Like all wine-producing countries in Eastern Europe (and there are many), Hungary is still in the throes of restructuring its wine business in the post-communist era. Until 1989 wine was viewed as simply a commodity like grain or potatoes to be supplied, according to long-term economic plans, to Hungarians and, particularly, Russians. The state monopoly handled all wine sales and distribution and, although much of the vineyard land remained in private hands, many vines were planted in unsuitable areas. Quantity was the priority. Quality was regarded as subversive.

Today, Hungary's vine-growers and wine-makers are trying to grapple with a completely new system. The Russian market has evaporated, the domestic market is embryonic, and export markets have never been so competitive. All things considered, Hungarian wine is not doing too badly.

Hungary is in the middle of the Carpathian Basin, surrounded by high mountains. The growing season can be notably long. Of all the eastern European wine producers to come out of the Soviet shadow, Hungary was most comprehensively invaded by the so-called 'flying winemakers', technically clued-up wine producers who spent just enough time in the wine region to make the cleanest, fruitiest, most 'international' wine out of that harvest's grapes. This resulted in a bevy of inexpensive, well-made, if not breath-stoppingly characterful varietals from Hungary – notably Chardonnay, Sauvignon Blanc, Pinot Noir, Cabernet and Merlot, which have been increasingly joined by the likes of Hárslevelű, Irsai Olivér, Furmint and Leányka among whites and Kékfrankos (Austria’s Blaufränkisch) and Portugieser (previously known as Kékoportó) among reds. But this century has seen an increased appreciation of Hungary’s indigenous grapes and her more traditional wines, which have benefited from improved winemaking and the commitment of passionate smaller producers, even if the best wines rarely find their way onto the export market.

If Hungarian whites, which comprise about 60% of the country's output, can be said to share a characteristic it is that they are relatively full-bodied and a have a certain Magyar fire or spice. Reds are less distinctive but made with increasing competence, as witness offerings from the likes of Malatinszky and Gere. Young Kékfrankos can be particularly juicy and appetising, while some vintages (Hungary's weather can vary considerably from year to year) yield some fine Pinot Noir fruit. Cabernets Sauvignon and Franc are starting to shine, especially in Villány in the south.

If many Hungarian vineyards are underachievers, many Hungarian wineries are severely underfunded, as the production system continues to adapt to private enterprise. Most of the newer equipment has been provided by western investment, sometimes with only one intermediary between a British supermarket shelf and the imported tank press.

The country's legacy of native vine varieties is distinctive, rich and diverse, encompassing light-skinned grapes such as Ezerjó, Furmint, Hárslevelű, Irsai Olivér, Juhfark, Kéknyelű and various Muscats. Olaszrizling is the Welschriesling of Austria, Szürkebarátis the Hungarian name for France's Pinot Gris, Tramini is Traminer and the grapey Leányka is originally from Transylvania

Kadarka was once Hungary's signature red grape variety, although it has been a casualty as growers have increasingly planted the internationally better known varieties Cabernet, Merlot and Pinot Noir. Kékfrankos (sometimes called Nagyburgundi) and Portugieser are also to be found on labels of wines exported from Hungary, some in considerable quantity.

There are at least 22 historic wine regions in Hungary, extending to all four corners of the country. Quite apart from the difficulty of pronouncing and spelling most of their names it will surely be some time before wine drinkers outside Hungary come to demand Hungarian wine by these appellations. It is still too early in Hungary's reconstruction to make long-term generalisations about the aptitude of various regions for different varieties and wine styles. The country is still being plundered by outside investors and the success of the resulting wines can often reflect the level of investment more than the natural potential.

It seems unlikely, for instance, that Sopron, which is effectively a continuation of Austria's Neusiedlersee sweet wine region, will be producing wines to match Austria's most sought after half-bottles in the foreseeable future. It is best known for dry reds today such as those made by Franz Weninger from Burgenland across the border. Wines from Nagy-Somló and Mór tend to be aromatic whites, while nearby Etyek-Buda and Neszmély have established a reputation for exportable varietals of both colours such as those widely exported by the Hilltop winery.

On the shores of Lake Balaton are many important and increasingly modernised vineyards, with Badacsony on the westernmost part of the northern shore and Balatonfüred-Csopak at the north-eastern end.

On the right bank of the Danube (Duna) in the south of the country are Szekszárd, Villány and Pécs in the Mecsek hills, once famous for its Olaszrizling. Many fine, concentrated red wines are made here by the likes of Attila Gere, Ede Tiffán, Vylan, Ferenc Takler, Malatinszky and Péter Vida. The historic Italian firm of Antinori conferred international respectability on Szekszárd by launching a joint venture with its co-operative to produce wines under the Bátaapáti Estate label. Antinori has also invested in Tolna.

Just across the Danube from here is Hungary's famous Great Plain, or Alföld, a flat, sandy expanse populated largely by itinerants and horses. Vines joined them in quantity soon after phylloxera invaded the country (phylloxera cannot thrive in sand). This is the source of Hungary's bulk of basic blending wine although it can produce some good-value international varietals, Hajós-Baja, Kunság and Csongrád.

The rest of Hungary's vineyards are in the north west of the country. In the Mátra foothills, vines are protected from cold winds by the Northern Massif.

To the east is the historic town of Eger, whose most famous wine, Egri Bikavér, was sold for years on export markets as red, sometimes powerful but often not, Bull's Blood. The Egervin Vineyard Company, the old monopoly revitalised by a $10 million injection of capital, has been trying to forge a new, controlled, recognisable identity for Bull’s Blood. GIA, founded by the late Tibor Gál, is just one winery producing impressive Pinot Noir here too.

But Hungary's most famous wine by far is made in the north-east corner of the country in a strange region known as Tokaj (which historically extended over the border into Slovakia – except that the Czechs exchanged the right to use the name Tokay for a large contract for another, more lucrative drink). Tokaji, the wine named after the town of Tokaj (and once called Tokay outside Hungary), was in its time the world's greatest sweet white wine, made from nobly rotten grapes as early as 1650 according to local history – long before botrytised wines were recorded in Sauternes and the Rheingau, the birthplace of such wines in Germany.

The main ingredients are Hárslevelű and, especially, Furmint, with some Muscat Blanc à Petits Grains (Sárgamuskotály) grapes. The local conditions around the 27 Tokaj villages in this very protected corner of middle Europe are such that in a good year the best are affected by noble rot, here called aszú, and can reach exceptional sugar levels. (As in Sauternes, a confluence of rivers encourages morning mists.) They range from dry to quite extraordinarily sweet with the following descriptions: Szamorodni (in which there is no selective picking of grapes affected by noble rot), dry or sweet; then Aszú 3, 4, 5 or 6 Puttonyos, 6 being the sweetest. (A puttonyo is the traditional hod used as a measure for the sweet grape paste, made from pulverised botrytised grapes, added to wine made from unaffected grapes before a slow second fermentation, though the timing of this addition may vary.) Eszencia is very rare grape sugar essence – a grape syrup really – made from the tiny amount of free-run juice from the botrytised grapes that are used to make Aszú paste. Because its sugar content is so high, yeasts can work only at a snail's pace and these wines continue to ferment in cask for many a year. These were the sort of wines which made Tokaji's reputation as an elixir of life and love. The final ingredient in Tokaji's extraordinary character is that in its traditional guise, it is aged rather like sherry, under a film of local yeast, in barrels partly filled, in strange underground caverns lined with mould like black felt and signalled only by the low doorways hollowed out of the small hills of the Tokaj region. Some producers now make their wines in a less oxidative, more modern, style and there is much debate as to which style or exact method of winemaking is more traditional or desirable. For more details, see Tokaj.

Of all Hungarian wine regions, this one has attracted most attention from outside investors, who include no fewer than three French insurance companies (AXA own Disznókű, for example), American businessman Anthony Hwang, owner of Királyduvar (and Domaine Huet in Vouvray), Spain’s Vega Sicilia with their Oremus, and a consortium, the Royal Tokaji Wine Company, involving the British wine writer Hugh Johnson. Wines made since the early 1990s are expected to have much more distinct, 'cleaner' (perhaps more Sauternes-like and less Hungarian) flavours than their predecessors, which were effectively thrown into a communal blending vat by the state monopoly. All of them are bottled in a distinctive half-litre clear glass flask.

Due to limited returns on highly priced sweet wines whose quantity and quality can vary alarmingly from year to year, many Tokaj producers have done what their counterparts in the middle Loire and Germany have done: started to make a higher and higher proportion of dry white wines instead, dry whites of heartening quality – typically dry versions of Tokaji's signature grape variety Furmint. Oaked renditions of ageworthy dry Tokaji now feature on many a cosmopolitan wine list.

Some favourite producers: István Szepsy, Királyudvar, Zoltán Demeter.

In a nutshell
Some fiery whites and some good value, plus the historic sweet white of Tokaj.