Good Practice - Project
Plant and product development of Bukó Pálinka House
Szögliget Municipality
General information
RDP Priority
- P6. Social inclusion and local development
RDP Focus Area
- 6B: Local development
RDP Measure
- M19: LEADER/CLLD
Beneficiary type
- Small-Micro Enterprise
Summary
The Hungarian village of Szögliget is located near the Slovak border and the Aggtelek National Park. Forest and small garden fruits from this nature area are the raw materials that are used by László Bukó’s family business to produce Pálinka (fruit brandy). After 40 years, a reduction in contract brewing required the company to seek additional income. Now, through LEADER support, the company has invested in developing and increasing the production of its brandy and finally distinguishing itself through its brand name, ‘Bukó Pálinka’. LEADER has also supported the business to improve its environmental credentials. In addition, its marketing approach was strengthened by focusing on the company’s regional trademark and its high quality based on local ingredients using traditional Kisüsti technology. The range of the company’s products has expanded ever since.
Results
- With the new distillery, the bottling capacity increased to 300 bottles/hour, which is far beyond the previous production volume.
- The company produces approximately 500 bottles of Pálinka (0.5 litres) of each fruit type per year and undertakes contract cooking. The biomass boiler provided the small plant with greener and more independent energy and created a simple form of circular economy.
- The LEADER investment created additional jobs for the small factory.
Promoter
László Bukó
Funding
Total budget: ~108 000 (EUR)
EAFRD: ~60 600 (EUR)
National/Regional: ~15 150 (EUR)
Private/own: ~32 250 (EUR)
Resources
Documents
Good Practice Report - Plant and product development of Bukó Pálinka House
(PDF – 1.32 MB)
Links
Context
László Bukó's family has been brewing Kisüsti Pálinka in Szögliget, Hungary since 1985. A Kisüsti Pálinka is a traditional Hungarian fruit brandy distilled in a pot no bigger than 1 000 litres. From father to son, the craft has been passed down through generations. The quality of Pálinka depends on its purity which requires the fruit to be clean, ripe and healthy for mashing before distilling.
When László took over the family business in 2007, it was still operating in a rented building owned by the Szögliget Municipality. In 2010, László started to modernise the plant, aiming to develop the business in line with EU standards. Increasing the capacity of the plant, achieving quality improvements and energy savings were thereby important drivers. New premises were also needed including a completely new Pálinka brewing system. At that time, the company did not yet produce its own products and its activities were limited to contract brewing.
When contract brewing declined year after year, it became necessary to secure an additional source of income. This was when László dreamed big and envisaged developing his own Pálinka brand. However, the company’s resources were insufficient, but with EU co-financing through LEADER from the Borsod-Torna-Gömör Local Action Group (LAG), this dream was made a reality.
Nowadays, a wide range of Pálinkas are produced including from pear, plum, peach, raspberry, grape, cherry and apple. The fruit is sourced from local growers, making their product 100% local.
Objectives
The main aim of the project was to secure an additional income source that would help balance the company’s resources. By developing its own products and creating its own Pálinka brand, the company could counteract the trend of decreasing contract brewing work.
The production of fruit brandy is seasonal (approximately from August to March). However, by increasing the company’s production volume through additional product development, the objective was to extend the brewing season to benefit the local economy.
In addition, the company sought to secure its energy from a greener and more independent source.
Further aims included developing new products and a brand and improving marketing know-how to provide a solid base for the company’s future ambitions, such as purchasing another Pálinka brewing line, an office building, a hall and a warehouse, thereby doubling its capacity.
Activities
The main project activities involved purchasing equipment, developing marketing material and installing a biomass boiler.
In detail, a 500 litre cooking pot and the associated complete, closed-system brewing system were procured and installed. The closed system allows the fruit to move through the environment from the moment it arrives until the final product is ready.
In addition, a mash fermentation tank and a bottling machine were installed through another two applications.
The marketing activity was also an integral part of the project and included incorporating relevant image elements of the regional trademark network and producing marketing tools (e.g. flyers, business cards, roll-ups, etc.).
Finally, official approval needed to be ascertained for the new distillation system to begin brandy production.
Main results
- With the new distillery, Pálinka production increased both in quantity and quality. The bottling capacity increased to 300 bottles/hour, which was far beyond the previous production volume. As such, the company could grow further if and when demand increased.
- Following the investment, the company produced approximately 500 bottles of Pálinka (0.5 litres) of each fruit type per year and undertook contract cooking.
- The biomass boiler gave the small plant greener and more independent energy and created a simple circular economy. Seeds and stalks left over from cleaning the fruit are put into the boiler. In addition, the water of the Pálinka house is recirculated, and the water used to cool the brandy is now also used for heating.
- The LEADER investment created additional jobs for the small factory. From two people before the investment, the company now provides five full-time jobs, with 1-2 casual workers being hired for the duration of fruit processing.
- The new Bukó Pálinka House products added diversity and quality to the local product landscape, with the pear Pálinka product winning the 'Excellent Landscape Product' trademark.
Key lessons
- Through the LEADER measure, László Bukó was able to take serious steps to develop and grow his business despite its small size.
- The Borsod-Torna-Gömör LAG prepares its calls so that they build on each other, allowing small businesses to progress and develop step-by-step.
- The biggest challenge in Hungary's LEADER measure is that entrepreneurs cannot draw on financial support in advance. Therefore, it is worthwhile for an entrepreneur to first take out a loan on a commercial basis to cover the initial costs of a project. Nevertheless, implementing this approach in less developed areas is often difficult, resulting in many entrepreneurs losing out on development opportunities.