The South African Wine Industry Strategy Plan (WIP)

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					The South African Wine Industry
      Strategy Plan (WIP)

    A Strategic Plan for a Vibrant, United,
          Non-racial and Prosperous
    South African Wine Industry

             This Strategy Plan was prepared by
        the South African Wine & Brandy Company
                          (SAWB)
     through consultations with the SAWB Chambers
       representing Wine Producers, Labour, Cellars
                  and the Wholesale Trade;
    the South African Wine Industry Trust (SAWIT);
      relevant government departments and agencies;
     and other important stakeholders in the industry.
    On 31 October 2003 the WIP was accepted by the
      Minister of Agriculture and Land Affairs as the
    strategic framework for cooperation and action in
                    the SA wine industry.



                                                         SAWB 2/2003
                                                            (WIP 1)
SAWB Drafting Team:

 O Bosman         (Consultant to SAWB)
 L Fillis         (Consultant to SAWB)
 V Mafilika       (Consultant to SAWB)
 N Vink           (University of Stellenbosch)
 C J van Rooyen   (CEO: SAWB)




SAWB Management Team:

 D de Wet         (Wine Producers Chamber)
 R Kruger         (Wholesalers Chamber)
 N Pieterse       (Labour Chamber)
 J Scannell       (Chair: SAWB ExCo)
 I Visagie        (Cellars Chamber)




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TABLE OF CONTENTS:                                                           Page

Preamble ……………………………………………………………………….                                        (i)

Executive Summary ………………………………………………………..….                                  (ii)

PART ONE: THE FRAMEWORK FOR A WINE INDUSTRY
STRATEGY PLAN …………………………………………………………….                                        1

1.    Challenges for the South African Wine Industry:
        Dynamic transformation in a global and local context ……………….          1

2.    Towards a South African Wine Industry Strategy:
        Statements of policy and strategic intent ………………………………                2

3.    Strategic alignment:
         Linking Vision 2020 to the Strategic Plan for SA Agriculture ……….   11

4.    Strategies for a vibrant, united, non-racial and prosperous
         wine industry …………………………………………………………                                14

PART TWO:        THE WINE INDUSTRY STRATEGY PLAN (WIP) ………                   18

5.    Core purpose and vision ………………………………………………….                           18

6.    Strategic goals and programmes …………………………………………                        18

        Strategy 1: Economic empowerment and development ……………..             18
        Strategy 2: Social development and upliftment ………………………              22
        Strategy 3: Human resources development …………………………..                 25
        Strategy 4: Market development and promotion …………………….               29
        Strategy 5: Knowledge and information systems …………………...             33
        Strategy 6: Technical innovation and transfer ………………………              35

7.    Setting a Wine Industry Scorecard (WIS) ………………………………                   39

8.    Implementing the WIP ………………………………………………….                              43

9.    Financial support system ………………………………………………..                          46

10.   The way ahead …………………………………………………………                                   46
       SA WINE & BRANDY COMPANY (SAWB)
     A Strategic Plan for the South African Wine Industry
                                       PREAMBLE

The South African wine industry established a firm resolve that it has now reached the
moment to unite, as an important and vibrant sector of South African society in order to
address all factors constraining progress and at the same time to exploit new markets and
opportunities in a viable and sustainable manner. Some of the major challenges in this
context is related to changing the South African historical dualism with its legacy of
exclusion and discrimination along racial and gender lines and to redress an industry
characterised by skewed levels of ownership, managerial and technical skills and a lack
of access to economic opportunities in the wine industry. A different but equally
important challenge deals with the economic repositioning of this sector which has, since
1994 moved away from a highly regulated environment to face global competitiveness
and highly skewed trade environments.

The South African Wine Industry Strategy Plan (WIP) is a watershed commitment,
driven by the South African Wine & Brandy Company (SAWB) on behalf of the South
African wine industry to deal with these fundamental challenges to establish a unified
and progressing industry. In doing so the WIP will align the industry’s “Vision 2020”
initiative, which focussed through industry-wide consultations on designs for future
prosperity and global competitiveness, with the national drive for a “united and
prosperous agricultural sector (the “Strategic Plan for SA Agriculture”).                 This
agricultural sector plan – an initiative to develop a strategic initiative for agriculture and
agribusiness – was endorsed by the President, senior Cabinet Ministers from Agriculture,
Trade and Land Affairs, Trade and Industry, Labour, Safety and Security and Finance, by
Organised Agriculture (AgriSA and NAFU), representative agricultural industry leaders
(AgriBusiness Chamber) and top executives from government departments and
parastatals on 21 November 2001.

In meeting the challenges of our time, the Wine Industry Strategy Plan will expand on
these two major strategic initiatives and also incorporate developments in the industry
such as global interactions to “open up” the international trade, and in a local context,
accommodate recent strategic events and imperatives re Black Economic Empowerment
policy, liquor legislation and “scorecards”.

The core purpose of the WIP will be to provide the strategic focus, leadership and
indicators of progress for the whole wine industry and to establish an “accord” as basis
for collaboration and partnerships between the industry and government in order to
promote economic growth with equity.

The ultimate aim of the WIP is to provide the strategic thrust to “achieve a better life for
all in the wine industry through strategic leadership, collaboration and innovation and
thereby establish a vibrant, united, non-racial and prosperous South African wine
industry”.



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                              EXECUTIVE SUMMARY

STRATEGIC ALIGNMENT

The South African Wine Industry Strategy Plan (WIP) is a watershed commitment,
driven by the South African Wine & Brandy Company (SAWB) to deal with the South
African historical dualism and legacy of exclusion and discrimination along racial and
gender lines, the legacy of a highly regulated economic environment and the many
challenges of our times. The purpose is to align the industry’s “Vision 2020” initiative,
which focussed on designs for the future prosperity and global competitiveness of the
industry, with the national drive for a “united and prosperous agricultural sector” (the
“Strategic Plan for SA Agriculture”).

The ultimate aim of the WIP is to establish a “vibrant, united, non-racial and prosperous
South African wine industry”.

VISION

The Wine Industry Strategy Plan that is outlined in this document starts with an
assessment of the transformation challenges facing the South African wine industry in the
global and local context. In assessing these challenges, the Vision 2020 of the industry
envisages that in the year 2020 it is “… innovation-driven, market-directed, globally
competitive, highly profitable and dominant in selected global markets – a producer of
uniquely South African products of great quality, distinction and impeccable traceability
records. The industry is “a global enterprise with strong South African cultural roots –
reflecting good citizenship and social responsibility”. Our industry is “leading socio-
economic transformation and empowerment in South Africa through equitable access to
resources, business opportunities, markets and decision-making by historically
disadvantaged and economically marginalized South Africans”. Through all this the
industry “performs as a dominant economic force in the economy and a social
responsible citizen of the South African society”.

STRATEGIC GOALS
  • To increase global competitiveness and profitability;
  • To generate equitable access and participation within the wine value chain;
  • To enable environmentally sustainable production systems; and
  • To promote socially responsible consumption of the produce of the vine.

These goals will be implemented through six industry strategic programmes:

Strategy 1: Economic development and empowerment
The core focus of this strategy will be economic development in general, to support
Black Economic Empowerment and to enable historically disadvantaged groups in the
wine industry to create economic ownership, to gain access to assets and to exploit and
participate in business opportunities along the full value chain in the industry.




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Strategy 2: Social development and upliftment
The core focus of this strategy is to ensure that all role players, and in particular
historically disadvantaged groups and individuals, are socially and organizationally
empowered to make a constructive contribution to the industry and the country at large.

Strategy 3: Human resources development and training
The core focus of this strategy is to promote the human capacity development in the wine
industry, establish a positive viable workplace image and to address backlogs in the
supply of skilled workers to the industry in terms of international norms and standards;
and in particular to create opportunities and access for historically disadvantaged groups
and persons to participate in a productive and sustainable manner.

Strategy 4: Market development and promotion
The core focus of this strategy is to promote “Brand South Africa” through generic
market development and provide promotional, marketing and business development
initiatives. This strategic programme will focus on wine, brandy and wine concentrates as
distinctly different, but highly complementary components of the industry. Both the
international and local market will be dealt with.

Strategy 5: Knowledge and information development
The core focus of the knowledge and information systems strategic programme is to
provide trusted and accurate knowledge based industry information to support product
quality and integrity systems and to assist strategic leadership and informed business
decisions through analysis and intelligence by all stakeholders: producers, workers,
trade, consumers and government.

Strategy 6: Technology innovation and transfer
The core focus of this strategy is the establishment of problem solving market directed
and socially and environmentally responsible technology innovation and development
and transfer systems.

SETTING A WINE INDUSTRY SCORECARD (WIS)

The purpose of the Wine Industry Strategic Plan is to align and focus the wine industry
into coherent and integrated activities within the six strategic programmes and to create
synergies with the three core strategies of the Strategic Plan for SA Agriculture. To this
end a Wine Industry Scorecard (WIS) (established along the lines of the recently
released Mining Industry Charter and Scorecard and other initiatives) will be developed
to monitor progress.

The key principles of such a Scorecard are:
  • Establish partnerships between industry and government;
  • Create investor confidence by ensuring greater transparency;
  • Focus on the creation of new opportunities;
  • Focus on the specific characteristics of the wine, brandy and concentrate sectors of
     the industry, and on the entire supply chain;
  • Focus on the most disadvantaged participants rather than on old or new elites;



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  • Provide flexibility by allowing stakeholders to set their own targets and pace within
    agreed guidelines;
  • Combine the advantages and disadvantages of setting hard targets with the
    flexibility required from the diversity of institutional structures in the industry;
  • Establish “Codes of Good Practice” to facilitate measurement and evaluation.

The Scorecard will provide a checklist of indicators that will be used by each signatory
(enterprises, companies, SAWB structures, etc.) to implement appropriate strategies and
will be monitored by the SAWB. A proposed checklist of indicators will be developed
within the following categories.

Ten Point WIS Indicators to measure performance re:
  • Human resources development and employment equity performance
  • Social upliftment and rural development
  • Business development, service providers and input suppliers
  • Ownership and equity schemes to benefit HDI’s
  • Governance systems and participation
  • Quality and integrity
  • Technology, innovation and transfer
  • Market development and promotion
  • Environmentally sustainable production practises
  • Economic performance, efficiency and competitiveness.

The next steps in the implementation of this Scorecard are to obtain industry-wide
agreement on the exact form of the Scorecard, including performance benchmarks and
time scales for the different stakeholders. Once industry stakeholders agree on these
matters, the industry through its organisations and enterprises, will commit to the setting
of hard targets and the implementation of the Scorecard. In this regard, SAWB will be
charged with the responsibility to support the setting of benchmarks and to monitor
progress with implementation. In this manner the industry will reap the benefits of hard
targets as well as the benefits of flexibility.


IMPLEMENTING           THE     WIP:     INSTITUTIONAL          AND     MANAGEMENT
SYSTEMS

The South African Wine & Brandy Company (SAWB), a Section 21 Company
representing the whole wine industry through four chamber groupings (producers, labour,
cellars and the trade) is tasked to drive and manage this vision and the Wine Industry
Strategy Plan through a range of industry related programmes and responsibilities.

Thus, the SAWB Mission is to “enhance the strategic environment for the benefit of
the South African wine industry” through the following core tasks:
  • To provide strategic collaboration and leadership in the wine industry;
  • To represent the wine industry; and




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  •   To initiate, co-ordinate, drive and monitor the implementation of six strategic
      programmes of the WIP.


Each of the WIP core strategies, strategic programmes and activities will be
institutionalised into the SAWB operational system through functional business units and
offices. Five offices are planned to support the SAWB: Socio-Economic Development;
Human Resources Development and Training; Technology Innovation and Transfer
through the Winetech network; Market Development and Promotion through the
activities of Wines of South Africa (WOSA) and the SA Brandy Foundation; and
Knowledge and Information Systems through SAWIS. A corporate support system will
be instituted dealing with compliances issues, monitoring, certification services, industry
analysis and intelligence, levy management, the legislative framework, etc. The various
business units will interact with the stakeholder groups and forge partnerships with the
appropriate institutions and organisations.

Structures will be introduced to institutionalise a coherent system of corporate
governance. These will include a “Code of Conduct” to guide accountability and the
institution of corporate management systems. Structures will be designed to
accommodate innovation, participation and optimal stakeholder collaboration.

The implementation of the WIP will require the mobilisation of funds from industry
sources and levies, government provisions, international donors and investors. The
following principles will apply:

  • Projects and activities to be funded will fall within SAWB business plans.
  • Particular consideration and priority will be given to the Socio-Economic
    Development and Human Resources Development functions.
  • Each SAWB organisational structure will be self-funding through the mobilization
    of appropriate “source and application” opportunities and projects.
  • The relationship with government institutions to mobilize statutory levies and other
    provisions will be formalized by the SAWB as industry body.
  • The relationship with bodies such as the South African Wine Trust (SAWIT) and
    other similar institutions will be normalized through the establishment of a common
    framework of reference and through financial applications and the necessary project
    cycle management interactions.
  • Innovative mechanisms such as equity funds, guarantee schemes, project funding,
    etc will be mobilised.

THE ROLE OF GOVERNMENT

Government, at a national and regional level and through its appropriate agencies, has a
crucial role as partner and stakeholder in the performance of the wine industry. The
wine industry provides significant economic and employment development opportunities
in production, trade, exports and tourism. The role of government is vital in research
and technology development, establishing the integrity of the industry, export promotion,


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infrastructure development, economic empowerment and social and human upliftment
and will be highly relevant to facilitate and support the wine industry on its growth and
development path. As partners, a shared vision and accord between government and the
wine industry is envisaged to provide the overall thrust and governance system for the
WIP.

THE RELATIONSHIP WITH THE SOUTH AFRICAN WINE INDUSTRY
TRUST (SAWIT)

The South African Wine Industry Trust is designated as an important structure to
promote transformation in the wine industry through strategic funding initiatives.

A Memorandum of Cooperation between SAWIT and the SAWB will direct the strategic
funding role of SAWIT within the focus of the WIP. The SAWB will provide
professional support to SAWIT to enhance this focus.


THE WAY AHEAD

The process to implement the WIP in terms of operational “roll out” will require
continued participative consultations and agreements with a wide range of stakeholders –
industry groupings, civil society, relevant government ministries, departments and
agencies, the broader “Nedlac” environment, and where appropriate, international
agencies. The SAWB, as representative body of the wine and brandy industry will
engage such groups and promote such agreements.              Interaction with the National
Department of Agriculture and provincial departments, the Department of Trade and
Industry and the South African Wine Industry Trust, will be positioned as important
initiatives in this regard. The aim will be to establish and implement memoranda of
understanding (MOU’s), a “Wine Industry Accord” and “Scorecards” between the wine
industry, the government and other relevant role players to guide and strategically direct
the evolving partnerships to meet the strategic goals of the WIP. This will confirm the
Wine Industry Strategy Plan (WIP) as a significant South African strategic commitment
in the field of industry collaboration and strategic leadership to pursue a “vibrant, united,
non-racial and prosperous wine industry”.

The WIP also provides a strategic thrust to achieve a number of important value
propositions. These include the harmonising of governance arrangements between
government agencies and industry and as such to unlock financial and technical resources
to benefit the positioning of the industry; the coordinated interaction in the global
environment to promote trade of South African wine and brandy products; the
capacitating of the various stakeholders in the industry supply chain to participate in
industry based decision-making; the facilitation of economically sound Black Economic
Empowerment in the industry; and to rationalise the application of scarce resources in
various industry endeavours.




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                                     PART ONE:
       THE FRAMEWORK FOR THE WINE INDUSTRY STRATEGY

1. Challenges for the South African wine industry: dynamic transformation in
a global and local context

The South African wine industry is an important economic sector in the Western and
Northern Cape provinces, and in the country as a whole. It constitutes a R13 billion
sector, produces 3% of global wine production (number 9 in the world) and was the 9th
largest exporter of wine globally in 2001.      The industry sustains more than 4500
commercial producers, an estimated 350,000 farm workers and their dependants, 3300
cellar personnel, and with a large number of workers and entrepreneurs operating in the
wine trade and services sectors, and the state has earned up to R1,8 billion annually in
taxes and excise duties. In addition to these, more than R3.5 billion are generated in
annual earnings through wine tourism. Many more livelihoods are created through the
income multipliers and employment linkages in the Western Cape and Northern Cape.

Responding from the legacy of a highly regulated industry, South Africa is well
positioned in the “growing” phase of the wine business cycle against international
competitors. Statistical analysis shows positive growth trends in exports (e.g. from 20
million litres in 1992 to above 210 million litres in 2002), domestic consumption, the
establishment of a drinkwine crop and in farm production. In this context South Africa
out-performed Australia and New Zealand, partly because of a consistent increase in the
industry’s competitive performance index. The challenge now will be to sustain these
trends.

The South African wine industry is furthermore challenged by formidable forces to
remain productive, competitive and economically viable in a global context. Wine fights
for a share in consumer spending in a saturated global beverage market. On the positive
side, while consumption in many traditional wine markets is declining, consumers are
trading up from table wine to quality wines and, while demand is increasing for “new
world” wines. Ethical and environmental assurances are also becoming increasingly
relevant in consumer preferences. An innovative focus on “Brand South Africa” and the
protection thereof through technological innovation, ethical and environmental practices
and wine tourism would thus give South African wines a particular edge in the evolving
and increasingly segmented global market place. Ethical and environmental practices
should, however, stand the test of intensive market scrutiny, traceability and certification.
Such initiatives must also be driven at both individual/firm and generic/industry levels to
ensure a positive impact. In this context the promotion of socially responsible alcohol
use is important for a successful South African wine industry.

The global market place is however constrained by high subsidisation regimes in certain
countries (EU, USA, Canada, etc) and tariff and non-tariff barriers. Alliances with
international groupings to promote free trade will therefore be important to position
South Africa in the global market i.e. with the World Wine Trade groups and others.



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Apart from the global competitiveness challenge the South African wine industry has
decided to align itself proactively to the challenges of socio-economic transformation,
deracialisation and economic empowerment as equally vital ingredients for a prosperous
and growing South Africa. This particular set of challenges is contextualised by large
inequalities and entry barriers along racial and economic lines in the wine industry and
the relative slow progress to redress these characteristics since 1994. Capital and land are
largely owned and the industry mostly managed by the white population group. Farm
workers on the other hand, are from the black/coloured population groups. This racially
based skewness manifests in a skewed access to economic and social opportunities and
wealth accumulation and also in aspects such as low productivity and representivity in
wine industry decision-making structures. All this in turn constrain economic
transformation and rural development, and also effective engagement by the industry
with government agencies and also global governance structures such as GATT, EU, the
World Wine Trade Group, OIV, etc. At an industry business level three thrusts are clearly
important in this socio-political context, namely the strengthening of representation by
these particular groupings to actively and effectively engage in industry lobby and
strategic management processes; the institutional integration of the concerns and
representivity of these groups into industry level decision-making processes; and a
targeted approach to open up access to business and economic growth opportunities and
social upliftment.

2. Towards a South African Wine Industry Strategy: Statements of policy and
strategic intent

In 1999 the SA wine industry embarked on an inclusive and comprehensive process to
generate a new and innovative development path for the industry. The outcome of this
process is known as “Vision 2020” and is accepted as an inclusive and representative
statement by the industry at large. This vision aims to position the wine industry as:
   • Innovation-driven, globally competitive, market directed and profitable;
   • The producer of great quality and uniquely South African products;
   • An industry reflecting good citizenship and social responsibility; and
   • A leader in viable socio-economic transformation and the development of human
      capital.

In 2002 all stakeholders unanimously accepted proposals for a formal representative
structure for the SA wine industry - The South African Wine & Brandy Company
(SAWB) - to represent the industry and to implement Vision 2020 and to promote
competitiveness and socio-economic transformation. This event was the culmination of
an intensive consultative process between representatives of producers, labour, cellars
and the wine trade on the appropriate institutional structure for implementation of Vision
2020.

In February 2003 the SAWB was tasked by its Board (established by the democratically
nominated representatives of labour, trade, producers and cellars) in response to a request
by Government through the Director-General, Department of Agriculture, to roll out a
“Wine Industry Strategy Plan (WIP)”. This plan aims to fully integrate Vision 2020 into
the Strategic Plan for SA Agriculture, which was endorsed by the President, the Minister


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of Agriculture and Land Affairs, other senior cabinet members of the Economic Cluster,
and the agricultural industry on 21 November 2001 as the strategic framework for the
development of South African agriculture.

The important thrust of the WIP will be to drive wine industry initiatives concerning
competitiveness, socio-economic empowerment, human resources development,
technological innovation and transfer, market development, and appropriate industry
intelligence. The SAWB was tasked with responsibility to oversee the development and
implementation of this plan.

The current (2003) initiative is built on a number of strategic events and agreements
which provide the policy and strategy framework for the WIP.

The “Strategy Plan for SA Agriculture”, which is accepted as the definitive statement on
agricultural policy and strategy in this country, was completed during the final quarter of
2001. The Wine Industry Futures project, which gave rise to the ‘Winetech Vision 2020’
strategy for the South African wine, brandy and grape juice industry, was completed in
the first quarter of 2001. Therefore, it is important to revisit the Vision 2020 strategy to
ensure that it is aligned to the Strategic Plan. In this context it will also be important to
note recent developments on matters which will impact on strategies in the wine industry
such as Black Economic Empowerment legislation, the revision of the Liquor Act, labour
policies, etc. To this end, the first purpose of this WIP document is to analyse the points
of departure, strategic focus areas and extended outcomes of these various policy and
strategy reports in order to establish the degree to which the wine industry strategy
complies with the Strategy Plan and subsequent developments.

The second purpose of the document is to structure the framework for the implementation
of a “South African Wine Industry Strategy Plan”, which will result in a “vibrant, united
and prosperous South African wine industry”.

The South African Wine & Brandy Company (SAWB) will drive the implementation of
the WIP. The institutional, managerial and organizational structure of SAWB describe
the relationship between the SAWB constitution, the various WIP strategies and the
appropriate sets of operational activities that need to be implemented by the SAWB
annual business plan. In this manner organizational structure will evolve to optimise the
implementation focus of the SAWB business plan.

The next sections focus on a broad description of the “Strategic Plan for South African
Agriculture” and of the “Wine Industry Vision 2020”. In both these cases, the relevant
documents are freely quoted in order to preserve the integrity of their authors’ intentions.
Recent developments in the wine industry are also referred to.              All these will
contextualise the 2003 initiative towards a Wine Industry Strategy Plan.

2.1 The Strategic Plan for South African Agriculture – an important milestone in
South African agriculture

In his State of the Nation Address on 9 February 2001, President Thabo Mbeki indicated


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that while balance and stability had been achieved at the macro level, the growth rate of
the economy was still too low. In his address the President announced an action plan to:
   • Move the economy to a high growth path;
   • Increase competitiveness and efficiency;
   • Raise employment levels; and
   • Reduce persistent poverty and inequality.

The President indicated that these objectives could best be achieved through special
attention within the Integrated Government Planning Framework to economic sectors
demonstrating a high potential for growth and job creation. Agriculture, energy, tourism,
cultural industries, certain export sectors (including agro-processing), and the information
and telecommunications industry were highlighted. The strategy plan for the agricultural
sector was drafted during 2001 as a collaborative effort between Government, Organised
Agriculture representatives and representatives of the agricultural industry (producers and
agribusiness).

The Strategic Plan for South African Agriculture has the following as its objectives:
  • To create a common vision for key stakeholders;
  • To design and implement a strategic framework to guide policy and
     implementation in the future;
  • To address issues undermining investor confidence and the building of better
     understanding and good social relations;
  • To ensure increased access and participation in the sector through well designed
     empowerment processes and programmes;
  • To combine, share and optimise the resources and benefits among the partners;
  • To foster global competitiveness growth and profitability in the sector in order to
     attract new investment;
  • To ensure sustainable development; and
  • To build lasting partnerships among public, private, NGO and community
     stakeholders.

Although critical to the success of the agricultural sector, the issue of organised labour
was not specifically addressed in the document since most of those issues have been
addressed in the “Vision and Code of Conduct for Labour Relations in Agriculture”. This
particular code was drafted by organised agriculture, labour unions and the Department
of Labour. The issues in that document form an integral part of implementing the
strategic sector plan.

The vision for the sector is: A united and prosperous agricultural sector

This vision implies “sustained profitable participation” in the South African agricultural
economy by all stakeholders, recognising the need to maintain and increase commercial
production, to build international competitiveness and to address the historical legacies
and biases that resulted in skewed access and representation.

In support of the vision for agriculture, the core focus for the strategy will be on the
following strategic goal:


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  “To generate equitable access and participation in a globally competitive,
  profitable and sustainable agricultural sector contributing to a better life for all”.

The vision gives a clear picture of where South African agriculture wants to be in the
long term. The main impediment to successful implementation of this strategy is the vast
untapped potential that lies in its people and material resources, and the low profitability
and competitiveness that constrain the participation of a full spectrum of people and
economic entities. This problem is manifested in a number of sub-problems – each
providing its own challenges:

  •   Constrained competitiveness and low profitability: Indications are that the
      South African agricultural sector is responding positively to the challenge for
      increased competitiveness. However, there is also evidence that some sub-sectors
      of agriculture and value-adding activities are uncompetitive in the local and
      international market. This is caused by high input costs combined with low
      productivity, poor business strategies and inefficiencies, and unfair trade practices
      by our competitors, etc. The lack of international competitiveness also leads to low
      profitability and below normal returns in the sector, which is again responsible for
      low investment in certain industries. This is perhaps the major challenge that needs
      to be addressed to put agriculture on the high growth path that is envisaged.

  •   Skewed participation: Given the legacy of exclusion and discrimination in South
      African agriculture, the challenge is now to improve participation in all facets of
      the sector and rid it once and for all of the many entry barriers rooted in its
      historical dualism. The challenge is in particular to identify programmes to
      encourage new entrants: black and white; young and old; men and women; small
      and medium scale enterprises to enter the sector. It is important to find ways to
      ensure that all these different constituents of the sector genuinely feel and see
      themselves as belonging to a single whole.

  •   Low investor confidence in agriculture: The poor investor confidence in
      agriculture is caused by the low returns mentioned above as well as definitive and
      hard-core economic and social problems impacting on investment and production
      such as the wave of farm murders, evictions and illegal occupations. Investor
      confidence is necessary to achieve a vibrant and growing agricultural sector.

  •   Inadequate, ineffective and inefficient agricultural support, research and
      delivery systems: This is one of the key problems underlying each of the
      aforementioned problems. The lack of delivery and implementation of a wide range
      of government measures, regulations and programmes as well as ineffective
      support systems - all of which are critical to ensure an enabling environment for
      agriculture – is a major concern and a challenge to all state agencies supporting the
      agricultural sector. Aspects that contribute to this problem are the fragmentation of
      certain services, inadequate resources, weak governance and accountability as well
      as poor executive decisions and often long delays in taking decisions.

  •   Poor and unsustainable management of natural resources: Unused land of high


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      and medium potential is not abundant in South Africa while water is scarce. There
      is clearly a limit to the horizontal extension of agricultural production. In addition
      the infrastructure and services to support sustainable land use are inadequate –
      water in particular is critical in this context. Government programs (i.e. Landcare
      and Working for Water) aimed at protecting the resource base are successful but
      insufficient. Land degradation remains a problem on good and marginal lands.
      With increasing pressure on agriculture to increase output per unit of land, it is a
      major challenge to ensure that this does not take place to the detriment of our
      natural resource base.

Broader concerns are also important such as HIV/AIDS, the general level of education, in
particular on farms and the often perceived negative image of agriculture

In addressing these challenges and concerns and achieving the vision, the strategic plan
will consist of three core strategies, namely:

Equitable access and participation: A strategy to enhance equitable access and
participation in the agricultural sector in particular historically disadvantaged groups,
including women and the youth, addressing the following key issues:
   • Business development opportunities
   • Agricultural land reform
   • Revitalising and focussing agricultural support services
   • Land access
   • Finance
   • Markets and marketing
   • Technology
   • Infrastructure
   • Information
   • Extension
   • Training and skills development.

Global competitiveness and profitability: The aim of this strategy is to “enhance
profitability through sustained global competitiveness in the agribusiness sector (input
supply, farming, agro-processing, agro-tourism, etc)”. An industry’s competitiveness is
determined by six broad criteria or attributes that shape the environment in which a sector
or firms compete and which promote the creation of competitive advantage. These
include factor conditions; demand conditions; related and supporting industries; firm
strategy, structure and rivalry; government attitude and policy; and the role of chance.
Strategic interventions should focus on each of these dimensions.

Sustainable resource management: The aim of this strategy is to enhance agriculture’s
ability to use natural resources in a sustainable manner and to ensure the wise use and
management of the natural and biological resource base required for agricultural
production processes.

Some elements of the core strategies are complementary and will contribute towards
creating and restoring confidence in agriculture. With this in mind the following essential


                                                                                          6
supporting and enabling strategies, which are crosscutting to the core strategies, have
been identified:
  • Good governance
  • Integrated and Sustainable Rural Development
  • Knowledge and innovation
  • International co-operation and
  • Safety and security.

These complementary strategic objectives are vital because they provide the critical
foundation without which the strategic goal of a competitive, inclusive and sustainable
agriculture will not be realised. They also underscore the dependence of the sector on the
support of other government cluster departments and industries.

The vision of “a united and prosperous agriculture sector” requires partners to have
aligned strategic focus areas, action plans, key performance indicators, service delivery
standards, monitoring and evaluation systems and time frames in order to realise the aims
of the strategic sector plan. It also requires government to do things differently - with
greater commitment, speed and urgency and in operational partnership with farmers,
agribusiness structures, NGOs, and other government departments. To this end, a
permanent joint committee was set up between the partners involved.

As a first step to move the strategic plan closer to implementation the strategic partners
identified the following priority programmes and actions:

  •   Implementing the safety and security strategy to bring rural stability and
      confidence;
  •   Improving governance and implementing partnerships and a mentorship
      programme;
  •   Fast tracking the programme of land redistribution for agricultural development;
  •   Transforming the agricultural technology development & transfer system towards
      being more market responsive;
  •   Establishing a broadly accessible market information system including information
      systems and economic analysis capacity in each province;
  •   Developing and operationalising an effective risk management system (plant &
      animal health system, natural disasters, credit guarantees);
  •   Ensuring fair competition both locally and internationally;
  •   Implementing the shared vision on labour and land reform;
  •   Introducing processes of empowerment in all sectors of the agri-food sector. In this
      process mentorship programmes are critical and will be established immediately
      with full government support;
  •   Targeting investment to enhance competitiveness (infrastructure: water, electricity,
      telecommunications, rail, air road, financial services; training, mechanisation).

Efforts are under way to “roll out” the sector plan for individual agricultural industries.
The wine industry is one of the sectors currently engaging in this process.




                                                                                         7
2.2 Vision 2020: A Statement of Strategic intent by the Wine Industry

A wine industry initiative called Vision 2020 was initiated in June 1999 on behalf of all
major stakeholders through Winetech. The project was financed by the Department of
Trade and Industry in partnership with the wine industry through a contribution from
SAWIT. Wine industry specialists, stakeholders and industry representatives from the
producers, cellars, labour and the trade were involved.

The document ‘Strategic outline for the South African wine industry: a road map for
future competitiveness’ provides a ‘realistic and desirable vision for the South African
wine industry … [and] … an integrated strategy for the development of the industry in
terms of that vision’. This report, accepted by all major stakeholders in the industry,
envision the status of the South African wine industry in the year 2020 and emphasises
competitiveness and the importance of leadership for effective change management in the
industry. This change management is required to overcome the legacy of decades of
control, isolation from the global market, and hence reliance on a (relatively weak)
domestic market. While the industry has reacted to the new opportunities presented by
the large political and economic forces that have swept the country over the past decade
and the new trend towards globalisation, leadership was required to gain the maximum
benefit from these opportunities. Thus, the following elements of a desirable status for
the wine industry in the year 2020 (Vision 2020) were identified:

  • The South African wine industry is globally competitive and highly profitable;
  • The wine industry dominates its selected market niches, and will never chase
    market share;
  • The products of the South African wine industry are ‘distillates of nature’, which
    reflect respect for the creativeness of nature, and the great possibilities presented
    by the diversity of ecologies in the South African wine producing regions;
  • The South African wine industry is innovation driven and market directed in order
    to ensure its continuous renewal and its ability to provide sustainable customer and
    consumer satisfaction in all the products and services that it offers; and
  • The South African wine industry is a good citizen, it ‘walks tall’, it is an example
    to other industries, it is socially responsible, it develops its people, it builds
    relationships with its community and contributes towards creating a better society
    in South Africa through its infectious behaviour and path breaking success.

The essential characteristics of competitive businesses in the wine, brandy and distillates,
and grape juice and concentrate sectors of the industry are to be:

  •   Market driven and quality focusing on the promotion of a unique “Brand South
      Africa” concept;
  •   Cost effective through total value chain management and total logistics;
  •   Innovative, adaptive and increasingly competitive through market focused research
      and management of technology;
  •   Information bonded and learning oriented; and
  •   Socially responsible.


                                                                                          8
In addition, the future effectiveness and efficiency of these three wine industry sectors
will firstly depend on the untangling of the historical (statutory) bonds between them by
ring fencing their activities in as far as it is possible and accepting the complementary
nature of these sectors. In other words, each sector must stand on its own business legs,
while complementary relationships should be optimised in a viable economic context,
within supply chain systems. The notion to view these complementary relationships as a
“surplus removal” strategy should be treated with caution as “surplus production” must
be viewed as essentially non-economic and costly.

The concept of conditional planning is nevertheless necessary because the wine industry -
being agriculture based - will always experience seasonal fluctuations in production.
These fluctuations may be both in the quantity and quality of a crop. This means that
some kind of seasonal management strategy will be necessary — at firm level with the
necessary support at industry level.

A second consideration is how a drive for quality wine production in future may affect
the desired percentage of drink wine pressed from the crush. In recent years this
percentage has increased somewhat in order to take maximum advantage of the market
opportunities that have appeared since 1994. However, in future it may be worthwhile to
decrease this percentage, and the residual may then be available for distillation.

A third factor is the necessity to manage the consequences of the shift from a statutory
control system to an open market system in the South African wine industry. Some
groups find it difficult to cope with the changes, in particular wine surpluses and
corresponding price fluctuations.      This motivated them to take extreme measures in
order to survive financially. For example, there is much talk in the liquor trade that
“foilbag” wine is of the cheapest alcohol available on the South African market during
surplus periods resulting in problematic socio-economic situations. Independent studies
by the National Agricultural Marketing Council (NAMC) however indicate that cheap
wine is a far lesser evil than other inexpensive alcohols. This notion is clearly sending
out the wrong and damaging message to society and to government and needs to be
addressed by a “responsible wine use” and policing strategy.

The essential twelve Vision 2020 strategic actions that were formulated for the long-
term development of the industry are as follows:

  • The industry needs a central marketing research capability that can inform
    producers and direct market and product development for the industry as a whole
    on an ongoing basis.
  • The industry requires a marketing function that can provide generic marketing
    services to the whole industry – international and domestic. Wines of South
    Africa (WOSA) and the SA Brandy Foundation need to expand their activities in
    this context to promote the “Brand South Africa” concept.
  • The industry should continue and strengthen the work of the Winetech network by
    setting clear targets for financing research and technology transfer, developing new
    sources of finance, developing co-operative research on an international basis, and


                                                                                       9
      instituting effective technology management systems based on the market directed
      ‘technology tree’ principle and cost-benefit analysis. Apart from the current
      research programmes of Winetech that are largely focussed on the first three links
      of the wine industry’s value chain (i.e. natural resource studies, viticultural studies
      and cellar practice and winemaking studies), it would be necessary to expand its
      focus to cover all the links in the value chain.
  •   The industry needs an effective business intelligence and information transfer
      service, which should expand on the current services of SAWIS and link with the
      existing programmes of VinPro.
  •   The industry needs an effective quality and logistics management system to
      support the development of “Brand South Africa” in the global market.
  •   The industry should implement well-integrated and strategically oriented social
      responsibility and affirmative action programmes as a matter of the highest
      priority.
  •   The industry needs an effective labour relations system, particularly institutions for
      farm worker representation that are truly independent, democratic, representative
      of farm worker interests and constitutionally legitimate.
  •   There is a need for an effective lobby system for the wine industry – i.e. one with
      the authority to negotiate and speak for the whole industry (i.e. not just for
      producers or for the trade), and with the capability to approach negotiations from a
      global and strategic point of view.
  •   The industry needs to recognise the huge backlogs in terms of international
      standards, and needs to implement medium and long-term strategies to improve the
      state of affairs.
  •   The industry should consider new approaches to its plant improvement scheme.
  •   The industry should continue with, and expand on, the work that was initiated by
      the Vision 2020 project on the application of GIS studies in the identification of
      outstanding and unique terroirs throughout the wine producing regions.

The following implementation steps were identified by Vision 2020 to set the process of
transformation in motion:
   • Identifying and instituting a leadership system for the industry;
   • Identifying and instituting an organisational structure for co-ordinated implemen-
       tation; and
   • Deciding on the initiating procedures for implementation.

An effective leadership system for the wine industry has to display the following
attributes:
   • It should be representative of, and represent, all relevant stakeholders in the
       industry;
   • A leadership core should be the ultimate authority on the general (or collective)
       affairs of the wine industry;
   • It should function under a constitution that has been accepted by all relevant
       industry stakeholders;
   • The leadership core must be constituted of persons of strong character, and with
       experience, deep insight and understanding of the wine industry business;
   • The leadership core must be totally committed to the vision and the implementation



                                                                                          10
      of strategic programmes of the wine industry.

One of the outstanding aspects of Vision 2020’s recommendations for a strategic
programme for the South African wine industry is that they cover a wide array of
interlinking (and mutually reinforcing) initiatives of various degrees of complexity.
These initiatives must be managed as a whole because the successful implementation of
each one depends on the successful implementation of the others.

Thus, there is a clear need to institutionalise an industry umbrella body that can serve
as the organisational arm of the leadership system of the industry, represent (and lobby
for) the industry, facilitate the development of the strategic programmes of the industry,
co-ordinate other activities such as industry levies in terms of the agreed vision for the
industry and establish the required partnerships inter alia with the government. Such an
institution should create a supportive environment for enterprise and innovation in the
renewal of the industry, and should therefore not be seen as a substitute for any existing
organisation.

The following actions were proposed to set Vision 2020 in process (2001):

  •   Instituting a leadership system for the industry;
  •   Developing an action plan for managing the problems that some producers are
      experiencing as a result of transformation in the industry;
  •   Taking decisive and strategically oriented steps to develop an industrial relations
      system for farm workers;
  •   Taking decisive, strategically oriented, imaginative, and well publicised steps to
      implement a social responsibility and affirmative action programme for the wine
      industry;
  •   Instituting a quality assurance and logistics programme for the industry which
      should support the development of a “Brand South Africa”;
  •   Developing an integrated and strategically oriented market development service for
      the industry;
  •   Setting up an effective business intelligence service for the industry;
  •   Setting up an innovative human resources development strategy for the industry;
      and
  •   Structuring an effective research, technology development and transfer system for
      the industry.

3. Strategic alignment: Linking Vision 2020 to the Strategic Plan for SA
Agriculture

In 2002 the South African Wine & Brandy Company (SAWB) was established as a first
step to institutionalise the strategic alignment and leadership in the industry. This
Section 21 Company was formed after intensive consultation between all major industry
role players and stakeholders including wine producers, labour groups, cellars, trade and
government re Vision 2020 implementation. In this context The Black Association of
Workers in the Wine and Spirit Industry (BAWSI), a founding member of the SAWB,
focussing on socio-economic empowerment and human resources development,


                                                                                       11
facilitated a coherent voice representing historically disadvantaged persons in the wine
industry on future developments and transformation in the industry (BAWSI is currently
the most representative association consolidating the perspective of black persons and
organisations in the wine industry i.e. various labour unions, NGOs and business). This
focus was strengthened by recent developments in the concept of “Black Economic
Empowerment”, including legislation and the development of industry “scorecards”.

The other founding members, VinPro representing wine producers, the Wine Cellars of
South Africa (WCSA) and the Wholesale Forum, mobilised their respective groupings to
establish the SAWB. The SAWB, with the great majority of industry stakeholders
represented in its four Chambers - Wine Producers, Labour, Cellars and the Trade – is
now, as representative body, responsible for aligning the total wine industry and
implementing a strategic plan, accommodating all the above considerations.

The SAWB is particularly tasked to provide a plan to capture this strategic alignment
between the Strategic Plan for SA Agriculture, Vision 2020 and subsequent
developments as described through the Wine Industry Strategy Plan. New initiatives and
provisions should also be accommodated in an appropriate manner.

The close alignment of this Wine Industry Strategy Plan with the Strategic Plan for SA
Agriculture is readily apparent from this exposition: wine industry strategies can be
grouped into those aimed at promoting competitiveness, those aimed at promoting equity,
those aimed at promoting sustainability and environmental values and actions, and a
range of strategies that are specific to the idiosyncrasies of the industry. Even in this
latter case there is considerable overlap with the supporting and enabling strategies of the
Strategic Plan. This much can be expected as a result of the high degree of strategic
alignment between different actors within the agricultural sector. SAWB officials are
for example currently involved in the “Black Economic Empowerment Reference Group”
of the National Department of Agriculture (AgriBEE), various working groups on trade,
research and development, the “roll out” of the Strategic Plan for SA Agriculture, etc.
The SAWB is also engaging with the Department of Trade and Industry on BEE.

However, a point to note with such strategies (and this includes the Strategic Plan for SA
Agriculture) is that the core strategies and even the supporting and enabling strategies are
not inherently symbiotic. ‘Win-win’ solutions have to be created, they do not arise
naturally from some mechanistic working of an invisible hand or a benign state.

The best solution to this problem lies in the integrated implementation of strategies and
management thereof to reconcile potential conflicts and create synergistic opportunities.
The operating rule in implementation will be that any action plans to further one of these
objectives may not be at the expense of the achievement of any of the other objectives. It
is in this respect that the Vision 2020 strategy seems to err in its cautious approach to the
empowerment, equity and participation objective while comprehensively focusing on
global competitiveness and sustainable environmental systems. Therefore, it is now
necessary to establish the appropriate set of considerations and strategies around this
objective and related strategies in the wine industry.



                                                                                          12
Vision 2020 argued that wine industry strategies in the equity arena needed to depart
from the existing state programmes of economic development and social responsibility in
order to maintain legitimacy and to ensure that public-private partnerships are fully co-
ordinated. However the current Black Economic Empowerment Strategy and also the
“roll out” of the Strategic Plan for SA Agriculture in particular industries, define a strong
leadership role for industry, setting targets and clarifying the required government
support. Government on the other hand will set in motion incentives and levers to
facilitate the envisaged transformation. Nevertheless, sustainability of these initiatives
implies that empowerment strategies have to be planned within the framework of the
unique characteristics of an industry and in a close partnership with the responsible
government agencies.

For the wine industry the following unique characteristics should drive the transformation
agenda.

  •   A history of problematic labour relations, especially on the farms. This is an
      issue that always has the potential to divide the industry, yet few can argue the
      need to improve the level of skills of farm workers and hence their productivity, to
      combat alcoholism among farm workers, and to improve their standard of living
      and quality of life. However, the experience of the wine industry has shown that
      successful empowerment amongst workers will not be achieved with conventional
      centralised ‘command and control’ models. Thus, sustainable empowerment
      programmes require decentralised self-governance systems of collective action by
      the industry, and collective action among the beneficiaries, i.e. it requires
      investment in the nurturing and building of social capital, which refers to the
      institutional and cultural bases that are needed for communities to function.

  •   A highly skewed (land)ownership regime. Land is largely in the hands of white
      entities. While this aspect will impact at farm level, a skewness in asset and
      resources ownership is also apparent in the wine industry. Land settlement and
      farming should therefore not be the only dimension of asset ownership
      transformation.

  •   The need for a competitive and economically viable market driven approach.
      The industry was controlled by statute for decades, and is still in the process of
      adapting to market forces. While this has not been a painless process, few in the
      industry argue for a return to the controls that existed in the period before the
      1990s. Global change and South Africa’s renewed access to the international
      market have created exciting new opportunities for the industry. By implication,
      empowerment programmes must, therefore, also be market based rather than
      coercive if they are to become part of the mainstream of change rather than an add-
      on function.

  •   The need to become integrated into value chain management. Experience has
      shown that the future success of the wine industry depends on the extent to which it
      succeeds in managing the entire value chain in order to enhance the global


                                                                                          13
      competitiveness of the industry. This means that the value chain has to be managed
      as an integrated network rather than as a series of functions with a linear
      connection. Thus, it is also important that empowerment programmes are
      implemented in all spheres of the value chain if they are to result in meaningful
      change. The various avenues for empowerment that result from this approach have
      the added advantage of catering for the different needs and capacities of the
      participants in empowerment programmes.

  •   The need to accommodate the high degree of knowledge, business acumen and
      capital intensity of the wine industry. The wine industry value chain is capital,
      skills and management intensive, and it is becoming increasingly technology
      intensive. Sustainable empowerment programmes demand, therefore, greater
      support to the participants than envisaged under existing State programmes for
      agriculture at large. In this regard, such programmes should be seen as only part of
      the support required by participants, and industry initiatives should aim in the first
      instance to supplement State programmes.

By taking these unique characteristics into account, the wine industry is declaring its
belief and intent that it needs to address equity and developmental issues successfully in
order to build its global competitiveness, and hence the profitability and economic, social
and environmental sustainability of the sector. In situations of conflict the focus should
be on “win-win” solutions.        Appropriate strategies and mechanisms to foster such
outcomes should therefore guide application and implementation.

4. Strategies for a vibrant, united, non-racial and prosperous wine industry

The South African wine industry is well-positioned in a positive growth phase and is
currently outperforming most countries producing “new world wines” on this score. A
major challenge will be to sustain this growth. In a recent analysis by the SAWB the
following factors were identified as enhancing performance in this sector:
• Quality and branding of product in global and segmented markets;
• Managerial capabilities to operate innovatively;
• Adaptability and flexibility at operational level throughout the wine supply chain;
• Quality and availability of accurate knowledge and business intelligence;
• Appropriate market segmentation and pricing strategies; and
• Linkages with R&D institutions.

The top factors constraining performance are:
• Crime;
• Labour policy, in particular high administration costs associated with labour matters;
• High production costs;
• High cost of capital;
• High cost of technology;
• Quality of unskilled labour; and
• Undue bureaucratic procedures re empowerment initiatives and also restricted access
    to government policy development procedures.


                                                                                         14
All of these are also referred to in the Strategic Plan for SA Agriculture as important
factors influencing competitive performance in agribusiness viz factor costs, markets,
support structures, firm strategy, government policies, governance procedures and chance
factors. The major requirements for a viable Wine Industry Strategy Plan (WIP) will
therefore centre on “dovetailing” considerations on participation and equity;
competitiveness and profitability; and sustainable national resources management (all
core strategies of the Strategic Plan for SA Agriculture) with those strategic initiatives
envisaged by Vision 2020.

In the assessment of the alignment of the strategic initiatives of the wine industry with the
Strategic Plan for SA Agriculture it was shown that, while the extent of alignment was
readily apparent at a macro level, the reality is that the three core strategies on which this
alignment rests are not inherently symbiotic. Therein lie the identification and
implementation of strategies for the future development of the industry, given the
conviction that access and equity are keys to the achievement of the other strategies. A
more detailed exposition of these aspects will be required in a comprehensive wine
industry strategy plan. Furthermore, sustainability in the transformation process will not
be achieved unless these initiatives are managed and evaluated in the context of good
business practices and sound governance and partnership. This requires monitoring
systems based on clear and widely accepted targets, workable systems of measurement
and a commitment to training and other forms of capacity building and regular interaction
between the government and the wine industry.

To this end, the wine industry, through the initiatives of the SA Wine & Brandy
Company, has identified the following six strategic thrusts around which the industry
should be managed to achieve a vibrant, united, non-racial and prosperous wine industry.
These are:

   • An economic development and empowerment strategy. The core focus of this
     strategy must be to promote economic development and growth in general and to
     enable historically disadvantaged groups of the South African society to
     participate in, and to create and exploit business opportunities in the industry. The
     operational tasks of the strategy will deal with economic infrastructure
     development, asset ownership (including land resources, water, etc), management
     skills, and general business skills and know-how important to the industry. The
     operational strategy will be to define economic empowerment targets, support
     operational strategies and actions and measure, monitor and evaluate outcomes.

   • A social development and upliftment strategy. The core focus of this strategy
     must be to ensure that all role players, and in particular historically disadvantaged
     groups and individuals, are socially and organisationally capacitated to make a
     constructive contribution to the industry and the country at large. The operational
     tasks of the strategy will entail the development/promotion of civil society to
     represent the “voice” of these groupings at industry level decision-making.
     Concerns related to material welfare, working conditions, health, social
     circumstances, alcohol status, and the environment will also be addressed. The
     operational strategy will be to define social empowerment mechanisms and targets


                                                                                           15
       and measure, monitor and evaluate outcomes.

   • A human resource development strategy. The core focus of this strategy must
     be to promote human capacity development in the wine industry, establish a
     positive workplace image and address backlogs in the supply of skilled workers to
     the industry in terms of international norms and standards. The operational tasks
     of the strategy will identify major areas of skills shortages and employment
     deficits in terms of gender and population group, historically disadvantaged
     individuals, etc. The operational mechanism will be to link appropriate service
     providers with demands per competency cluster and particular backlogs.

   • Market development and promotion strategy. The core focus of this strategy
     must be the promotion of “Brand South Africa”, the provision of generic market
     development, promotional, marketing and business development services to the
     whole industry; the promotion of socially responsible consumption of the produce
     of the vine; and the establishment of productive linkages between the wine
     industry and tourism. The operational tasks of the strategy will focus on linking
     evolving markets to the business needs of the wine, brandy and concentrate sub-
     sectors operating in the export and domestic markets.

   • Industry knowledge and information strategy. The core focus of this strategy
     must be to provide trusted and accurate knowledge based market and industry
     information to support product quality and integrity systems and also to assist
     strategic leadership and industry level decision-making. The operational tasks of
     the strategy will focus on the provision of two distinct aspects viz information and
     industry level intelligence re all aspects that will influence the strategic direction
     of value adding processes in the industry such as knowledge on crop estimates,
     market trends, macro-economic analysis and intelligence on evolving business
     models and structure. The operational strategy for the information function will
     be to provide timely, accurate and relevant information to all role players in the
     industry in a manner that preserves the privacy of individual firms. The
     operational strategy for the intelligence function will be to analyse and interpret
     industry information and macro trends and develop scenarios to assist in the
     implementation and monitoring of the Wine Industry Strategy Plan.

   • A technology innovation and transfer strategy. The core focus of this strategy
     must be to create a technology innovation model for the wine industry and to
     facilitate market directed and socially and environmentally responsible technology
     development and transfer systems. The operational tasks of the strategy will focus
     on strategy and network development, co-ordination and financial support
     mobilisation to link service providers to industry needs.

Of particular importance in the context of transformation in the wine industry is the close
alliance and collaboration between the SAWB and the South African Wine Industry Trust
(SAWIT). SAWIT was established as a financial trust between the Government and the
KWV as one of the outcomes of the deregulation process in the wine industry in the late
1990’s. SAWIT focus on strategic investment to promote growth and transformation. A


                                                                                        16
clear Memorandum of Cooperation between the SAWB and SAWIT to support the
implementation of the Wine Industry Strategy Plan will be dealt with as a priority.

These six strategic thrusts will provide content to the Wine Industry Strategy Plan, and
provide the basic guidelines for the operational structuring of the SAWB as an
organisation i.e. structure follow strategy. These issues are addressed in more detail in
Part Two.




                                                                                      17
                                    PART TWO:
               THE WINE INDUSTRY STRATEGY PLAN (WIP)

5.     Core purpose and vision

The core purpose of the Wine Industry Strategy Plan is to:
   • provide the strategic focus, leadership, knowledge and indicators of progress for
      the South African wine industry; and
   • establish an “Accord” and “Code of Good Practice” as basis for collaboration and
      partnerships between industry and government.

Vision: The South African wine and brandy industry focussing on achievements in the
year 2020 envisages that:
   • “the industry is innovation-driven, market-directed, globally competitive,
       highly profitable and dominant in selected markets – a producer of uniquely
        South African products of great quality, distinction and impeccable traceability
        records.
     • “The industry is a global enterprise with strong South African cultural roots
       – reflecting good citizenship and social responsibility.
     • “The industry is leading socio-economic transformation and empowerment in
       South Africa through equitable access to resources, business opportunities,
       markets and decision-making of historically disadvantaged and economically
       marginalised South Africans.
     • “Through all this the industry is a dominant economic force in the SA
       economy”.


6. Strategic goals and programmes of the Wine Industry Strategy Plan

In order to achieve the Core Purpose and Vision, the WIP will focus on the following
strategic goals:
    • To increase global competitiveness and profitability;
    • To generate equitable access and participation in the South African context;
    • To enable environmentally sustainable production systems; and
    • To promote socially responsible consumption of the produce of the vine.

These will be achieved through the following strategic programmes:

STRATEGY 1: Economic empowerment and development

The core focus of the Economic Empowerment and Development programme is to enable
historically disadvantaged groups of South African society to gain access to assets and
create ownership and to exploit and participate in business opportunities along the full
value chain in the wine industry.



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Programme scope: Successful economic empowerment requires:
  • New initiatives in building innovative forms of association and partnerships
     between new and established role players in all aspects of the industry value chain;
  • New business alliances, for example between established members of a winery and
     new commercial farmers, or between established exporters and new enterprises;
  • Participative investment schemes to supplement State funding to assist new
     entrants to the industry in overcoming the high capital needs of participation.

A range of government policies, laws and regulations exists at national and provincial
level relevant to the process of empowerment in the wine industry. These programmes
are all aimed at restructuring ownership patterns in the South African economy, and form
part, together with monetary, fiscal, trade, labour market and Black Economic
Empowerment policies, of the instruments of the Growth, Employment and
Redistribution (GEAR) policy of the government of South Africa. Nevertheless in
agriculture, and hence also in the wine industry, land reform represents the key
programme against which successful empowerment will be measured, despite the fact
that land makes up less than 10% of the assets of the industry, and that the production of
grapes produces less value added than virtually every other part of the supply chain.

It is clear that the wine industry cannot afford to lag behind in the achievement of
economic empowerment objectives, nor can it afford only to sit back and wait for the
relevant government agencies to effect reforms in the industry. Therefore, as its major
operational focus under this programme, the wine industry should proactively set itself
hard empowerment objectives and targets in all aspects of the value chain.

In setting empowerment objectives, the industry has to take its cue from official state
policy. Unfortunately, hard targets have not been set for economic empowerment
initiatives, with the exception of the land reform programme. This process of target
setting should of necessity start with an agreed definition of the concept of empowerment
itself.

The dictionary definition of the term is useful. The American Heritage® Dictionary
defines empowerment as ‘To equip or supply with an ability; to enable…’ while the
Merriam-Webster also defines it as ‘Enable’. Thus, in South African terms this broad
definition can be construed to cover access to land and other economic assets;
management control; socio-political participation and a command over relevant
information, i.e. sufficient knowledge to be able to exploit opportunities in the industry.
Empowerment therefore consists of many related dimensions. As a result a number of
measurable targets can be set for the economic empowerment programme:

  • Asset ownership targets, encompassing a target percentage of, for example, the
    ownership of land, capital and intangible assets (e.g. patents, brand names) in the
    wine industry;
  • The numbers of managers from previously disadvantaged groups as a proportion of
    existing managerial positions in the industry. This includes self-employed people,
    e.g. farmers, consultants, traders, etc. as well as salaried managers and directors in
    the public sector as well as the corporate world. Targets can be set for different


                                                                                        19
    levels of management and corporate governance, from the supervisory level to the
    level of company directors;
  • The distribution of skills in the industry, measured by the proportion of people
    from previously disadvantaged groups who have acquired specific qualifications in
    terms of the various National Qualifications Authority skills categories;
  • Indirect empowerment through procurement and outsourcing and contract
    programmes;
  • The effective participation in industry and business enterprise decision-making.

Thus, the industry should commit itself to an inclusive and transparent process of
defining economic empowerment objectives, criteria and targets across all aspects of the
value chain and monitoring/evaluating progress.

Strategic programmes, activities and tasks: The wine industry has to take
responsibility for its own progress in reaching the set targets. To succeed, the industry
requires an institution whose main purpose will be to represent its interests in the process
of restructuring, and to co-ordinate industry initiatives. Thus, the operational SAWB
mission for this strategic programme should be to become the key co-ordinating and
facilitating institution in the economic empowerment programme of the industry.

To this end, the SAWB should focus on the following sets of activities and tasks:

   (i)     Policy and strategy development:
           • Establish a strategic approach to achieve empowerment in the wine
              industry;
           • Develop appropriate and innovative development programmes and
              empowerment models and targets to activate empowerment opportunities at
              various business points in the total wine supply chain. This will include
              joint ventures, equity share schemes, buy-outs, preferred supplier status
              contracts, etc;
           • Establish a baseline of and co-ordinate the maintenance of a formal record
              of all wine industry empowerment initiatives, whether they are land reform,
              other asset transfer programmes, small business development, employment
              equity programmes, joint ventures, education and training initiatives, etc;
           • Analyse and evaluate such initiatives in order to provide continuous
              feedback to the evolving policy framework;
           • Undertake a pro-active advocacy role in representing wine industry
              interests in empowerment policy debates in South Africa.

    (ii)   Project development support:
           • Actively take part in all phases of the project cycle. Here SAWB should
              both initiate industry empowerment programmes and assist role-players in
              the industry who wish to launch empowerment programmes of any
              description. This means building close working relations with those State
              agencies responsible for various initiatives;
           • Actively support historically disadvantaged participants in the project
              identification phase. In many instances prospective participants require


                                                                                         20
          assistance, for example legal and financial advice, business planning
          advice, advice on the availability of education and training programmes,
          etc;
        • Act as a liaison with public and private sector providers of funding for
          empowerment projects. This will include the various government
          departments, the LandBank and NewFarmers, etc. for land reform projects,
          Khula for small business loans, the Industrial Development Corporation for
          export promotion schemes, and the commercial banking and investment
          sector;
        • Establish a “task force” of committed business partners to implement
          initiatives as pilot projects.

(iii)   Business development facilitation:
        • The SAWB will facilitate processes to establish joint ventures/
          partnerships/buy-outs based on a number of available opportunities;
        • Provide innovative advice to the industry in finding ways of circumventing
          the high capital requirement of access. This should include the exploitation
          of a wide range of opportunities for creating different types of partnerships
          between existing businesses and new entrants, and greater emphasis on the
          innovative use of land rental markets. This includes ownership of the plant
          material only, rent-to-purchase schemes, etc. For example, a co-operative
          can arrange land rental for new entrants to farming where the latter invest
          their grant funds in the processing activities rather than in the land;
        • Ensure access to economic infrastructure in appropriate production,
          winemaking, packaging, distribution and technology for new entrants in the
          industry;
        • Ensure that participants in new business ventures (e.g. in land reform, small
          business development projects, joint ventures) have continuous access to
          technical know-how and business and marketing advice. Examples include
          ensuring that new farmers gain access to the extension service provided by
          VinPro, facilitating their membership of WOSA, and ensuring their access
          to export promotion grants from the Department of Trade and Industry i.e.
          through mentorship programmes inter alia;
        • Ensure preferential allocation of water rights to areas where new entrants
          can farm and already have access to land by co-ordinating industry
          involvement in Catchment Management Authorities. This will also allow
          new entrants to build collateral by improving the value of the land.

 (iv) Benchmarking, monitoring and evaluation:
      • Maintain an inventory of all empowerment programmes and initiatives that
        affect the wine industry as a source of general information. This will
        include the design of the programmes, the targets if specified, and progress
        against these targets;
      • Monitor, benchmark and evaluate the progress made by the wine industry
        against the agreed targets, and ensure that the industry is kept appraised of
        such progress (See Wine Industry Scorecard).



                                                                                    21
The operational tasks should thus be to define a strategic approach and economic
empowerment targets, facilitate the necessary opportunities and support activities to
achieve these and measure, monitor and evaluate outcomes.


STRATEGY 2: Social development and upliftment

The core focus of this strategy is to ensure that all role players, and in particular
historically disadvantaged groups and individuals, are socially and organisationally
capacitated and integrated to make a constructive contribution to the wine industry and
the country at large.

Programme scope: The overall wealth of a country or a region should be measured in
terms of produced assets (material wealth), human capital (investment in education,
health, etc. that improves the quality of life of people) and social capital. Under this
heading a strategy is proposed for some elements of investment in social capital, while
strategies to address human capital are discussed under Strategy 3 below. In this regard,
successful social empowerment requires new initiatives in the sphere of social
responsibility programmes to empower those who cannot but aspire to participate as
entrepreneurs in the industry. This includes efforts to improve the living conditions of
workers, to enhance life skills in the broader worker community through education and
training programmes, and to ensure a more balanced relationship between worker
representatives and employers in the industry. Through such initiatives a broader based
grouping may also be enticed to participate actively.

A wide range of government policies, laws and regulations affect the lives and working
conditions of workers, managers and the owners of assets in the wine industry. These
include:

      • Conditions of employment. There are more than 25 laws that affect all aspects of
        labour on the farms, in the wine cellars, and in the related parts of the wine industry
        supply chain. The key laws in this regard are the Labour Relations Act, the Basic
        Conditions of Employment Act, ESTA, the Skills Development Act and the
        Employment Equity Act (and the expected BEE Act).
      • Health policies, which are aimed at redressing the imbalance between preventative
        and curative health services delivery and improving access to health services,
        especially for the rural poor in the wine industry.
      • Social policies, including welfare, housing, youth, gender, recreation etc. and the
        impact thereof on the wine industry.

The labour legislation identified above applies to all facets of the wine industry. The
WIP intends to facilitate the application of these laws in a viable and effective manner.
Farm workers form a distinct category compared to workers in other parts of the industry.
This has been recognised in the sectoral determination for agriculture that became
effective on 1 March 20031. Furthermore, research shows that while there has been some

1
    A sectoral determination is conducted in terms of the Basic Conditions of Employment Act, and governs matters
    such as regulation of working time, a minimum wage, etc.


                                                                                                              22
progress in poverty alleviation in South Africa, this has largely been the result of progress
in urban areas. Farm workers remain one of the poorest and most marginalised groups in
South African society, and are the poorest in terms of wage employment in the formal
sector. The wine industry must ensure that this categorisation does not apply to its
profile.

The industry should set itself clear objectives and hard targets in the arena of social
responsibility, and set up a representative co-ordination mechanism to ensure that
industry initiatives are focussed on meeting these targets.

In setting objectives and targets in the arena of social responsibility, the industry has to
take account of a wide variety of initiatives and occurrences that fall outside its direct
sphere of influence. The result is that targets are harder to define, and it is more difficult
to assign accountability for any progress against these targets. Nevertheless, the main
purpose of the social strategy that has been developed for the industry should be to ensure
that all role players in the industry are in a position to make a constructive contribution to
the industry, and therefore to the country at large. To this end, the industry should set
mutually agreed and measurable targets for achieving social responsibility objectives, and
also put in place mechanisms to ensure that these targets are not only met, but
continuously improved upon. In this respect, it is clear that the principal objectives
around which such targets should be set have to ensure that all role players can:

  •   Achieve a representative voice in particular historically disadvantaged groups in
      the wine industry;
  •   Enjoy a level of material and general welfare commensurate with their worth as
      individuals and with their contribution to the industry. At the least this implies that
      the industry should strive to ensure that the remuneration of all workers in the
      industry is above poverty levels;
  •   Enjoy general working conditions that are considerably superior to the average for
      the agricultural sector as a whole, including working hours, worker safety
      standards, etc;
  •   Enjoy a life free of debilitating disease, and have access to appropriate medical
      services;
  •   Live and work under social circumstances that are free from the ravages of alcohol
      abuse; and
  •   Live and work in an unpolluted and unspoiled physical environment.

In addition, the industry has a responsibility towards those who consume its products, and
needs to co-ordinate its efforts in this respect as well. Close interaction with initiatives
such as the Wine Ethical Trade Initiative (WIETA), the Association for Responsible
Alcohol Use (ARA), etc should therefore be promoted strongly (see Strategy
Programme 4).

Strategic programmes, activities and tasks: The activities and tasks of the social
development strategy of the wine industry should aim to empower the most vulnerable
people in the industry by directing service provision, legislation, etc and by establishing
capacity to deal with these matters in a representative manner. Farm workers and their


                                                                                           23
families should be a particular focus area.

The wine industry will focus its efforts in a co-ordinated manner on:

   (i)     Social development in the industry:
           • Develop a strategic plan to direct social development in the wine industry;
           • Engage with the appropriate stakeholders, including the health authorities
              to design and implement innovative primary health care programmes that
              allow for early identification of debilitating diseases such as alcoholism,
              tuberculosis and HIV/AIDS, etc;
           • Encourage institutions such as the South African Wine Academy to create a
              sub-programme whose purpose will be to promote the image of wine as a
              civilising factor, and to encourage the responsible use of alcohol on farms;
           • Facilitate housing improvement and general social upliftment programmes
              for worker families;
           • Promote socially responsible alcohol use in communities, with a special
              focus on alcohol abuse problems.

   (ii)    Promote the improvement of working conditions:
           • Set up appropriate mechanisms to monitor the process of application of the
              Basic Conditions of Employment Act to agriculture as it affects the wine
              industry, and to monitor the impact on the industry of the specific
              recommendations of the sector determination for the agricultural sector;
           • Set industry targets for the various aspects of working conditions covered
              under the sector determination, including the minimum wage, working
              hours, etc. and monitor compliance with these targets. The industry should,
              for example, consider setting an industry benchmark wage that is higher
              than the prescribed minimum wage.

   (iii)   Civil society development:
           • Foster the formal organisation of the various representative groupings in the
              wine industry, with a particular focus on workers in a process aimed at
              ensuring that they have an effective voice in the future of the industry
              (Labour Chamber of the SAWB). The industry should draw up guidelines
              according to which recognition, and possibly support, will be given to such
              organisations;
           • Support initiatives aimed at creating and implementing Codes of Conduct
              for various facets of the industry, such as those existing for the responsible
              use of alcohol i.e. ARA, the Wine Ethical Trade Initiative and the
              envisaged employer Code of Conduct of Agri-Western Cape;
           • Support efforts to introduce environment friendly and ethical production
              practices throughout the industry supply chain. In this regard experience
              has shown that a commitment to fair labour practices, or to environment
              friendly production practices often remains just that: a commitment without
              action. Therefore, the wine industry should seriously consider industry-
              wide initiatives to foster fair trade and ethical trade monitor mechanisms,
              and to integrate accreditation with the Wine of Origin certification system.


                                                                                         24
   (iv)   Benchmarking, monitoring and evaluation:
          • Maintain an inventory of all empowerment programmes and initiatives that
            affect the wine industry as a source of general information. This will
            include the design of the programmes, the targets if specified, and progress
            against these targets;
          • Monitor, benchmark and evaluate the progress made by the wine industry
            against the agreed targets, and ensure that the industry is kept appraised of
            such progress.

STRATEGY 3: Human resources development and training

The core focus of this strategy is to promote human capacity and skills development in
the wine industry, to establish a positive workplace image and to address backlogs in the
supply of skilled workers to the industry in terms of international norms and standards
and in particular to create opportunities and access for historically disadvantaged groups
and persons.

Programme scope: Successful human resources development for the wine industry
requires:

  •   The establishment of a positive image of the wine industry as providing viable,
      exciting and profitable professional employment opportunities;
  •   The design of a holistic concept and approach to human resources development;
  •   Proper co-ordination of human resources management and development throughout
      the industry;
  •   More well-trained and skilled workers in many areas of the value chain in
      accordance with international standards;
  •   Attention to the skewed access and participation of black people in the industry in
      the whole value chain;
  •   Participative management styles;
  •   Industry assistance with implementation and compliance with legislation;
  •   Comprehensive occupational safety and security policy and general health and
      retirement benefits.

Government programmes on human resources development cover a wide range of
initiatives that impact directly or indirectly on the wine industry. Alignment will thus be
of strategic importance. The most important of these include:

  • The allocation of funding to learners and institutions from the poorer communities
    of South Africa for formal primary and secondary education and to accommodate a
    wider range of learner needs away from a purely academic focus;
  • The redesign of the higher education system to enable it to better address the need
    for the global competitiveness of the economy by improving articulation, making
    the system more flexible and efficient, etc;
  • Expansion of a focus on science and mathematics as basic disciplines at school


                                                                                        25
    level;
  • Bursary and scholarship programmes, as well as maintaining a tax regime that
    favours investment in these areas;
  • A greater focus on issues such as Adult Basic Education (ABET), the improvement
    of literacy amongst the community at large, etc;
  • Industry-focused planning and execution of career training through bodies such as
    the Sector Education and Training Authorities (SETA).
  • The mentoring of young professionals through appropriate internships and the
    acquirement of skills.

It is furthermore evident that the field of human resources development has changed
radically in the past decade, and creates unique opportunities for the wine industry to
tailor its own plans.

The objectives of the Human Resources Development strategy for the wine industry are
to promote human resources development throughout the industry. The following will
receive attention:

  •   To promote the wine industry as a viable, professional and exciting workplace;
  •   To institute and develop an integrated and co-ordinated industry wide human
      resources development plan to facilitate HR policies, objectives and strategies to
      benefit both the industry and the people who work in it, to assess the HR
      development facilities in the industry in order to combine, share and optimise
      resources, and in order to fill the gaps, and to speak for and negotiate on behalf of
      the industry as a whole;
  •   To develop a strategy that will address, in the long and the short term, the backlogs
      of skilled workers who have been identified throughout the value chain of the
      industry;
  •   To identify and fill the gaps in training, mentoring and internships through
      engagement with service providers and to promote career opportunities and a
      culture of lifelong learning in the industry;
  •   To implement the Skills Levies Act and Workplace Skills Plans to improve the
      skills base; etc;
  •   To increase access and participation in all sectors and levels of the industry by
      addressing the historical legacies and biases and through well-designed
      empowerment processes and programmes. Access and participation must be
      increased in private as well as in state-owned organisations and institutions;
  •   To develop academic programmes at all levels and promote career paths through
      training and skills development, to facilitate the successful establishment of new
      entrants in farming and agribusiness with appropriate training, to facilitate the
      upgrading of educational opportunities for rural children in the wine community;
  •   To assess gaps in access and training for previously excluded groups and to
      establish and integrate appropriate training facilities, to promote training and career
      opportunities in the wine industry to previously excluded groups, to fast track able
      individuals to act as role models, to set targets and to monitor achievement;
  •   To interlink the strategy of inclusion with the backlog requirements of the industry;



                                                                                          26
      •   To ensure that fundamental transformation takes place in the industry by
          developing a credible and legitimate mouthpiece for the industry that can
          effectively engage national and international governments and bodies in the field of
          HRD;
      •   To develop and introduce a participative management style and culture of
          transparency, trust and a sense of ownership throughout the industry;
      •   To ensure that there is compliance with and implementation of legislation
          pertaining to the work force, to ensure that all workers are informed about their
          rights and are allowed to exercise these rights without fear, to give unified industry
          views on legislation, and to monitor the efficacy of the legislation in achieving its
          goals;
      •   To ensure that occupational safety and security measures are in place and to pursue
          health and employee benefits for all in the industry;
      •   To facilitate the development of an HIV/AIDS and TB policy and programme for
          the whole industry.

Strategic programmes, activities and tasks: To this end, the programme of the SAWB
will focus on the following sets of activities and tasks:

(i)       To develop an integrated Human Resources Development and Training
          strategy:
      •   To develop a Human Resources Development and Training plan for the industry;
      •   To promote the image of a productive sector with viable employment and career
          opportunities;
      •   Organise and facilitate dialogue amongst the stakeholders to formulate strategic
          goals, direction and priorities for the industry;
      •   Study existing wine industry research, plans and guidelines that have been drawn
          up by private and public sector role players as well as by academic and research
          institutions in South Africa;
      •   Facilitate the gathering and discussion of significant and relevant documentation on
          international HRD trends. Stimulate strategic debate within the industry to create a
          culture of learning, sharing and growth;
      •   Study international models for successfully integrating and co-ordinating the value
          chains and structures of comparable industries, and select the best practices,
          models and opportunities most suitable to the South African situation;
      •   Set up Human Resources Management industry standards (taking into account
          international Best Practice) to be used as a benchmark for the stakeholders.

(ii)    Address the human resources development backlogs of skilled workers and
        professionals in the whole value chain:
      • Using the data compiled for Vision 2020 and other relevant sources, identify the
        relevant role-players and facilitate a process to generate discussions and solutions;
      • Facilitate the formation of a “HRD Centre of Excellence” approach for the Wine
        Industry to co-ordinate industry inputs into the required human resources
        development programmes and to act as career development promoter by bringing
        together viable shareholders: Determine the scope and capital needs as well as the



                                                                                             27
      roles and responsibilities for this enterprise; facilitate a process to secure the seed
      money and the implementation of such an entity;
  •   Engage and work with human resources development service providers and
      training experts to identify appropriate training and training materials in every one
      of the clusters in the value chain, and to see to the development, at various
      institutions, of appropriate courses, course materials and training staff;
  •   Collaborate with the official skills development authorities (PAETA, SETASA and
      FOODBEV) and engage the National Department of Agriculture to establish
      progress within the National Agriculture Training and Education Strategy;
  •   Analyse progress in the field done by professionals, employers and HR staff to roll
      out Workplace Skills Plans e.g. wine estates and cellars;
  •   Facilitate workshops amongst stakeholders, attend workshops and seminars offered
      by stakeholders and training and education institutions, act as a broker to match
      prioritised training needs with training and education institutions and experts.

(iii) Support equitable access and participation in the wine industry: This
      programme will co-ordinate with Strategy 1 and 2.
    • The broadening of the ownership of land and assets will largely depend on the
      commitment, policies and funding of the government. To make this policy work
      successfully the SAWB must ensure that trainers and institutions with relevant
      training materials are focussing on this challenge. A culture of mentorship with the
      identification and development of mentors must be established in the industry. At
      grass roots level, farmers’ associations, co-operatives and cellars must be
      encouraged to guide and support the new owners. Local government is the key
      state organ to operationally land reform. The SAWB must ensure that trained staff,
      who will plan realistically and implement their planning justly and successful, are
      deployed within the local governments;
    • Addressing the lack of skilled black labour in the whole of the value chain, inter
      alia by identifying opportunities for black empowerment, affirmative action and the
      recognition of informal prior learning;
    • Workplace Skills Plans must be influenced to reflect above strategy. HR staff,
      professionals and employers must be orientated and guided to comply with the
      Strategic Plan for SA Agriculture, labour laws and understand that these steps are
      essential for survival and the growth of the industry;
    • Certain trainers, institutions and training and course materials must be dedicated to
      fast tracking the process of training so that meaningful numbers of black personnel
      can successfully be promoted and/or appointed in all levels of the value chain. The
      “HRD Centre of Excellence” concept should facilitate such a fast track strategy;
    • Awareness and a willingness to create representative structures (e.g. Cellar
      Boards) throughout the wine producing areas must be encouraged and guided. This
      could take the form of a road show or regional conferences or workshops;
    • Establish a viable “role model” interaction and mentorship programme at all
      professional levels;
    • Formulate policies to guide above strategies and support operational activities to
      affect these plans;
    • Recognition through reward of progressive companies via favourable trade
      conditions, and marketing of empowerment brands in the international market to


                                                                                          28
    ensure that fundamental transformation takes place, through representation of black
    people in all levels of the industry and not just labour;
  • To develop and facilitate a culture and systems of participative management in the
    wine industry.

 (iv) Promote compliance with and implementation of work place legislation:
  • Employers and employees must both be well-informed about labour legislation;
  • Identify relevant existing training projects, e.g. NORAD, CBOR, and CRLS, in the
     field of constitutional and bill of rights and all labour laws;
  • Develop with these organisations a strategy to inform all workers about their rights;
  • Institutionalise these rights in the workplace, employees and employers must be
     guided to include the application of these rights in service contracts. In cases of
     disputes, workers must have knowledge of how to access support systems to assist
     them. In cases where the results of laws are not desirable to the people whom they
     were designed to benefit the SAWB should facilitate unified industry views and
     influence policy makers to correct the situation;
  • A data base should be developed to effectively monitor and evaluate compliance as
     well as the effectiveness of legislation in achieving its goals;
  • Negotiate incentives to enterprises which comply.


STRATEGY 4: Market development and promotion

The core focus of this strategy is to promote the concept of “Brand South Africa” through
generic market development and promotional, marketing and market development
initiatives.

This strategic programme will focus on wine, grape concentrates and brandy as distinctly
different, but highly complementary components of the industry. Both the international
and local market will be implicated. The initial focus in the WIP will be on wine and
brandy.

Serving the Wine Sector:       The wine sector is rapidly changing from a highly
fragmented supply driven agribusiness to a competitive professional brand driven
beverage industry. Changing consumer demand, increasing retail power and the impact
of branding are the major drivers for change. To be globally competitive, the wine
business needs to be more than just market driven and quality focussed, it must be
innovative and dynamic in assessing (and directing) consumer preferences and market
behaviour.

Over the past decade, the South African wine sector has focussed on improving quality
and on planting varietals which are in international demand, and has now begun to
compete more effectively in the global arena. This has been successful in driving export
volumes up tenfold since 1992. Strong South African brands are beginning to emerge, as
evidenced by the presence of 4 brands in the UK Top 20 AC Nielsen rankings for 2002.
However relative, too much of the wine exported from South Africa is still sold in the
popular premium sector, and South Africa is only just beginning to develop wines in the


                                                                                      29
higher quality segments. Unequal “playing fields” in the global trade environment also
need to be addressed. Alliances with international groupings supporting free trade will
be required.

Programme scope: The focus of the strategy will be to build the positive image of
“Brand South Africa” and to promote added value and value growth in key markets. The
operational focus of the SAWB will be on ensuring that the industry, including SMME’s,
BEEs and PDIs have the necessary support, information and access to develop sound
market strategies and to facilitate market access.

In its contact with the international markets, the WIP should promote new investment,
build the positive image of South Africa and South African wine, contribute to the
growth in tourism, and facilitate market access for all. Attention should also be given to
market access and free trade promotion inter alia through the activities of the World
Wine Trade Group.          In the local market, the focus must be on promoting socially
responsible wine consumption, the consumption of good wines, growing the capacity of
existing and new entrants especially BEE initiatives and assisting wine tourism ventures
to increase profitability through participation in the wine business.

Strategic programmes, activities and core tasks:

(i)        Promote “Brand South Africa”:
       •    Develop the “Brand South Africa” concept as an exclusive protocol related to
            promoting and protecting South Africa’s unique quality, consistency and ethical
            practice.
       •    Prioritise market focus in the evolving global arena i.e. select focus areas for
            market development.
       •    This initiative will be aligned with market development and promotional work
            being done by the National Agricultural Marketing Council, the Joint Marketing
            Initiative of the Western Cape, and SA Tourism.
       •    The bi-annual Cape Wine trade exposition will be continued as an important
            element in the programme.
       •    Support the Wine Industry Ethical Trade Initiative managed by WIETA and
            similar initiatives.
       •    Link up with “World Wines Trade” initiatives in order to promote free trade
            policies and sign the particular memorandum.
       •    To support the effective positioning of “Brand South Africa” in the global market
            through effective quality and logistics management innovation.

(ii)     Support a value growth strategy in key markets:
       • Classify markets as priority, focus, development and niche in terms of the strategic
          allocation of funding and management time.
       • Local market development will be attended to with particular efforts towards
          emergent horeca small businesses and generic wine promotion.
       • Link up with appropriate international market development groupings advocating
          an international free trade regime i.e. World Wine Trade Group, etc.



                                                                                          30
      In addition to these two core tasks the following activities will be supported in
      collaboration with other relevant strategies.

(iii) Develop a comprehensive marketing, intelligence and information base for the
       industry (in collaboration with Strategy 5 & 6):
     • Develop a comprehensive information resource on South Africa’s key markets,
        which is constantly updated. This will be disseminated through publications and
        workshops.
     • SMMEs and Historically Disadvantaged Groups/Persons and new entrants will be
        given extensive support and counselling and will access information at no cost,
        which helps lower barriers to entry.
     • Transmit market signals re product requirements to all processes in the supply
        chain:
        -      Consumer preferences and traceability;
        -      Requirements re safety, ethics and environment must be attended to.
     • Link to trade policy development initiatives (ATF; DTI initiatives, etc).

(iv) Promote Wine Tourism (the link between wine and tourism):
    • The programme will work with national and local tourism bodies in this context
      and will focus on innovative promotional activities in South Africa. Wines of
      South Africa (WOSA) is currently supporting a programme in the Western Cape
      to build wine knowledge and familiarity amongst new entrants into the horeca
      trade, such as township restaurants and tour operators who are servicing the tourist
      industry. This type of programme is vital in ensuring that emerging entrepreneurs
      will grow the scope and profitability of the tourism businesses and should now be
      rolled out nationally.
    • Establish linkages and support systems to regional tourism events, wine routes,
      exhibitions, shows and related opportunities i.e Cape cuisine, Cape sea food, Cape
      Malay food, etc.

(v)     Support marketing skills development (in collaboration with Strategy 3):
      • A legacy of the past is a racially and gender skewed wine marketing corps. The
        industry will set targets to change this and SAWB will support these initiatives
        through bursaries and overseas exposure for suitable candidates.
      • Ensure that all involved in the wine trade have access to appropriate training
        programmes and formal qualifications.
      • Collaborate through appropriate internships and mentoring initiatives.

(vi)    Support socially responsible wine consumption (in collaboration with
        Strategy 2):
      • Promote socially responsible and health focussed campaigns;
      • Support ARA initiatives;
      • Consider market initiatives to deal with the “foilbag” dilemma.

Market development and promotion in the Brandy Sector: The importance of the
brandy industry to a large segment of wine grape producers, to the labour intensive
distillation houses and to the retail industry and increasingly the wine tourism industry,

                                                                                       31
makes this sector an important focus area for the SAWB. It is thus accepted as vital that
South African brandy as a product be seen as a prominent player at the forefront of the
liquor chain.

In the light of the extent of the wine produced for brandy distillation – as well as the
importance of the brandy market in its own right in terms of sales and government duties
– it is evident that the South African brandy industry needs to be subjected to an
innovative and proactive marketing strategy, especially tailored to protect and further its
own interests. This “brandy situation” becomes especially important when taken into
account that, though being a product of the wine industry, brandy consumers are largely
separate from wine consumers.          The generic market development and promotion
strategies to address these different consumer groups will thus largely be independent of
one another.

Programme scope: As most South African brandy is consumed locally, it is thus also
important that a strategy aimed at promoting this vital segment of the local wine industry,
be directed at the broader South African population of current and potential brandy
consumers. The promotion of South African (or Cape) brandy as a unique South African
product should however also receive increased attention in the global market.

It is important to direct the generic marketing and promotion of the brandy industry so
that it will contribute to the broad principles espoused by WIP. The focus will thus be
that of ensuring a relevant profile for brandy as a unique South African (Cape) product,
as well as providing the necessary information to target audiences. The brandy industry
will endeavour/benefit those currently in the industry, as well as create new opportunities
for those wishing to enter it. Spin-offs of a healthy and vibrant industry will benefit
persons from previously disadvantaged communities in the marketing fields of
advertising, public relations, promotions and tourism.

Strategic programmes, activities and core tasks: In view of the importance of the
brandy sector to support a successful wine industry, the SAWB should establish itself as
authoritative and independent spokesbody for the brandy industry and focus on the
following:

(i)       Support a value growth strategy in key markets
      • Develop a strategic approach to local and global markets;
      • Develop unique Brand South Africa protocol for South African brandy;
      • Work closely with its established network of taverners to create opportunities to
          promote the values and image of brandy especially to the black youth market;
      • Complement the above through advocating the responsible use of brandy
          trademarks;
      • Support a global free trade regime;
      • Support the effective positioning of “Brand South Africa” in the global market
          through effective quality and logistics management innovation;
      • Support the effective positioning of “Brand South Africa” in the global market
          through effective quality and logistics management innovation.
      In addition the following will be attended to in collaboration with other programmes.


                                                                                        32
(ii)     Promote Brandy tourism:
       • Develop an innovative brandy tourism strategy;
       • Use the SAWB’s evolving network of tourism destinations (brandy route, brandy
         cellars) so as to create opportunities for previously disadvantaged persons wishing
         to enter this industry;
       • Establish support systems and linkages to tourism events i.e. Cape food, Malay
         food, etc.

(iii)       Market information and intelligence service (in collaboration with Strategy
            5 & 6):
       •   Redefine its target markets in terms of priority and to proactively disseminate
            information to these respective audiences;
       •   Proactively communicate developments within the industry – especially
            achievements in the fields of transformation and the industry’s economic
            importance – to the media and relevant target groups;
       •   Support publications and provide information to black audiences through
            promotions and generic advertising in the print and radio media;
       •   Transmit market signals re product requirements to all processes in the supply
            chain. Consumer preferences and traceability re safety, ethics and environment
            must be addressed;
       •   Establish appropriate mentorship programmes;
       •   Link to trade policy development initiatives (i.e ATF, DTI, etc).

(iv) Support marketing skills development (in collaboration with Strategy 4):
    • This set of activities will support the above to establish a clear human resources
      development focus for the SA brandy sector;
    • Ensure that all involved in the brandy trade have access to appropriate training
      qualifications.
    • Collaborate through appropriate internships and mentoring programmes.

 (v)     Support socially responsible brandy consumption (in collaboration with
         Strategy 2):
       • Promote socially responsible and health focussed campaigns;
       • Support ARA initiatives.


STRATEGY 5: Knowledge and information development

The core focus of the knowledge and information programme is to provide trusted
knowledge based industry information and generic intelligence to support product quality
and integrity systems and also to assist strategic leadership and informed business
decisions by all stakeholders.



Programme scope: The wine industry has a well-developed and co-ordinated knowledge
and information function which provides affordable, accessible, timely, accurate and


                                                                                         33
relevant market information to all role players in the industry re producers, workers,
trade, consumers and government. The productive utilization of this function by the
other WIP strategies’ outputs is directly linked to the effectiveness of those strategies. As
is frequently said about structure, the same is true about information gathering and
dissemination – it tends to follow strategy. It follows logically that close liaison between
this programme and the other WIP programmes will be necessary to ensure that
additional needs in this regard are identified and addressed.

Although this programme goes a long way in assisting existing industry role players to
make informed business decisions and minimise market and price risk, more analysis,
interpretation and intelligence, over the whole range of economic determinants and
stakeholders, and to deal with the need of new entrants must be added to this end.

The major objectives of the knowledge and information systems strategy for the wine
industry are:

  • To identify and address additional information needs from the other WIP strategies,
    especially in respect of previously excluded groups and new entrants;
  • To assess gaps where analysis and intelligence are required, and to address such
    gaps;
  • To assist with the transfer of information and intelligence to all stakeholders in
    order to support strategic decision-making.

Strategic programmes, activities and core tasks: The industry should commit itself to
make any and all information required for these purposes, available.

To this end the programme should focus on:

(i) Information provision:
   • Accelerate dissemination of standardised information outputs developed in
     response to industry needs. Previously excluded groups will be a particular focus
     group.

(ii) Management information systems:
   • Ensure that a co-ordinated and integrated information management and transfer
     system underlies all WIP strategic programmes to be able to effectively identify and
     address information needs.
   • To develop information to facilitate supply chain and risk management processes in
     the wine industry.

(iii) Collaboration and information network development:
   • Engage Government and other statistical services in respect of statistical capacity,
      economic analysis and market intelligence with a view to co-operate in this regard.
   • Consult all role players in the industry supply chain and other industry such as
      tourism re data needs, information and economic analysis and industry intelligence
      to ensure that co-operative efforts will address all requirements re logistics,
      traceability, certification, etc and if not, establish a system that will.


                                                                                          34
(iv) Dissemination:
   • Accelerate dissemination of information outputs.

In addition the following activities will be attended to in collaboration with other
programmes.

(v) Product quality and integrity:
  • Develop information and knowledge systems to support the product quality and
    integrity of the South African wine industry (in collaboration with Strategy 6).

(vi) Industry level economic analysis:
  • Develop industry intelligence and conduct industry and economic analysis related
     to market trends and macro-economic developments and evolving business
     systems, models and scenarios (in collaboration with Strategy 4 and 6).


STRATEGY 6: Technology innovation and transfer:

The core focus of this strategy is the establishment of problem solving, market directed
and socially and environmentally responsible technology invention, commercial
development and transfer systems.


Programme scope: The long-term global competitiveness of the South African wine
industry depends critically on its ability to learn and innovate faster than its competitors.
This implies that the industry's research and technology invention and commercial
transfer programme should be clearly focused on the kind of activities that hold the best
promise in this aspect and be based on three principles, viz.
  •    A well-designed, well-financed and well-executed programme of research and
       technology development and transfer is absolutely essential for building
       innovativeness and international competitiveness in the South African Wine
       Industry;
  •    In view of South Africa’s relative limited research capacity the motto “adapt – not
       invent” should largely drive the application of this programme.
  •    The programme should cover all the links in the wine industry's value chain, from
       terroir and plant material selection, via viticultural practice, to wine making and
       cellar practice, logistics, market research, economic analysis, etc.
  •    The programme should deal with all facets of risks as a source of cost, low
       productivity and consumer distrust.
  •    The programme must be market-directed, but should also support national policy
       towards R&TD in agriculture and industry development, in particular appropriate
       technology systems to integrate new farmers into the wine industry.




                                                                                          35
This programme should broaden and integrate its almost exclusive focus on the wine
farm and the cellar, towards (and with) other value chain activities in the wine industry
i.e. brandy and concentrates and also focus on aspects related to human resources
development and logistics. It places a strong emphasis on the operational application of
wine industry R&TD. All of this implies enhancing inventiveness and innovation in the
wine industry through technology transfer. This will be achieved through initiatives to:
    • enhance South Africa’s global competitiveness;
    • enhance natural resource sustainability in the winelands;
    • improve the quality of life of all who are associated with the industry;
    • empower resource poor persons in order to increase their effective participation in
       the industry through improved access to appropriate technology;
    • aim at the transfer of appropriate technology in the industry with new entrants
       from historically disadvantaged groups as a pertinent target group;
    • affirm the integrity of the South African “Wines of Origin” system.

A successful outcome in a particular R&TD programme focus area is, nevertheless, also
dependent on its potential contribution towards innovation in the other WIP strategies –
or, at the very least, that it will not subtract from these other focus areas.

For example, a R&TD programme result that significantly enhances the South African
wine industry’s global competitiveness while also increasing inequity and destroying
water resources through pollution, will not pass the criteria for a successful outcome.
Broadly speaking, the sustainable success in a particular programme focus area depends
on its contribution towards other programme focus areas and on the contribution of other
programme focus areas to it.

Direct interaction with other SAWB strategic programmes to enhance and, where
possible, develop integration and complementary activity will be implemented. Each
activity will require a unique and particular target setting process. However, technical
innovation should set the tone for most as technology is viewed as a critical enabler for
international competition.

Within the R&TD framework of the wine industry BEE and HRD should also be
addressed through objectives which focus on resource limited producers with the aim of
broadening access to the industry by:
   • the development and transfer of affordable and effective technologies for resource
      limited producers.
   • the identification of training needs and facilitating the training of resource poor
      producers.

Transformation (exposure, training and research support of previously disadvantaged
groups) should be supported by:
   • making bursary funds available for PDI students participating in wine industry
      related research projects.
   • funding wine industry related research projects where PDIs are involved as project
      leaders and/or technicians.



                                                                                      36
This programme will furthermore find its rationale in a focus on technology which could
mitigate risk factors in the wine supply chain. These will include:
   • natural factors;
   • technology/production factors; and
   • trade and retail factors (safety).

Strategic programmes, activities and tasks: The operational focus of this strategic
programme is to become the key co-ordination and facilitating institution in industry
innovation through research and technology development and transfer. This programme
will create an interactive network of service providers, strategic planners and the users of
technology and contribute to the funding of the required technical innovation. Entrants
from historically disadvantaged groups will be a particular priority.       To this end the
SAWB should attend to the following:

   • To support the wine industry with expertise, enabling it to be cost effective while
     producing quality wines and other grape based products through the application of
     environmentally friendly technologies.
   • To support the training and education of individuals for the R&D sector of the
     industry – at all levels in terms of skills, knowledge and insight development – in
     order to ensure the practical implementation of the best knowledge and most
     advanced technologies in viticulture, wine making and other grape based products.
   • To establish a culture of technological innovation, to ensure the ongoing
     utilisation of the best technology within the industry, and to facilitate its
     dissemination to all the sectors of the industry.
   • To facilitate the development of resource poor and previously disadvantaged
     producers and to improve their access to the industry by making appropriate
     cutting edge technology available to such producers.
   • To promote sustainable natural resources management practices and product
     systems.
   • To establish world leadership in selected niche areas of the wine industry through
     a network of scientific and technological expertise.
   • To commission relevant and thoroughly planned research, technology
     development and technology transfer in the promotion of the industry’s
     technological capabilities and in the attainment of the other objectives.
   • To support the effective positioning of “Brand South Africa” in the global market
     through effective quality and logistics management innovation.
   • To support innovation to affirm the integrity of the “wines of origin” programme.
   • To interact in the global environment in order to develop a productive network and
     alliances (i.e. the OIV, etc).

The following strategic programmes will direct these activities:

  (i) Setting a strategic agenda and operational plan
   • To develop a wine industry technology innovation strategy and plan in
      collaboration with the industry stakeholders and service providers and R&D
      institutions.


                                                                                         37
  (ii) Expertise network development
   • Establish leadership in selected areas of the wine industry through a network of
       scientific, technological and economical/social expertise.

 (iii) Commissioning of research and development (RLD)
    • Commission relevant (in terms of the strategic plan) and thoroughly planned
       research, technology development and technology transfer in the promotion of the
       industry’s technological capabilities and in the attainment of its objectives.
    • To develop policy analysis and advice to support the strategic development of the
       industry in its economic, social, financial, institutional and environmental context
       and impact.

  (iv) Technical expertise and skills development (in collaboration with Strategy 3,
       Human Resources Development)
   • Support the wine industry with the development of the required expertise at all
       levels in terms of skills, knowledge and insight development – in order to ensure
       the practical implementation of the best knowledge and most advanced
       technologies in viticulture, wine making and other grape based products.
   • Facilitate the development of resource poor and previously disadvantaged
       producers and to improve their access to the industry by making appropriate
       cutting edge technology available to such producers.
   • Promote economic and social analysis skills.

The following research themes have been identified:

 (i)      Grapevine Virus combat (prevention, evaluation, identification, eliminating,
          etc);
 (ii)     Optimum grape composition for specific wine purpose;
 (iii)    Phenol composition for specific wine purpose;
 (iv)     Wine grape terroir (identification, optimum usage, etc);
 (v)      Improving grapevine, wine yeast and bacteria for a quality focussed, market
          directed wine industry (Biotechnology);
 (vi)     Litigate an effective quality and logistics management system to enhance
          supply chain management (in collaboration with Strategy 4 & 5);
 (vii)    Determine adulteration practices (link to programme 5, Strategy 4);
 (viii)   Wine industry economic research and strategic intelligence (in collaboration
          with all other strategic programmes); and
 (ix)     Determine and develop technology to mitigate risk factors in the supply chain
          (in collaboration with other strategic programmes).




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7.       Setting a Wine Industry Scorecard (WIS)

The purpose of the Wine Industry Strategic Plan is to align and focus the wine industry
into coherent strategic activities and to create synergies with the three core strategies of
the Strategic Plan for SA Agriculture. To this end a comprehensive Ten Point Wine
Industry Scorecard (established along the lines of the recently released “South Africa’s
economic transformation: a strategy for broad-based black economic empowerment”) and
other initiatives in this regard will be developed to monitor progress.


The key principles of such a Scorecard are:

     •   Establish partnerships between industry and government;
     •   Create investor confidence by ensuring greater transparency, establishing the ‘rules
         of the game’ for the industry, and avoiding ‘shifting goalposts’;
     •   Focus on the creation of growth and new opportunities rather than the
         redistribution of existing opportunities (an important exception is, however, the
         need to set hard targets for employment equity);
     •   Focus on the specific characteristics of the wine, brandy and concentrate sectors of
         the industry, and on the entire supply chain;
     •   Focus primarily on the most disadvantaged current and prospective participants in
         the industry rather than on old or new elites;
     •   Provide flexibility within the industry by allowing stakeholders to set their own
         targets and pace within agreed guidelines. This is especially important in an
         industry where firm size varies from small farms to large corporations;
     •   Combine the advantages and disadvantages of setting hard targets with the
         flexibility required as a result of the diverse institutional structures found in the
         industry;
     •   Establish “Codes of Good Practice” to facilitate measurement and evaluation.


The Scorecard will provide a checklist of indicators that will be used by each signatory
(enterprises, companies, SAWB structures, etc.) to implement appropriate transformation
strategies and be monitored by the SAWB. A proposed checklist of indicators is
elaborated below. These indicators focus wider than BEE per se but are important in
context of the Vision 2020 and the achievement of all the WIP’s strategic goals. Details
will be developed through industry wide consultation processes with stakeholders along
the lines of the following table:




                                                                                           39
                                                        3-5   Achieve-     10   Achieve-
              WIS INDICATORS                            year   ment       year   ment
                                                              Yes No            Yes No
                                                      targets            target
1(a) Human resources development:
• Has the enterprise given each employee the
    opportunity to become functionally literate by
    2005, and are workers receiving training?
• Has      the enterprise instituted career
    development     planning     for    previously
    disadvantaged workers, including Skills
    Development Plans?
• Has the enterprise developed systems to
    monitor progress, in particular with
    empowerment?

1(b) Employment equity performance:
• Is the employment equity plan of the
    enterprise    developed     known     to    all
    stakeholders, and does the enterprise report
    annually on progress?
• Has the enterprise established a plan to
    achieve representation of x% by previously
    disadvantaged individuals in its management
    structures within five years, and has the plan
    been implemented?
• Has the enterprise established a plan to
    achieve representation of x% by women in its
    management structures within five years, and
    has the plan been implemented?
• Has the enterprise already identified a pool of
    talent internally, and are they being fast-
    tracked within the enterprise?
Seasonal workers:
• Is a system of service contract complying with
   legal provisions in place?




                                                                                     40
 2. Social upliftment and rural development:
• Has the enterprise assisted with the
     development of integrated development plans
     in the communities in which it operates, and
     from where it draws its workers?
• Has the enterprise taken steps to allow the
     relevant communities to participate in these
     endeavours?
• Has the enterprise, in those cases where it
     provides housing to workers, instituted joint
     actions with its workers to upgrade housing
     and to promote property ownership?
• Has the enterprise, in those cases where
     housing is not provided on site, instituted
     other innovative plans e.g. Agrivillage
     development, housing schemes, etc.
• Has the enterprise, in those cases where it
      provides other in-kind benefits such as food,
      instituted joint actions with its workers to
      upgrade quality?

3. Business development, service providers
   and input suppliers
• Has service providers and suppliers to the
   enterprise    embraced      the    concept   of
   transformation      and      black    economic
   empowerment?
• Has the enterprise identified the extent of its
    procurement of capital goods, and production
    inputs and services from empowerment
    groups? List which
• Has the enterprise made provision for
    preferential supplier status for empowerment
    groups? List what
• Has the enterprise plans to increase such
     purchases and outsourcing over the next three
     years, and to what extent have such plans
     been implemented? List where.

4. Economic ownership and equity schemes to
   benefit historically disadvantaged groups/
   persons
• Has the enterprise planned and implemented
   steps to broaden the ownership of assets (land,
   business shares, etc.)? List what and how
   much



                                                      41
5. Governance systems and participation
• Have systems been implemented to establish
   participative      management,          including
   historically    disadvantaged        individuals?
   Specify levels, i.e. management, knowledge
   workers, other levels, gender, race.
• Company boards?
• Executive management?

6. Product quality and integrity
• Product inspections
• Labeling integrity
• Brand SA protocols
• Information systems

7. Technology, innovation and transfer:
• Has the SAWB spent at least X% of the
    Research and Development statutory levy
    income on socio-economic empowerment
    activities?
• Has technology been effectively transferred by
    your enterprise to historically disadvantaged
    groups and individuals through
    - targeted services?
    - appropriate technology development support?

8. Market development and promotion:
• Has South Africa increased value share in core
   focus markets?
• Has the enterprise provided opportunities for
   HDG/Is to become proficient in export
   marketing? How many? What level
• Have these opportunities been translated into
   business opportunities?
• Have UK supermarkets sourced from WIETA
   accredited members? How many members?
   How much (value)?
• Have local tourism operators grown their
   wine/brandy business as measured by sales in
   restaurants, tours to winelands?
• How many persons were targeted for market
   development and promotion training?
• How many persons have been trained in
   marketing and related promotion skills?
• How many of these were black, gender?


                                                       42
9. Environmentally sustained production
   practices
• Environmental impact assessment

10. Economic performance:
• Efficiency ratios
• Competitiveness index
• Confidence index
• Income distributional effects


The next steps in the implementation of this Scorecard are to obtain government and
industry-wide agreement on the exact form of the scorecard, including performance
levels and time scales for the different stakeholders. Once stakeholders agree on these
matters, the industry will commit itself to the implementation of the Scorecard. In this
regard, SAWB will be charged with responsibility to monitor progress with
implementation, and will be subjected to agreed-upon “Codes of Good Practice”
benchmarks and measurable targets concerning the proportion of enterprises that
achieve a satisfactory rating based on the Scorecard (e.g. SAWB will have to ensure
that say 30% of all enterprises score more than 70% within three years, 50% within five
years and 80% within eight years). In this manner the industry will reap the benefits of
hard targets as well as the benefits of flexibility.

8.   Implementing the WIP: institutional and management systems

The South African Wine & Brandy Company (SAWB): The South African Wine &
Brandy Company (SAWB), a Section 21 Company, is tasked to drive and manage the
Vision and Wine Industry Strategy Plan through a range of industry related tasks,
programmes and responsibilities.

The SAWB mission is to “enhance the strategic environment for the benefit of the
South African wine industry”.

The core tasks of the SAWB in achieving this mission are:
  • To provide strategic collaboration and representative leadership in the wine
     industry;
  • To represent the industry; and
  • To initiate, co-ordinate, drive and monitor the implementation of the strategic
     programmes of the WIP.

The South African Wine & Brandy Company will drive the implementation of the WIP.
The institutional, managerial and organisational structure of SAWB describe the
relationship between the SAWB constitution, the various WIP strategies and the
appropriate sets of operational activities that need to be implemented by the SAWB
annual business programme. In this manner organisational structure will be developed
to optimise the implementation focus of the SAWB business units.



                                                                                     43
Business model: The business of the SAWB will focus on representation advocacy and
promotion.      The necessary knowledge base and networks will be established and
maintained to sustain this focus. The establishment of accords between government and
the wine industry (labour, producers, trade and cellars) and the implementation thereof
will also be a major task of the SAWB. A number of industry business units will
operationalise the WIP.

Institutionalisation of WIP Strategic Programmes: WIP core strategies, strategic
programmes and activities will be institutionalised into the SAWB operation system
through functional business units and offices.      Six business units will support the
SAWB: CEO viz Socio-Economic Development; Human Resources Development and
Training; Technology Innovation and Transfer by the Winetech network; Market
Development and Promotion through the offices of Wines of South Africa and the SA
Brandy Foundation; and Knowledge and Information Systems through SAWIS. A
corporate support system will be institutionalised, dealing with compliances issues and
monitoring, certification and the wine industry integrity system, the legislative
framework, rationalisation and organisational development, etc.

Governing principles and values: The following principles and values will formalise
the management system and organisational structure of the SAWB:

(i)    The SAWB is a Section 21 Company and should be managed in terms of the
       appropriate legal, financial and corporate governance requirements.
(ii)   The SAWB corporate structure, inclusive of the SAWB (CEO’s offices) and the
       various business units, needs to be formal but administratively “lean” and cost
       effective.
(iii) The SAWB structure must be racially and gender representative at Board level and
       at functional business unit level.
(iv) SAWB units/offices will be structured to allow innovation and optimal
       stakeholder participation and ownership.
(v)    SAWB units/offices will each have an own constitution. The SAWB Board will
       approve and amend the constitution.
(vi) Each functional business unit/office will have a Council consisting of the relevant
       stakeholders and experts in order to recognise diversity in the industry and
       optimise stakeholder engagement to provide strategic leadership and support.
(vii) In terms of good corporate governance, each council will be appointed by and will
       be accountable to the SAWB Board. The strategic direction and responsibilities
       per functional business unit/office will be the collective responsibility of the
       SAWB Board, the SAWB: CEO and the leadership structure of each functional
       business unit/office.
(viii) Each business unit/office will be funded as a separate entity.
(ix) Financial support arrangements per business unit will not be jeopardised in the
       process of restructuring and alignment within the SAWB system.
(x)    A Code of Good Practice will be implemented to guide accountability and these
       values in the various entities of the SAWB.




                                                                                     44
SAWB matrix management system: One of the main tasks of the SAWB is to
introduce good governance practice, to create collaborative and symbiotic relationships
and cost saving synergies between the various strategic programmes and business
units/offices. An integrated matrix management system will enable such an interactive
governance approach. Management co-ordination and alignment will be directed at
three levels viz
    • Corporate governance and accountability within the SAWB group (aligning
        Board, CEO and functional business units);
    • Accountabilities between SAWB functional business units/offices and their
        particular stakeholders and members (focussed industry interaction); and
    • Integrated operational systems to co-ordinate and align the business plans of the
        various functional business units/offices of the SAWB (matrix management).

Corporate governance systems: Systems will be introduced to institutionalise a
coherent system of corporate governance. These will include a “code of conduct”; the
linking of business unit councils to the SAWB corporate management matrix, transparent
business plans and the setting of targets, etc. Corporate support systems will be designed
to accommodate innovation, accountability, participation and optimal stakeholder
collaboration.


The relationship with the South African Wine Industry Trust (SAWIT):
The South African Wine Industry Trust is designated as an important structure to
promote transformation in the wine industry through strategic funding initiatives.

A Memorandum of Cooperation between SAWIT and the SAWB will direct the strategic
funding role of SAWIT within the focus of the WIP. The SAWB will provide
professional support to SAWIT to enhance this focus through all phases of the project
cycle.


The role of government: Government, at a national and regional level and through its
appropriate agencies, has a crucial role as partner and stakeholder. The wine industry
provides significant economic and employment development opportunities in production,
trade, exports and tourism. The role of government is crucial in research and technology
development, export promotion, infrastructure development, in economic empowerment
and in social and human upliftment and will be highly relevant to facilitate and support
the wine industry on its growth and development path. As partners, a shared vision and
accord between government and the wine industry is envisaged to provide the overall
thrust and governance system for the WIP.

Monitoring and evaluation: This activity will require that a comprehensive “scorecard”
for the wine industry for each core strategy and strategic programme needs to be
developed to enhance those set in the WIP. Appropriate indicators and targets will be
established in collaboration with industry stakeholders to ensure ownership and
commitment.


                                                                                       45
9.      Financial Support System

The implementation of the WIP will require the mobilisation of support and funds from
industry sources and levies, government provisions, international donors and investors.
The following principles will apply:

      • Projects and activities to be funded will fall within SAWB business plans i.e. to
        support the implementation of the listed strategic programmes.
      • Particular considerations will be given to the Socio-Economic Development and
        Human Resources Development functions of the SAWB.
      • Each SAWB business unit will be self-funding through the mobilisation of
        appropriate “source and application” opportunities and projects (levies, donor
        contributions, membership fees, etc.).
      • The relationship with government institutions to mobilise statutory levies and
        other provisions will be formalised through the SAWB as industry body i.e.
        “NAMC levies”, “SETA levies” and provisions from international agreements.
        Particular arrangements need to be established re the “EU monies” to be allocated
        to economic empowerment and human resources development initiatives.
      • The relationship with bodies such as the South African Wine Trust (SAWIT) and
        other similar type of institutions will be normalised through the establishment of a
        trust relationship and via financial applications and the necessary project cycle
        management interactions.
      • Innovative mechanisms such as equity funds, guarantee schemes, etc will be
        mobilised.


10.      The way ahead

The process to implement the WIP in terms of operational “roll out” will require
continued participative consultations and agreements with a wide range of stakeholders –
industry groupings, civil society, relevant government ministries, departments and
agencies, the broader “Nedlac” environment, and where appropriate, international
agencies. The SAWB, as representative body of the wine and brandy industry will
engage such groups and promote such agreements.             Interaction with the National
Department of Agriculture and provincial departments, the Department of Trade and
Industry and the South African Wine Industry Trust will be positioned as important
activities in this regard. The aim will be to establish and implement memoranda of
understanding (MOU), a “Wine Industry Accord” and “Scorecards” among the wine
industry, the government and other relevant role players to guide and strategically direct
the evolving partnerships to meet the strategic goals of the WIP. This will confirm the
Wine Industry Strategy Plan as a significant South African strategic commitment in the
field of industry collaboration and strategic leadership to pursue a “vibrant, united, non-
racial and prosperous wine industry”.



                                                                                         46
The WIP also provides a strategic thrust to achieve a number of important value
propositions. These include the harmonising of governance arrangements between
government agencies and industry and as such to unlock financial and technical resources
to benefit the positioning of the industry; the coordinated interaction in the global
environment to promote trade of South African wine and brandy products; the
capacitating of the various stakeholders in the industry supply chain to participate in
industry based decision-making; the facilitation of economically sound Black Economic
Empowerment in the industry; and the rationalisation of the application of scarce
resources in various industry endeavours.




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