me for Hungarian wines, which I then started to supply. In the course of the privatisation in Hungary and the disappearance of the large vineyards, however, it became increasingly difficult to supply the large quantities required. By necessity I turned to other Eastern European wines, which were also well known in Russia at the time. In 1996-97 I gave up the export of Hungarian wine entirely. Wine exports to Russia sank to an insignificant level at that time. While my company alone used to send 20 to 40 lorry-loads of wine to Russia at the beginning of the 1990s, I would estimate that that is now the total export quantity from Hungary to Russia. Meanwhile vodka production in Russia has got back on its feet. The direction of trade has changed with time. Recovered. Now we import vodka from Russia.
Meanwhile wine production in Hungary has experienced a revival. Wouldn’t that be worth another try?
Yes, but the vintners offer their wines at prices that are far too high. If Hungarian premium wines are around twice as expensive as comparable French or Italian wines, then exporting them is all but impossible. A good Bock or Polgár today costs around HUF 6,000, which is more than EUR 20. There are only a few great lovers of Hungarian wines in Germany and Russia who will pay that much, but you cannot base your business model on them. While customers can buy French or Italian wines of comparable quality for EUR 10 to 12, they won’t touch Hungarian wines costing almost double that amount, particularly given that Hungarian wines are not particularly well known in Western Europe. That is gradually also the case in Russia too.
Before the change of regime Hungarian wines enjoyed a good reputation in the former Soviet Union.
Yes, but the first Hungarian government after the change of regime made the fatal error of virtually stopping trade with Russia altogether. Suddenly everything was to be delivered to Western Europe instead. What was forgotten, however, was that in Western Europe nobody was expecting Hungarian products, especially foodstuffs, and certainly not in the previous export quantities. Instead of thinking of ways to avoid the financial bottlenecks in the trade with Russia and not insisting stubbornly on advance payments, in foreign currency moreover, the government simply shifted its entire focus to trade with Western Europe. Finally Hungarian producers were unable to deliver to either the East or the West and industries which had previously flourished were suddenly on their knees. I still cannot understand how such a huge Russian market could have been destroyed so systematically. Western suppliers were happy to see that and gladly jumped into the breach. As a Hungarian I experienced some odd scenes during that time. In Russia, where I lived for around 12 years in various cities and regions, several times when it emerged that I am Hungarian, local government representatives approached me and asked me, as a trader in foodstuffs, to encourage Hungary to deliver Ikarus buses again. Large numbers of Ikarus buses still travel on Russian roads. They are still highly valued because of their robustness. The abandonment of the huge Russian bus market is another unfortunate chapter in Russian-Hungarian foreign trade.
Getting back to the subject of wine, isn’t it possible to enter new markets if sufficient money is spent on marketing?
Considering the current price level of Hungarian wines, every forint spent on marketing is money wasted, in terms of both Western Europe and Russia. Hungarian winemakers are systematically destroying their potential export markets with their high prices. It’s true that right now they are living well from the domestic market. Just look at the estates and magnificent wine cellars that many have acquired in recent years. But in the long term such a pricing policy will certainly not pay off. In Austria we had a similar situation. Now many vineyards there are facing bankruptcy. I can see a similar thing coming in Hungary. Since we gave up trade in Hungarian wines in the 1990s, every two or three years we have tried to export Hungarian wines to Russia but always without success. With such prices, that is not particularly surprising. It gets more difficult from year to year as fewer and fewer Russian consumers and distribution managers can remember Hungarian wine from their own experience.
How are your wines from southeast Europe positioned in terms of price?
They are around 30 to 40 per cent cheaper than comparable Hungarian wines. I have experienced many times, such as recently at the wine festival next to Buda Castle, that Hungarian consumers are genuinely surprised by the low prices after tasting our wines.
Surely it would be tempting for you to adjust the prices to match the higher price level here.
Yes, but I don’t do that. We apply a normal profit margin. Making a few more euros today doesn’t pay off in the long term. Our aim is to raise the profile of southeast European wines in Hungary and to sell them, rather than to rake in extra profits in the short term. The positive trend in our sales figures since our opening shows that our approach is the right one.
How do you explain the fact that Hungarian consumers, who are otherwise very price-sensitive, make an exception when it comes to wine?
It’s primarily because of the small presence of foreign wines, which could provide proper competition. In Bulgarian supermarkets half of the selection consists of foreign wines. In Hungary foreign wines have a very minimal presence on supermarket shelves. It’s just a question of time, however, until food retail chains in Hungary take full advantage of the price advantage of foreign wines. Competition between supermarkets will ensure that they exploit that potential soon. I think that process will be completed in two to three years.
How do non-Hungarian wines from southeast Europe sell in Russia?
Very well, and an upwards trend can be observed. Our export structure has changed completely since the beginning of the millennium. At the start I mainly exported mass wines to Russia but now I can only do well there with premium wines. Consumers there have become more discerning, not least because of the quality selection from other parts of the world. A trade structure has also developed that specialises in high-quality wares.
How do you manage to keep an overview of the many wine countries represented in your shop?
By travelling a lot so that I can personally keep track of what’s happening. It isn’t an easy undertaking when you consider that I deal with eight countries and have contracts with four to five vineyards per country. I continue to hold fast to my basic principle of only offering wines that I also like drinking myself. So far that has stood me in good stead. I have known some vintners and their wines for over ten years. That also helps in having a relationship based on trust. I am increasingly also consulted by them when it comes to developing new wines. Of course it is very exciting for me to be involved at such an early stage of the process and makes it more likely that I will be supplied with a good wine later on.
Wouldn’t it appeal to you to get involved even earlier in the role of a winemaker yourself?
Yes, certainly. In the long term I would definitely like to have my own vineyard. In Hungary the Tokaj and Sopron regions would interest me. I regard Sopron as greatly underrated. The conditions for good red wines are in part better there than in Villany thanks to the special microclimate created by Lake Neusiedl [Fert? tó]. Outside Hungary I would invest in the Thracian lowlands in southern Bulgaria. That was the cradle of European wine cultivation. Homer valued the quality of the wines made there. Because of political developments in the past century that region was cut off from European wine culture, but it is making up lost ground now.
What are your plans for Vinorium?
At the moment we can accommodate up to 30 people for tastings. We are also going to prepare another part of the cellar so that there is plenty of room for up to 50 people. That will also provide more room for classical and light jazz music. At the beginning of November we would like to organise a southeast European wine week at a larger venue.
