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  • Hungarian spirits pálinka as a “Hungaricum” I. Literature review and practical approaches

    The history of alcoholic distillation dates back over thousands of years. Spirits arrived in Hungary by the mediation of foreign countries, and were used as medicine in the royal court already in the XIV. Century. The first written presence of the pálinka as a word originated in Debrecen (1572). The quality and alcohol degree of these drinks were increased continuously, and rose to ’Hungaricum’ rank due to several factors such as the quality of the fruit stock grown in our country, the technical development of distillers and several centuryold professional experience. Mitterpacher, who distinguished the main parts of the equipment, reviewed the determination methods of alcohol content, and made a proposal for coating the inner surface of the cauldron with tin in favour of the preparation of the high quality product, played an important role in the establishment of the literature of pálinka distillation. Subcontract distillation, considered as an individual peculiarity in the European Union, developed during a long time in Hungary. It was facilitated by the regulation of distillery plants allowing the operation also for private persons from 1983. The fame of Hungarian national drink increased greatly when the meaning of pálinka was defined punctually: those drinks could be called ’pálinka’, which had 100% fruit content containing no additives, prepared in Hungary and their alcohol content was at least 37.5%.
    According to conservative evaluation, more than 50% of the Hungarian adult population consumes pálinka occasionally. The majority of the adult population believes that a small amount of pálinka is good for health; many people use it for the alleviation of toothache, sore throat and stomachache. Pálinka has a mood-enhancing impact at social parties and pleasant family events, if consumed in moderation. This paper is an overview of the history of Hungarian pálinka. This is the first part of the article. In the second part we analyze cost-benefit circumstances, and we also deal with the main problematic issue, namely the effect of tax-free production in Hungary and in the European Union.

  • Hungarian spirits palinka as a “hungaricum” II. The effect of tax-free production in Hungary and in the European Union

    Palinka is a traditional Hungarian fruit spirit prepared exclusively by the distillation of fruit mash or fruit pulp. As an alcohol product, it is subject to the Act CXXVII of 2003 on Excise Duties and Special Regulations on the Distribution of Excise Goods amended several times. The present government of Hungary pledged to grant the right of free palinka distillation again in the previous election campaign. As of 27 September 2010, the excise duty of subcontract-distillation was repealed, and the previously non-existent “official” home distillation was introduced, which resulted in explicit revenue losses for the state budget. The modification of the law mentions distillate instead of the word palinka. The difference between the two notions will be discussed in the present study. Presumably, lawmakers did not consider the fact that at the time of Hungary’s EU accession we entered into an agreement stipulating that the tax on subcontract-distillation should not be lower than 50% of the tax on alcohol products. Having been unable to agree on a solution to the problems in question, Brussels launched an infringement procedure against Hungary. Finally, Hungary was convicted; therefore, tax exemption or palinka distillation shall be ceased. This regulation came into force on 01 January 2015. The reactions of those who used the services of subcontract distillation were negative; turnover plunged by approximately 85% compared to the year of 2014. The present research will present the amendments concerning home distillers due from 2016 and the elements of the bill intended to amend the Act LXXIII. of 2008.

    JEL CODE: K34, L51, L66

  • Increasing palinka recognition with tourism and gastronomy

    The history of Hungarian palinka distillation dates back thousands of years. Palinka is a special product; its quality features are being increasingly recognized and appreciated by consumers. Our national drink went through considerable transformations in the past years, as it left the village environment behind and has become a Hungaricum, popular with young people. The authorization of home distilling in September 2010 was a key factor in its gaining ground in the country. In connection with this topic, the international practice of beverage tourism has been reviewed. After that, the Hungarian practice was examined, including the selection of palinka festivals, thematic palinka tours and palinka product ranges in 19 counties and in Budapest based on a total of 100 restaurants. Using SWOT analysis I revealed the strengths, weaknesses, opportunities and threats of palinka gastronomy and pálinka industry. Overall, it was found that the popularity of pálinka is increasing, but the thematic pálinka tours have not yet widened, and there is a need for more procedures supported by community marketing.

    JEL Code: Z30, E83

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