RENCOM – Workpackage 4 – Hungarian case studies: Eger Bull’s blood project
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Eger Bull’s blood project (Heves)
Winegrowers play a major rule in this county. Bull’s blood is one of the
two most famous wines in Hungary (the other one is the „old Tokay” from
the county next to Heves) which is grown in Eger, the capital city of
Heves.
After the transition in the early 90’s, many new small farmers have
appeared on the hills of Eger, who try to produce Bull’s blood. At this time
there wasn’t any approving method to control the quality of wines. This
situation was very harmful for the wine-growers who tried to sell quality
wines with high prices, and of course it was very harmful for the famous
brand, „Bull’s blood”. But many small farmers produced red wine under
the brand’s name “Bull’s blood”, whose quality were not suitable, and
before the transition, in the foreign markets the brand became the synonym
of a “moderate quality” Hungarian red wine, and these bottles abided on
the bottom shelves of the supermarkets. Another problem also arose:
Eger’s farmers can’t deal with each other if the Bull’s blood has to become
the region’s dominant famed high quality wine or it should remain an in
quantity produced and within easy reach market-leader red wine.
We try to focus on a special network in which actors try to rebuild the
brand of the wine in the Hungarian market as well as in the world market.
The most important step in this process was to create a legal text which
controls the winegrower’s method, and ordains some quantitative
indicators (for example: weight of grapes per hectare, the area where the
grapes from etc.). But before this step they had to determine the special
chemical components that can be used in the course of the wineproduction, and the weight of these components.
Eventually, in 2003 the authorities modified the “wine-law” which opens
hence the door to regulate the production and preparation of proprietary
extra fine quality wines. The council of the 15 parishes of the region
settled down the regulation of the production of a “simpler Bull’s blood”
and in the same time they created a new category: “Bull’s blood Superior”,
and agreed, that the best quality will be the “Superior Eger”. (The
differences result in the permitted volume-crop of grape per hectare, the
permitted types of grapes or the degree of the sugar etc). Naturally the
RENCOM – Workpackage 4 – Hungarian case studies: Eger Bull’s blood project
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strict ordain results high costs, so the small farmers can’t finance this
process. Anyway, the result of this project will be lower grapes with higher
quality.
There are four major groups of the actors in our case study:
1) the group of farmers with high revenue and good export possibility;
2) the group of small farmers who won’t be able to follow the conditions;
3) the group of institutions are interested in the research to find the „best
quality”;
4) the last one is the group of institutions linked to the big farmers who
help to lobby in all levels of the politic.
The OPP (obligatory passage point) is to safeguard the quality and the
nimbus of the wine nevertheless make a deal in favor of smaller farmers
also.
Within the framework of the National Research and Developing Program,
Eszterházy Károly College applied for a tender to improve and to amend
technologically the production of the wine and to finish a marketing
strategy which enhance the competitiveness of the famous Bull’s blood.
The essential goal is to ameliorate the qualitative production of the Bull’s
blood and other wines of Eger. The project covers four years. The
members of the consortium are:
¾
¾
¾
¾
the College,
the Guild of 9 wine producers (who are the major wine-growers),
the Research Institute for Grape and Wine in Eger
and some small- and medium farmers who already won at more
international competition.
The intellectual basis is the College. They make researches in the field of
biology, chemistry, viticulture, meteorology, geography, and history too.
RENCOM – Workpackage 4 – Hungarian case studies: Eger Bull’s blood project
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The model
New entrants1a,
Substitute Products1b
Bargaining Power Suppliers2
Factor Conditions5
Project4
Bargaining Power Buyers3
Demand Conditions6
Related & Supporting
Industries7
Local Governments8
National Governments9
1a
The threat of the new entrants: It depends on how opened the market
is, on capital requirement, on resiliency of the market, on government
policy, on the possibility to access to input and to distribution, on Brand
identity, on switching costs, or on proprietary products etc. The possibility
that new farmers may enter the market also affects competition. But there
are many barriers (modified wine-law, the high cost of suffice the
specialized technological requirement, cost of investment assets, etc)
which reduces the number of possible new entrants.
1b
The scale of the substitute products: other wines on the market whose
quality is pretty much the same. The threat of substitutes depends on
switching costs, on buyer’s inclination to substitute or on priceperformance trade-off substitute. In Hungary we can find pretty much kind
of (red) wine in the market whose price often lower than the Bull’s blood’s
price, even if they are foreign wines. Nowadays customers can’t trust in
RENCOM – Workpackage 4 – Hungarian case studies: Eger Bull’s blood project
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this brand name because they can’t be sure, if they choose Bull’s blood it
means that they bought the expected and desirable quality.
2
Bargaining Power Suppliers: It depends on how efficiently organized
they are, on suppliers concentration, on the importance of volume to
supplier, on presence of substitute inputs or on impact of inputs on cost or
differentiation. In our case, Bull’s blood has a good position, because in
the region this kind of wine is the most famous, the brand name is already
familiar, the enhance and the promotion of the product is in the interest of
the national and regional authorities too. It could lead the market in the
future, and it would become a luxurious-product, if the low quality wines
were withdraw from circulation of the market.
3
Bargaining Power Buyers: It depends on how efficiently organized they
are, on buyer volume (how much wine they want to buy), if the product is
unique (Brand identity; it means less the product is unique, the BPB is
bigger), on the cost of the substitute of the product, the price-sensitivity of
the consumers, or if any substitutes are available. In our case the
consumer’s interest is to get good quality wine in “normal” price. Whereas
Bull’s blood is a traditionally appreciated Hungarian product, consumer
likely pays the additional price, if the quality of this wine is undeniably
guarantied.
4
Project: The goal of the project is to rebuild the brand of the wine in the
Hungarian market as well as in the world market, and to make Bull’s
blood the region’s dominant and appreciated extra fine quality wine.
5
Factor conditions: The nation’s – or in this case the region’s – position
in factors of production is necessary and essential to compete in a given
industry. We can rate here for example skill labor or infrastructure. In
Eger’s wine-country there isn’t any “wine-producer training”, while it
should be indispensable in order to produce Bull’s blood and other wines
on high quality. This task waits for the College. In the Research Institute
for Grape and Wine in Eger, the experts make researches and experiments
to improve the wine’s quality, but they don’t have enough informational
and technological background to attain smashing results.
RENCOM – Workpackage 4 – Hungarian case studies: Eger Bull’s blood project
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6
Demand conditions: The home demand for Eger’s products is quietly
sufficient, but on the foreign markets the Brand name has already bore loss
of face. To add, a more demanding local market leads to national
advantage. To improve the export opportunities all the participant should
make more efforts.
7
Related and Supporting Industries: It’s evident, that when local
supporting industries are competitive, firms and farmers enjoy more cost
effective and innovative inputs. In Eger the wine-producers not only grow
the grape but they have their own installation and materials with good
technology to bottle the wine. Moreover there are many subcontractor who
doesn’t produce wine, but bottles them. If they establish a good
relationship whit numerous producers, they can deal in a way, which is
fruitful for all of them.
8
&9 Local and National Governments: As we analyze on regional or
local level we have to recognize the role of the regional decision making
centers. The sub-regional or local authorities can intervene in order to
support economic as well as socio-cultural activities. To add, it’s necessary
to make the distinction between hard and soft support in this context.
Generally, the hard support which refers to physical infrastructural aspects
(such as roads, buildings) or favourable monetary conditions (taxation
measures) is given by the national authorities. The regional or local
authorities or institutes can rather give soft support for example education,
consultation for the small- and medium enterprises, or for farmers in
European Union’s affaires. In our study the national authority modified the
wine-law in order to protect the decent and honest producers. (The role of
government in this case is to encourage companies – and the growers – to
raise their performance by enforcing strict product standards.)
The government realized that the project is essential to the whole country,
so the Ministry of Education gave 100 million Forint for the Bull’s blood
project in the framework of National Program for R&D.
The local authorities and institutes – Eszterházy College, Chamber of Commerce
and Industry of Heves County – and the Guild of 9 major wine-growers make
the project with an additional 100 million Forint.
RENCOM – Workpackage 4 – Hungarian case studies: Eger Bull’s blood project
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List of the innovating and supporting actors:
¾ Eszterházy Károly College: it’s one of the innovating actors, the noted
College in Eger. The Institute run for a tender in the framework of
National Program for R&D invited by the Ministry of Education. The
role of the College is to delegate experts to the project, to build an
usable database, to participate in the researches, and to coordinate the
project by its deputy director.
¾ Ministry of Education, who invited the tender and allocated 100 million
Forint. The goal of the project is to rebuild the brand of the wine in the
Hungarian market as well as in the world market, and to make Bull’s
blood the region’s dominant and appreciated extra fine quality wine.
¾ Chamber of Commerce and Industry of Heves County (regional
authority) who participate in the project and provide main information,
and also contribute to the cost of the researches.
¾ Guild of 9 wine producers (major wine-growers) who are interested in
the establishment of a database which is necessary to the designation of
origin and the quality assurance of the Bull’s blood of Eger.
The four organization mentioned above finance the project together.
¾ Research Institute for Grape and Wine in Eger, which makes winechemical researches in order to identify and confirm the incomparable
qualities and flavors of this wine.
¾ Wine community in Eger (managed by the Council of Eger’s winecountry) who elaborated and accepted the regulation about the
designation of origin and about the quality assurance of the wine. They
also make efforts to obtain the right that only this wine-country could
bottle the Bull’s blood.
¾ Small farmers, who can’t adapt easily to the new regulation, because it
brings additional costs to them. Their interest is to go on with growing
grape and producing the wine while they can correspond to the strict
and hard quality regulations and specifications.
RENCOM – Workpackage 4 – Hungarian case studies: Eger Bull’s blood project
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¾ Local government of Eger, whose elementary interest to preserve the
brand’s nimbus and position in the market and to save the face of Bull’s
blood..
¾ Ministry of Agriculture, who presented the modification of the winelaw which guaranties the quality of the synthesized wine.
¾ The Hungarian Parliament, who voted the modification of the winelaw and determined the conditions of the wine-production.
RENCOM – Workpackage 4 – Hungarian case studies: Eger Bull’s blood project
Annex
Airports in Hungary
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