Pálinka distilleries must thrive in a shrinking market

The situation of pálinka in Hungary

According to Mónika Czakó, Hungarian consumers increasingly consider pálinka to be a fashionable drink, while many still insist on homemade versions. Private and contract-distilled pálinkas can be produced at a lower cost, as they do not have to pay excise taxes, employment contributions or bank charges. This poses a serious challenge for commercial pálinka distilleries.

Bestillo Pálinkaház products are not on the shelves of large supermarket chains, so they have been in a particularly difficult situation during the coronavirus pandemic, as the border closure and the closure of the HoReCa sector have drastically reduced turnover. Although they returned to pre-pandemic levels by 2021, they have only been able to achieve slow growth since then. Market competition has intensified, and more work and creativity are needed to stay afloat.

Export opportunities and the entry of gin into the market

Bestillo Pálinkaház products reach countries such as England, Germany, Italy, Spain, Switzerland and France, but the volume is not significant. Pálinka is world-famous in Hungary, but it is not a recognized product category internationally. According to industry players, a coalition would be needed to change this, but currently the sector does not have strong advocacy or the state support that already exists in the wine industry.

Due to the decrease in demand for pálinka and the scarcity of export opportunities, Bestillo Pálinkaház also started making gin. According to Mónika Czakó, the demand for gin is significantly higher, and it is also a product category that attracts younger consumers. The production of gin did not require any special investment, as it can be produced with existing equipment, so expanding the portfolio was a logical step.