Required Report - public distribution

**Date:** 10/14/2005

**GAIN Report Number:** HU5013

HU5013

**Hungary**

**Exporter Guide**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Sarah Hanson

U.S. Embassy

**Prepared by:**

Dr. Ferenc Nemes

**Report Highlights:**

Hungary is a middle-income country with a developed and export-oriented
food-processing sector. Hungary's GDP growth rose from about 3 percent
in 2003 to roughly 4 percent in 2004. Hungary's accession to the EU in
May 2004 began a new chapter for the country's food trade. Import
tariffs for major U.S. products exported to Hungary decreased, and the
administrative process for distributing products became simpler. The
Hungarian food distribution system has changed drastically in the past
six years with hypermarkets and shopping centers developing quickly.
Hungarian consumers are becoming more quality conscious, and market
segmentation is creating new opportunities for high quality U.S. foods
and beverages. Tourism is a leading industry, and hotels and restaurants
are demanding higher quality foods.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Vienna \[AU1\]

\[HU\]

**I. MARKET OVERVIEW**

Hungary is a middle-income country with a developed and export-oriented
food-processing sector. Hungary's GDP growth rose from about 3 percent
in 2003 to roughly 4 percent in 2004, spurred by increased investments
in areas such as machinery and construction. While Hungary can still be
regarded as a preferred destination for foreign investments and is a
competitive location for regional service operations, it has fallen
behind Poland and Czech Republic in attractiveness, according to the
OECD. After a marked rise in costs (real wages jumped approximately 12%
in 2002), wage increase slowed down in 2003, coupled with an increase in
productivity. At the same time, Hungary's currency, the forint, has
appreciated significantly since 2001 (approximately 10% against the euro
and 30% against the US dollar, even after the devaluation in June 2003),
which has led to sagging export performance due to manufacturing
relocating to lower cost countries. The state budget deficit grew to 6.4
percent of the GDP in the last two years. The poor budget performance
resulted in limited capability to finance Government of Hungary (GOH)
and EU programs, including agricultural programs. The rate of inflation
was 6.8 percent in 2004.

Since 1990, wave upon wave of foreign companies have come into Hungary
and invested more than \$25 billion in production and service facilities
throughout the country. In the case of U.S. investors, "Fortune 500"
companies like General Electric, Alcoa, IBM, Ford, Dow, Citibank, Ernst
& Young, AES, Coca-Cola, Pepsi-Cola, Proctor & Gamble, Sara Lee, first
arrived in the early 90's. In the late 90's and the new millennium, the
second wave of companies coming to Hungary included subcontractors to
the "Fortune 500." A third wave of suppliers to the subcontractors has
been making its way to Hungary selling products through agents and
distributors. Due to Hungary's geographic location in the center of
Europe, all three waves of companies are looking to do business not only
with Hungary, but also with the rest of the European Union and the
"frontier markets" of Eastern Europe (e.g. Romania, Ukraine and former
Yugoslavia).

The agri-food sector has a slowly declining but fundamental role in the
national economy and in the trade balance. Agricultural output amounted
to 3.0% of GDP and 6.50% percent of total exports in 2003. Agricultural
trade accounted for \$32 billion in exports and \$1.7 billion in imports
in 2003. More than 60 percent of Hungary's agri-food exports went to the
OECD countries; the share going to EU countries was 45 percent. Imports
of bulk agricultural products and intermediary goods (such as protein
meals, coffee, cocoa and spices, meat, livestock genetics, fruit and
nuts) make up to 80 percent of total agricultural imports. Processed
foods and beverages account for about 20 percent of the total, and these
are imported mainly from the countries of the EU.

The agricultural sector has many traditional ties to the United States,
especially in the area of genetics. Some consumer-oriented products also
come from the United States. Purchases of U.S. agricultural and food
items accounted for \$58 million in 2003. Hungarian sales to the United
States were \$33 million in the same period.

**Consumer Food Market**

Food consumption dropped considerably after the political and economic
changes of the late 1980s. The main reasons for the decline were a
decrease in real income and high inflation. However, consumption began
to rebound in 1997/1998 as macroeconomic conditions improved and
inflation cooled.

The gap between the rich and poor in Hungary is widening, and the less
fortunate tend not to shop at large commercial retailers. Also, in
response to high taxes, the black market has taken on an increasing role
in supplying food to lower income families, and subsistence farming and
unregistered farm food sales are on the rise. At the same time,
disposable income for the top strata of society has expanded rapidly and
these consumers are adopting consumption patterns similar those found in
wealthy western European countries.

The last few years have seen interesting changes in consumer
preferences. For example, pork consumption has decreased from 39 kg in
1990 to 28.5 kg at present, but consumption of cheaper meat cuts and low
priced frankfurters has increased. Similarly, demand for poultry has
increased in recent years and currently exceeds pork. Turkey and frozen
oven- ready poultry products have seen the most growth.

Demand for fish and seafood is low in (landlocked) Hungary and stands at
3 kilogram per capita annually. Demand for frozen fish, particularly
breaded products and more expensive restaurant cuts, is on the rise.

Although total consumption of milk products declined in recent years,
sales of yogurt and innovative convenience products have reversed this
trend and consumption now stands at 163.7 kg per capita annually.

Cereal consumption has dropped in recent years except for rice, where a
widening array of brands and products has stimulated consumer interest.

There has been an increase in the consumption of fresh and preserved
vegetables, although sales of these items appear to be highly price
sensitive. Given current consumption trends, canned products will
probably gradually lose market share to frozen foods in the coming year.

At present, there is a small but growing market for health foods. The
emerging Hungarian middle-class is adopting Western attitudes towards
health and well-being, including those towards food. This trend is
particularly evident in the sale and marketing of breakfast cereals and
snacks. Natural products such as granola bars, dried fruits and fruit
mixtures, soybean and wheat-based meat substitutes are also increasingly
popular. Demand for vitamin enhanced products, as well as those for
diabetics (sugar free chocolate bars, light soft drinks, etc.) are
growing.

Currently, food and beverages account for about 29 percent of household
expenditures. The percentage of income spent on food has been decreasing
and is trending toward Western levels. Hungary's population (currently
about 10 million) is gradually decreasing, and the population is aging.
Because of this, there is growing demand for high value specialty
products, convenience foods, and pet food. According to a 2004 survey,
food consumption outside the home accounts for 13 percent of total food
expenditures. This is 8 percent increase over the 2003 year level.

Ninety percent of Hungarian households have a refrigerator with a
freezer compartment. However, because freezing capacity in an average
household is still limited, the unit size of retail frozen food packages
is smaller than in the United States. According to trade estimates, 65
of every hundred households have a microwave oven. In cities this figure
is much higher and increasing rapidly.

  ----------------------------------- -----------------------------------
  Advantages                          Challenges

  After a period of decline there is  Domestic food processing is very
  room to increase consumption        competitive

  Western consumption patterns are    Competition from European
  emerging                            commodities is increasing with EU
                                      membership

  There is growth potential in the    Slow increase in real incomes
  development of retail sector,       
  especially in suburban and rural    
  areas                               

  There are unexplored commodity      Appreciation of the national
  areas                               currency (Hungarian Forint)

  Consumers still find imported       Food safety issues (Hormone beef,
  products novel and interesting and  biotech)
  associate imports with high quality 
  goods                               

  Domestic industry needs certain     Many traders are inexperienced in
  ingredients                         doing business with overseas
                                      companies

  Purchases by tourists and transit   High transport costs
  shoppers are large and growing      

  EU membership facilitates the entry Multinational retail chains
  of new and small volume imports of  participate in the increasing trade
  U.S. products through other         of member countries' processed food
  countries' distributors             

  High number of experienced,         Relatively small delivery volumes
  multinational retailers             

  Innovative products and packaging   Hungarian consumers are unfamiliar
  are appreciated                     with the value of many U.S.
                                      products

  Importers are open to new products  Tourism and consumption of tourists
  and technologies and have been      was weak in the last two years
  eager to participate in U.S.        
  sponsored events (e.g. the Cochran  
  Fellowship Program and visits to    
  trade U.S. food shows)              
  ----------------------------------- -----------------------------------

**II. EXPORTER BUSINESS TIPS**

Local Business Customs

The food and beverage wholesale trade is more concentrated than the
retail sector. Eleven 'purchasing partnerships', run by retailers,
handle about 70 percent of total turnover. These purchasing companies
are able to influence the price of domestic and imported foods and
charge different fees to domestic and foreign suppliers. Fees include a
"listing fee" to introduce a new product into the retailer's inventory,
slotting fees to keep a product on the store shelf, and "marketing and
shop network development contributions." Care must be taken to guard
against excessive fees.

Retailers, including the multinational chains, mainly import through
domestic foreign trading companies and wholesalers. U.S. traders
interested in selling in Hungary should offer their products to the
'purchasing partnerships' that serve the big retailers, to the
nation-wide network importer/distributors, or to "independent"
importers. U.S. companies may even consider establishing their own
import company to handle the distribution of their product.

The Hungarian wholesale market is also very price sensitive, and
Hungarian importers will expect American traders to bring samples and
quote prices in the early stages of negotiation.

With EU membership, the entrance of U.S. products to Hungary through
European importers/distributors became easier. See a list of importers
of US products in Europe at the following website:
[www.american-foods.org](http://www.american-foods.org/).

General Consumer Tastes and Preferences

Consumption patterns appear to be dependent on income rather than price.
Major factors in upper income purchasing decisions are quality,
packaging, and brand recognition. To date, foreign suppliers seem to
have been better able to capture this market segment than domestic
suppliers. Because of income stratification, demand for cheap foodstuffs
and expensive luxury items have increased while sales of medium priced
products has declined.

New products are appearing in many categories and packaging designs are
revised frequently. One negative aspect of this trend is that some
popular and affordable products have disappeared and plastic containers
have replaced the environmentally friendlier reusable glass bottles.

In the Hungarian food market, brands have secondary importance.
Consumers do not make a distinction between brand name, company name,
and product name. Brand recognition and brand loyalty have a different
meaning for the average Hungarian customer than they do in more mature
western markets. Sellers cannot rely on brand power for sales and price
premiums to the same extent as in other European countries. Many
consumers mistrust new products, names and packages, especially if their
appearance comes with a price increase. There is also a small movement
against branded, well‑advertised, \"foreign\" products. Conversely,
Hungarian customers buy some branded products primarily for prestige
(e.g., high-end U.S. bourbon or whisky).

Food Standards and Regulations

Until the middle of 2002, all food products, excluding fresh products,
had to be registered and approved by the Hungarian food-testing
institute - OETI. The process was slow and costly, but the testing had
to be completed before the product was allowed on the market.

In July 2002, the GOH terminated the import products registration
system. This created an opportunity for Hungarian traders to respond
faster to good prices or seasonal purchase offers. The required export
administration, quality responsibilities of the Hungarian importer and
the foreign vendor are outlined in the 43/2002 Order of the Minister of
Agriculture, Minister of Health and the Minister of Economy.

The only group of commodities where the mandated registration has been
prolonged is the nutrition supplements for sports, slimming diets, and
other "functional foods".

See the regulations for the entire EU at
<http://www.useu.be/agri/fairs.html> (Food and Agricultural Import
Regulations and Standards).

Labeling

Labeling must be in Hungarian. In instances where retail packages are
imported with labels written in English, the government requires that
Hungarian-language label stickers be added. Labels should include the
following information:

Name of product

Ingredients

Shelf life

Name and address of importer or distributor

OETI number

Tariffs and Tariff Rate Quotas (TRQs)

Hungary used its own tariff system until May 1, 2004. After EU
accession, the EU's common external tariffs are applied. In general,
tariffs for many US agricultural products exported to Hungary decreased.
(See Gain Report HU3002 for a detailed analysis of the effects of tariff
changes for US exports and Gain Report EU4040). You may look for the
actual EU import tariff of individual commodities at the following
website:
<http://europa.eu.int/comm/taxation_customs/dds/cgi-bin/tarchap?Lang=EN>

Taxes

Value added taxes (VAT - also called the 'general turnover tax' in
Hungary) are also charged. The VAT is essentially a tax on consumption
and the normal rate is 25 percent, with a reduced rate of 12 percent
applying to most food and agricultural products. In addition to the VAT,
a consumption tax is levied on certain goods (coffee, some kinds of
wine, jewelry etc.). Excise taxes are also levied on alcohol and tobacco
products. Imports are subject to VAT, with the taxable base calculated
as the sum of the customs value, plus customs duties, fees, and
consumption tax.

III\. MARKET SECTOR STRUCTURE AND TRENDS

Market opportunities in:

a\. Food retail sector

Food retail sales were \$10.1 billion in 2003 and grew to \$12.1 billion
in 2004 (2.8 percent increase at comparable prices).

Concentration in the grocery trade has increased over the last few
years. By 2004, more than 55 percent of the turnover was attributable to
the five biggest companies. Some of the famous retailer chains were
forced to sell their shops and move out of Hungary such as Julius Meinl
and Billa. The total number of food dominated shops decreased (from
35,963 in 2003 to 34,802 in 2004). The number of new hypermarkets is
still growing, although at a smaller rate than in the previous years.
Shops in the small-medium segment (200-400 sq. meter) managed to
stabilize their share in the total turnover. The number of small (under
200 sq. meter) shops dropped the most.

Share of the different types of shops based on turnover of
daily-consumed items (food, beverages, and household chemicals)

  ----------------------- ----------------------- -----------------------
  Type of Shop            2003                    2004

                          \%                      \%

  Hypermarket             21                      26

  Supermarket             14                      15

  Large Discount          15                      14

  C+C                     4                       4

  Convenience Shops       35                      33

  Market and Street       5                       4
  Kiosks                                          

  Other                   6                       6
  ----------------------- ----------------------- -----------------------

Hypermarkets bigger than 10,000 square meters include Cora, Tesco,
Interspar and Auchan, while cash and carry shops (5,000-10,000 square
meters) include Metro, Interfruct C+C and Alfa. Supermarket chains such
as Spar, Match, and CBA are well known in the capital area and in bigger
cities. Their size is typically 1,000-3,500 square meters. Discount food
stores (401-1,000 square meters) are the backbone of the everyday food
shopping (Profi, Penny-Market, Plus, Real)

A traditional consumer cooperative chain, COOP, still has the most shops
in the 200-400 and the 400-1,000 square meters size categories. However,
the 40-400 square meters size shops have been the biggest losers as the
sector consolidates - their share of total turnover has decreased from
22 percent to 13.4 percent during the last four years.

While the number of small convenience shops is relatively stable,
turnover is high. About one third of them close annually and are
replaced by newly opened shops. The position of small shops that are a
member of a purchasing alliance or a franchise system is growing
stronger. In 2002, the share of sales by independent shops out of total
turnover decreased from 25 to 21 percent, while the sales by chain
members increased their share from 10 to 14 percent, according to Gfk
Market Research firm.

Hungary's joining to the EU gave an impetus to the food imports.
Estimates of GfK Hungaria, a reputed market research firm, indicate an
increase of the share of imported goods in the total grocery retail
trade from 10 to 20 percent. The growth of foreign products in shops was
particularly high at dairy products, fresh fruit and vegetable, beer,
juices and sweets. The biggest volume import items are the same:
tropical and out season fruit, roasted coffee, canned fruits and
vegetable, fruit juice, beer and tobacco products.

The competition intensified not only at the shelves of shops but between
producers as well. Hungarian food processors increased the use of raw
materials from imports. Multinational companies revised the allocation
of their processing capacities in the expanded EU. Some of the strong
Hungarian brands are now produced in other EU countries and the product
is "re-exported" to Hungary.

Specialty shops, many of them at recently opened shopping malls, may
provide good business opportunities for imported foodstuffs. Nearly
thirty large shopping centers have been built in Budapest and other
cities in Hungary in the last three years. Supermarkets (typically
2,000-3,500 square meters in size) are an important part of each new
shopping mall.

Gift shops and sweets shops also sell a variety of foreign wine and
spirits, fancy dry fruits and nuts, and sweets. Gift baskets of food are
also commonly for sale in bigger food stores, particularly around
Christmas and Easter. Fancy food and spice shops, specialty beverage
shops, pet shops, etc. are also important distribution channels of
imported commodities.

Most of the more than 900 gas stations in Hungary are also convenience
stores. The size of these convenience shops varies from 200 to 1,300
square feet. According to a recent survey, 35-45 percent of shop sales
are food and beverage items. Most of Hungary's ten major gas station
companies run the shops themselves. Shell Hungary, however, has run its
"Select" stores under a franchise partnership with CBA, a major domestic
grocery chain, for many years.

There are about 150 companies in Hungary that sell their products over
the Internet and a few market leaders take 80% of the sales value.
According to a 2004 GKI - Westel - Sun Microsystems Hungary survey,
Internet sales revenues were forecasted about \$44.6 million in 2004.
This is a 247 percent increase over 2000. Reasons of the increase of the
last two years may be attributed to the technical development at the
Internet access of households, and a GOH supported home computer sales
program ("School-Net" Express program). The most common goods sold
online are books, music, electronics and gifts. There are several
grocery companies in bigger cities running e-commerce web sites for home
delivery of food and grocery items. The majority of non-food B2C
companies use the Hungarian Postal Service to deliver their goods; food
retailers use their contractors or have their own car fleet. In most
cases, payment is collected upon delivery.

b\. Hotel-Restaurant-Food Service

Catering sales were \$2.79 billion in 2004, representing an increase of
3.4% at comparable prices over the previous year. The Hungarian consumer
foodservice market is very fragmented and independent players were
dominant in most sectors. The biggest growth rate within the HRI sector
is in fast food. The significance of chained operators is also highest
in the fast food sector, where about 28 percent of the outlets are part
of a chain. Several well known companies have franchise networks in
Hungary, including McDonalds, Pizza Hut, Kentucky Fried Chicken, and
Subway.

Foreign and "theme" restaurants offering ethnic food and beverages also
appear to be growing faster than the restaurant sector in general. These
restaurants use and sell imported ingredients and niche products, making
them a good place to advertise new products and to educate consumers
about new foods.

Upper-tier hotels can also be good partners for U.S. exporters. Not only
as hosts for promotional events but also as buyers of premium
ingredients and beverages. Most hotel shops sell American products and
hotel and catering trade opportunities are under-utilized. Hotels and
restaurants mainly buy imported products from local distributors, but
their managers and chefs are good sources of information about customer
preferences and quality and price expectations.

c\. The Food Processing sector

Hungary\'s food processing sector is the most modern in Eastern Europe,
and its export revenues are vital to the country\'s trade balance.
Western companies have invested in privatized companies active in
distilling, sugar production, soft drinks, vegetable oil processing,
confectionary products, pet food, snacks, and tobacco. These processors
have received a good deal of foreign investment, have integrated
themselves into a Western-style market system, and are becoming more
concentrated in their ownership structure. In other industries,
privatization took place more slowly and investors have typically
established small‑ to mid‑sized joint ventures with domestic majority
ownership. Examples of this model include investment in the milling,
baking, pasta, and poultry industries.

Within most parts of the food-processing sector, the increase in the
number of companies and new production facilities, in tandem with the
decline of domestic consumption, initially led to excess production
capacity (sometimes over 30 percent above demand). Over capacity in turn
increased the pressure to export. In 2004, 22.1 percent of food industry
output was exported, but the export orientation is much higher for
individual sub-sectors such as canning, meat, poultry, and dairy
industry. Products at least partially produced by foreign‑owned
companies' account for almost two thirds of Hungary\'s exports.

The total food /beverages sector production is 120 % of domestic demand,
indicating a strong [export orientation]{.underline}. The following
table reflects that the share of imports in the supply of processed food
([import penetration]{.underline}) is relative low. Imports are
significant for sweets, confectionary and dairy products (need for a
wide variety products in these sectors), and fruits/vegetable (need for
out season products).

  ----------------------- ----------------------- -----------------------
  Food Processing         Export Orientation      Import Penetration
  Industry Sub-Sector                             

  Meat Industry           33.3 %                  5.4 %

  Dairy                   15.3 %                  6.2 %

  Poultry Processing      42.9 %                  0.9 %

  Fruit and Vegetable     52.0 %                  12.4 %
  Processing                                      

  Brewing                 0.7 %                   3.0 %

  Soft Drinks             8.2 %                   2.5 %

  Tobacco Industry        Negligible              2.0 %

  Sweets and              17.2 %                  22.8 %
  Confectionary                                   

  Wine                    62.0 %                  2.7 %

  Feed Milling            23 %                    52.0 %

  Flour Milling           13.5 %                  1.5 %
  ----------------------- ----------------------- -----------------------

For many sub-sectors, the consumer oriented product imports are not
high, but raw material imports may be considerable. Soybean and fishmeal
import (Feed milling), almonds and raisins import (Sweets and
Confectionary), pork and tobacco all fall into this category.

The number of food processing firms, employing more than 20 people, was
902 in 2003 (declining). Bigger companies, employing more than 200,
account for 83 percent of total sector output.

The food processing industry purchases most of its raw materials from
domestic sources, but imports of out season or unavailable agricultural
ingredients, non‑food additives, and packaging materials and
technologies, are vital.

Export sales opportunities for U.S. suppliers have occasionally occurred
in recent years because of temporary shortages on the domestic market
(meat) or the limited availability of a given commodity or quality grade
in Hungary (fruit juice concentrate, rice, tobacco, peanuts, fish,
raisins, tree nuts, dried fruit, etc.)

IV\. BEST HIGH-VALUE PRODUCT PROSPECTS

+-----------+-------+-------+------+--------+-----------+-----------+
| Product   | 2003  | 2003  | 5    | Import | Key       | Market    |
| Category  | M     | Im    | -Yr. | Tariff | C         | Attra     |
|           | arket | ports | Avg. | Rate   | onstrains | ctiveness |
|           | Size  |       | An   |        | Over      | for USA   |
|           |       |       | nual |        | Market    |           |
|           |       |       | Im   |        | De        |           |
|           |       |       | port |        | velopment |           |
|           |       |       | Gr   |        |           |           |
|           |       |       | owth |        |           |           |
+-----------+-------+-------+------+--------+-----------+-----------+
| # Raisins | 2.54  | 2.54  | 2.4% | 2.4%   | Co        | Developed |
|           | (,000 | (,000 |      |        | mpetition | sweets,   |
|           | MT)   | MT)   |      |        | from      | conf      |
|           |       |       |      |        | cheaper   | ectionary |
|           |       |       |      |        | suppliers | and       |
|           |       |       |      |        | from Iran | bakery    |
|           |       |       |      |        | and       | in        |
|           |       |       |      |        | Turkey    | dustries. |
+-----------+-------+-------+------+--------+-----------+-----------+
| Dried     | 2.76  | 1.00  | 17%  | 9.6%   | Co        | Co        |
| Fruits    | (,000 | (,000 |      |        | mpetition | nsumption |
|           | MT)   | MT)   |      |        | from      | is        |
|           |       |       |      |        | cheaper   | growing.  |
|           |       |       |      |        | suppliers | Good      |
|           |       |       |      |        | from Asia | quality   |
|           |       |       |      |        |           | of        |
|           |       |       |      |        |           | C         |
|           |       |       |      |        |           | alifornia |
|           |       |       |      |        |           | prunes is |
|           |       |       |      |        |           | r         |
|           |       |       |      |        |           | ecognized |
|           |       |       |      |        |           | by        |
|           |       |       |      |        |           | consumers |
+-----------+-------+-------+------+--------+-----------+-----------+
| Rice      | 58.24 | 41.70 | Sta  | 63%    | Protected |           |
|           |       | (,000 | bile |        | EU        |           |
|           | (,000 | MT)   | at   |        | co        |           |
|           |       |       | this |        | mpetitors |           |
|           | MT)   |       | l    |        | and cheap |           |
|           |       |       | evel |        | Asian     |           |
|           |       |       |      |        | suppliers |           |
+-----------+-------+-------+------+--------+-----------+-----------+
| Seafood   | 8.71  | 8.71  | 2.9% | 2%     | Per       |           |
|           | (,000 | (,000 |      |        | capita    |           |
|           | MT)   | MT)   |      |        | co        |           |
|           |       |       |      |        | nsumption |           |
|           |       |       |      |        | is still  |           |
|           |       |       |      |        | low.      |           |
|           |       |       |      |        | Consumers |           |
|           |       |       |      |        | do not    |           |
|           |       |       |      |        | know      |           |
|           |       |       |      |        | quality   |           |
|           |       |       |      |        | di        |           |
|           |       |       |      |        | fferences |           |
+-----------+-------+-------+------+--------+-----------+-----------+
| Distilled | 14.80 | 1.92  | 5%   | Free   |           | Import    |
| Liquors   | mi    | mi    |      |        |           | tariffs   |
|           | llion | llion |      |        |           | decreased |
|           | liter | liter |      |        |           | with EU   |
|           | (abs  | (abs  |      |        |           | a         |
|           | .alc) | .alc) |      |        |           | ccession. |
|           |       |       |      |        |           | Bourbon   |
|           |       |       |      |        |           | whiskey   |
|           |       |       |      |        |           | is a      |
|           |       |       |      |        |           | trendy    |
|           |       |       |      |        |           | brand     |
+-----------+-------+-------+------+--------+-----------+-----------+
| Wine      | 202   | 6.32  | 8%   | 11%    | High      | Wine      |
|           | mi    | mi    |      |        | tariff    | co        |
|           | llion | llion |      | (62.9% | until May | nsumption |
|           | liter | liter |      | before | 2004      | is        |
|           |       |       |      | EU     | hampered  | tr        |
|           |       |       |      | acce   | the       | aditional |
|           |       |       |      | ssion) | int       | and HRI   |
|           |       |       |      |        | roduction | needs     |
|           |       |       |      |        | of US     | high      |
|           |       |       |      |        | wines     | quality   |
|           |       |       |      |        |           | wine      |
+-----------+-------+-------+------+--------+-----------+-----------+
| Spices &  | 37.23 | 4.85  | 22%  | 9%     |           | Hyp       |
| C         |       |       |      |        |           | ermarkets |
| ondiments | (,000 | (,000 |      |        |           | and       |
|           | MT)   | MT)   |      |        |           | American  |
|           |       |       |      |        |           | re        |
|           |       |       |      |        |           | staurants |
|           |       |       |      |        |           | introduce |
|           |       |       |      |        |           | new       |
|           |       |       |      |        |           | cuisine   |
|           |       |       |      |        |           | and       |
|           |       |       |      |        |           | spices    |
+-----------+-------+-------+------+--------+-----------+-----------+
| Fruit     | 1     | 32.39 | 5%   | 12%    | Hungary   |           |
| Juice     | 37.46 | (,000 |      |        | is a      |           |
| Con       | (,000 | MT)   |      |        | major     |           |
| centrates | MT)   |       |      |        | producer  |           |
|           |       |       |      |        | of        |           |
|           |       |       |      |        | temperate |           |
|           |       |       |      |        | fruit     |           |
|           |       |       |      |        | juices    |           |
+-----------+-------+-------+------+--------+-----------+-----------+
| Almonds   | 1.66  | 1.00  | 7%   | 3.5%   |           | C         |
|           | (,000 | (,000 |      |        |           | alifornia |
|           | MT)   | MT)   |      |        |           | almonds   |
|           |       |       |      |        |           | is a      |
|           |       |       |      |        |           | market    |
|           |       |       |      |        |           | leader in |
|           |       |       |      |        |           | the       |
|           |       |       |      |        |           | quality   |
|           |       |       |      |        |           | segment   |
+-----------+-------+-------+------+--------+-----------+-----------+
| Pet Food  | 80.14 | 29.03 | Sta  | 3.8%   | EU        | H         |
|           | (,000 | (,000 | bile |        | V         | ungarians |
|           | MT)   | MT)   | at   |        | eterinary | keep a    |
|           |       |       | this |        | re        | lot of    |
|           |       |       | l    |        | gulations | pets, and |
|           |       |       | evel |        | may limit | petfood   |
|           |       |       |      |        | imports   | sales     |
|           |       |       |      |        |           | increase  |
|           |       |       |      |        |           | rapidly   |
+-----------+-------+-------+------+--------+-----------+-----------+

V. KEY CONTACTS AND FURTHER INFORMATION

[Ministry of Agriculture and Regional Development]{.underline}

H-1055 Budapest

Kossuth Lajos ter 11.

Web Address:

International Affairs

Ms. Mariann Kovacs, Head of Department

Tel: 361 301-4661

Fax: 361 301-4662

Veterinary and Food Hygiene

Dr. Miklos Suth, Head of Department

Tel: 361 332-7986

Fax: 361 301-4669

[National Institute for Food and Nutrition (OETI)]{.underline}

H-1476 Budapest

Gyali ut 3/A. POB 52

Tel: 361 215-4130

Fax: 361 215-1545

[American Chamber of Commerce in Hungary]{.underline}

H-1052 Budapest

Deak Ferenc u. 10.

Mr. Peter Fath, Executive Director

Tel: 361 266-9880

Fax: 361 266-9888

E-mail:

Web Address:

[National Association of Food Processors]{.underline}

H-1012 Budapest

Kuny Domokos u. 13-15.

Mr. Laszlo Piros, General Secretary

Tel: 361 375-4721

Fax: 361 355-5057

E-mail: <efosz@efosz.hu>

Web Address: [www.efosz.hu](http://www.efosz.hu/)

[Hungarian Franchise Association]{.underline}

H-1024 Budapest

Margit krt. 15-17. IV./3.

Dr. Istvan Kiss, General Secretary

Tel: 361 212-4124

Fax: 361 212-5712

E-mail: <franchise@chello.hu>

Web Address: [www.franchise.hu](http://www.franchise.hu/)

[U.S. Embassy, Office of Agricultural Affairs]{.underline}

Dr. Ferenc Nemes

Agricultural Specialist, Foreign Agricultural Service

Bank Center Building

Szabadsag Ter 7

H-1054-Budapest Hungary

Tel: 36-1-475-4162

Fax: 36-1-475-4676

E-Mail: <ferenc.nemes@usda.gov>

Web Address: [www.fas.usda.gov](http://www.fas.usda.gov/)

and <http://www.usembassy.at/en/usda/index.html>

Hungary

  ---------------------------------------------------- ------ -----------
  TABLE A: KEY TRADE & DEMOGRAPHIC INFORMATION         YEAR   VALUE

  Agricultural Imports From All Countries (\$Mil)/U.S. 2004   2,068 / 4%
  Market Share (%)                                            

  Consumer Food Imports From All Countries             2004   1,129/ 2%
  (\$Mil)/U.S. Market Share (%)                               

  Edible Fishery Imports From All Countries            2004   35 / 1%
  (\$Mil)/U.S. Market Share (%)                               

  Total Population (Millions)/Annual Growth Rate (%)   2004   10 / -3.5%

  Urban Population (Millions)/Annual Growth Rate (%)   2004   5.7 /-1.1%

  Number of Major Metropolitan Areas                   2004   1

  Size of the Middle Class (Millions)/Growth Rate (%)  N/a    N/a

  Per Capita Gross Domestic Product (U.S. Dollars)     2004   \$9,854

  Unemployment Rate (%)                                2004   7.6%

  Per Capita Food Expenditures (incl.                  2003   \$917
  beverages/tobacco)(U.S. Dollars)                            

  Percent of Female Population Employed                2003   46.9%

  Exchange Rate (US\$1 = HUF)                          2004   203
  ---------------------------------------------------- ------ -----------

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