Economic Analysis of Subcontract Distilleries by Simulation Modelling Method

Harcsa, Imre Milán – Kovács, Sándor – Nábrádi, András

Keywords: subcontract distilling, margin calculation, simulation modelling, first cost, income, sensitivity analysis, C15, L66, Q00

The majority of the nearly 500 ”pálinka” distillery companies currently operating in Hungary use the traditional “kisüsti” distilling method. Considering the peculiarities of these plants, we developed a calculation model that could be used to simulate the @Risk program package. It was found that 61% have a chance of income because of a low service charge rate of 550 HUF/litre pálinka. The average cost per litre is almost equal to this amount, and it is therefore justified to examine the possibilities of reducing the cost of distilling. The most significant increase in cost is the specific wage cost, and the effect of changes in energy and overheads costs is only six-tenths of the wage cost. By increasing the output, it would be possible to reduce the unit cost, but this can only be achieved by increasing consumer demand. It is advisable to continue making pálinka as a part-time job. Generally, the pálinka making can be considered as a profit generator, but the resources, location, and demand have a great influence on this income-generating capacity.

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