Cut the pork shoulder into 1-inch cubes and set aside. Dice the bacon into 1/4-inch pieces, dice the onions into 1/2-inch pieces, and place them in separate bowls. Rinse the sauerkraut thoroughly under cold water and drain well—this removes excess brine and mellows the tanginess. Measure out all spices (paprika, Hungarian paprika, caraway powder, ground pepper), tomato paste, paprika cream, bay leaves, and salt into small bowls. Heat the warm water in a kettle or pot and keep it ready for adding to the goulash.

Heat the sunflower oil in a large heavy-bottomed pot or Dutch oven over medium-high heat. Add the diced bacon and cook for 2 minutes, stirring occasionally, until the fat begins to render and the bacon starts to crisp slightly. Add the diced onions and sauté for 3-4 minutes, stirring frequently, until the onions become translucent and begin to soften. The bacon fat will help develop deeper flavor in the onions, creating an aromatic base for the entire dish.

Add the caraway powder, bay leaves, paprika cream, tomato paste, ground pepper, and Hungarian paprika to the aromatic base. Stir continuously for 1-2 minutes to bloom the spices and allow the tomato paste to caramelize slightly in the hot fat. This technique develops deeper, more complex flavors than simply adding them all at once. I find that blooming these spices in the fat releases their essential oils and creates a richer foundation for the goulash.

Add the cubed pork to the seasoned aromatic base and stir well to coat all pieces with the spice mixture. Cook for 4-5 minutes, stirring occasionally, until the pork is lightly browned on the outside (the goal is light browning, not deep searing, as goulash develops flavor through long, gentle cooking rather than a hard sear). Pour in the warm water until it just covers the pork. Bring the liquid to a gentle simmer, then reduce heat to medium-low. Cook uncovered for 30-40 minutes, stirring occasionally, until the pork is about halfway cooked—it should be tender but still hold its shape.

Add the rinsed and drained sauerkraut to the pot, stirring gently to combine it with the pork and braising liquid. The sauerkraut will add acidity and depth, balancing the rich, savory flavors. Pour in additional warm water as needed—the mixture should have enough liquid to braise gently without being soupy. Continue cooking on medium-low heat for 20-30 minutes until the pork is completely tender and easily breaks apart with a spoon. I like to taste the broth at this point and adjust the seasoning with salt and pepper if needed—the sauerkraut contributes quite a bit of salt, so taste carefully before adding more.

Taste the goulash and season with additional salt and ground pepper as needed. The flavors should be savory, slightly smoky from the paprika, and balanced with the tangy notes from the sauerkraut. Ladle the goulash into bowls and serve piping hot with crusty bread, a dollop of sour cream, and a sprinkle of fresh chili (or chili flakes) on top for added heat and freshness.