Magazine: Tax levied on ‘feelings’

At the end of the year spirits are among the most popular gifts – the category realises 15-20 percent of annual sales in this period. However, the introduction of the public health product tax (NETA) in 2014 resulted in significant market restructuring – we learned from János Fehér, brand manager of Brown-Forman (the distributor of Finlandia, el Jimador and Jack Daniel’s in Hungary). The new tax created a competitive advantage for certain product categories (fruit distillates and alcoholic products made with minimum 7 medicinal herbs).

Several manufacturers have found a way to evade paying the new tax, so the prices of some products stayed the same, while others cost 30 percent more because of the NETA. Imre Pulai, managing director of Heinemann Testvérek Kft. told us that demand for premium-quality products is growing fast, but in their main product categories sales have dropped considerably. Mr Fehér revealed that recently they appeared with Jack Daniel’s honey and cinnamon versions in the market. Mr Pulai told that after Jim Beam Honey and the black cherry version Red Stag they came out with Jim Beam Apple, which proved to be very successful. In retail sales of spirits hyper- and supermarkets continue to dominate. DunaPro brand manager Krisztina Hegedűs informed our magazine that smaller size products are more popular, probably thanks to their lower shelf price (per litre these products cost more than their larger version). Each brand has its distinctive target group and characteristic message, its ‘feeling’. János Fehér of Brown-Forman opines that a brand can only acquire new buyers with a special message, communicated to consumers in its own language. DunaPro’s Bacardi targets young consumers, those who like to party hard, while Martini offers an Italian feeling, the joy of life and the atmosphere of spending time with friends. In the holiday season these two products are sold with matching glasses; sparkling wine Asti and Bombay Sapphire gin appear on store shelves in special gift box packaging. Heinemann Testvérek’s leading products are Jim Beam and Sierra Tequila, which target consumers in their 20s. Jim Beam’s slogan is ‘Make History’. More sophisticated premium products target thirty-something consumers and use a different communication channel.