Absolute live and Power fruit: Hungarian success in sport drinks and vitamin drinks 

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Ervin Nagy has had to scrape together his company, which he founded in his father’s soda factory in Akasztó, twice in thirty years. The Coca-Cola price war didn’t stop him either, and with the help of online research he made a complete profile change in 2008. He set up R-Water, replacing carbonated soft drinks with sports drinks and then vitamin drinks. Not only did it become a major player at home, but it also established itself on international markets, now supplying 11 countries. Company profile.

“I am sometimes surprised myself at how few of the post-change of regime business people are now doing what we started out to do,” Ervin Nagy, who has been an entrepreneur for 30 years, producing sports drinks for 15 years, told Index, while his company, R-Water Ltd., grew out of a soda business in Akasztó. Although the business has been near bankruptcy on several occasions, he says, a change of profile has now made it one of the few SMEs in the Hungarian SME sector that can claim to be an “international champion” – writes index.hu.

HE BELIEVES THAT SUCH PRIVATE COMPANIES ARE CHARACTERISED BY THEIR ABILITY TO OUTGROW THEIR COUNTRY’S BORDERS ON THEIR OWN STRENGTHS AND TO STAND UP TO FOREIGN RIVALS.

It is a basic economic thesis that the more such firms strengthen a country’s economy, the greater its disruptive strength.

There is hope even in a difficult situation

Each of these businesses has a unique story, but this is by no means a fairy tale, rather a story of how to make a company in difficulty succeed through thoughtful yet courageous strategic decisions. Ervin Nagy’s father was a winegrower, a fruit grower, and ran a small soda business in Akasztó. His son started working here after his military service. “I was more in the mood for making soda than working in the vineyards,” he explained.

An important detail to remember is that in the early 1990s, a Hungarian family from the south of the country fled to nearby Kerekegyháza to escape the South Slavic war and started producing a carbonated soft drink called Bambino. They had everything from pineapple to mango to the most unexpected flavours. The Nagy’s idea of selling the product themselves was a hit. They used the family Barkas minivan to commute between Akasztó and Kerekegyháza, which could hold 250-300 bottles of soft drinks.

„We sold the first load in a week, the second in a couple of days, and most of the third was sold out before I even got home from Kerekegyháza.”

The Hungarians loved flavoured sparkling soft drinks, but it is worth remembering that after the fall of communism, with the collapse of the state-owned farms and the cooperatives that produced the drinks, the big brands such as

• Gyöngy,
• Sztár,
• the Márka
• or Traubisoda

disappeared one by one from the shelves. This paved the way for small businesses like Ervin Nagy’s.

“We felt that this was a much bigger business than soda, but we simply couldn’t sell more because the people in Kerekegyháza couldn’t produce more. Sometimes they couldn’t even supply the quantity they had negotiated because they were almost overwhelmed by customers. After a while, even the greengrocers in Pest started to buy the drinks, and everyone was hooked.”

The Nagy family – Ervin’s brothers joined in – decided to take their fate into their own hands: they bought three or four machines from Kerekegyháza, bought the recipe from KecskemétVin and started producing the flavoured, sugary drinks by hand in the soda factory. In one day, 2,400 bottles of soft drinks were produced in two shifts by a dozen people. Today, they make more than double that in an hour. “We were the third or fourth small business soft drink company in the country. Two of them were in Kerekegyháza. There was such demand that we reached maximum production capacity in two months. We were at exactly the same point as the Kerekegyháza company: we couldn’t produce enough. And sometimes I went to bed at 2 o’clock in the morning and two hours later I was back at the plant mixing the product.”

NOT ONLY THE COMPANY WAS BOOMING, BUT ALSO WILD CAPITALISM: WHEN THEY WANTED TO LOAD THE PET BOTTLES BOUGHT FROM THE AMERICAN CONSTAR, THE SUPPLIER OF PEPSI AND COCA-COLA, ON THE ISLAND OF HAJÓGYÁRI, THE WAREHOUSE CLERK REGULARLY HAD TO SLIP THE 100 FORINTS TO GET THE SHIPMENT GOING.

They loaded their upgraded tractor-trailer IFA so full that they had to drive in the middle of the lane on the Pest quay to fit under the bridge.

And then came Coca-Cola

There was a huge boom of similar soft drink producers in the area, a process that was finally brought to an end by Coca-Cola’s price war. While the Nagy’s and other retailers were selling their 2 litre soft drinks for 52 forints, Coca-Cola was charging 128 forints for its own product. According to Ervin Nagy, a cross-industry agreement between Coca-Cola and Pepsi led to a steep price cut, slowly ‘pricing out’ the small players. The entrepreneur from Akasztó was the first to go under, closing the shop for two years and moving on to other business interests, but when the big players started to raise prices again, he got back in.