Chapter

The Emergence and Survival of Microbreweries in Hungary

Authors:
  • HUN-REN Centre for Economic and Regional Studies
  • Centre for Economic and Regional Studies
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Abstract

This chapter investigates the emergence of microbreweries in Hungary after 2000. The privatization of the Hungarian beer industry leads to the dominance of the big multinational enterprises. Although in the early phase of the transition the number of microbreweries increased rapidly, their number had declined considerably during analyzed period. Our major findings are as follows: Microbreweries are typically short-lived, and they live only four years in average during a fifteen-year period. The entry rate of microbreweries was greater after the economic crisis than before it, while the exit rate decreased. However, in recent years, due to the new regulations on the beer market, relatively low entry costs, and rapidly growing demand for craft beers, the number of microbreweries started to increase again. New wave microbreweries efficiently reflect to the new generation demand for higher priced craft beers, and thus, they are able to create and exploit a new market segment. They concentrate on large university cities and Budapest using efficiently social media as a marketing tool.

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... Hopenhayn [47] also concluded that older firms enjoy higher profits and value. In the Hungarian beer industry, a company survives an average of 4 years, while the median value is 5.9 years; however, the mean and median lifetimes of microbreweries are less than half that of nonmicrobreweries [48]. ...
... Beside significantly lightened bureaucratic obligations, for the small-scale producers (breweries) excise duty was reduced by 50 percent. These reductions in entry barriers had a positive impact on companies and employment [48]. Also, home brewing up to 1000 litres became tax-free, which could be a competition for craft breweries. ...
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... Globally, mergers and acquisitions strongly contributed to a dramatic consolidation of the beer industry in the 1990s and 2000s. This was most dramatically demonstrated in Eastern Europe, where, after the collapse of the communist regime in 1989, the privatization of previously state-owned breweries led in the 1990s to the takeover of local breweries by multinational brewers such as AB Inbev,³ Heineken, and Carlsberg (Van Herck et al., 2012;Fertő et al., 2018;Chlebicka et al., 2018;Pokrivčák et al., 2018). ...
... This occurred across the global (Garavaglia & Swinnen, 2018a, 2020 Clemons et al. (2006) claim that in the United States, hyper-differentiation increases the diversity in craft beer and ultimately the prices of beer as well as consumer satisfaction. Consumers who value craft beer positively are willing to pay higher prices (Garavaglia & Swinnen, 2018b;Elzinga et al., 2018;Fertő et al., 2018). Therefore, firms need to know the factors that consumers identify with craft beer. ...
... To give an impression of the size of the market, in the year 2016 global beer consumption was estimated at approximately 186.89 million kilolitres (Kirin Holdings Company, 2017), up slightly from a figure of 183.78 million kilolitres the preceding year (Kirin Holdings Company, 2016). In concert with this increase in the consumption of beer, there has also been a marked increase in the number of innovative microbreweries operating in many countries (e.g., Hungary, North America, UK, and Italy; Fertő, Fogarasi, Major, & Podruzsik, 2018;Price, 2018) experimenting with beer. For example, Sailors Grave Brewing™ in Australia have been experimenting with the use of products such as seaweed, mushrooms, grapefruit, pumpkin, and yoghurt in their beers (http://www.sailorsgravebrewing.com/). ...
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