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Back from visiting South Africa (SA) with our OIV MSc Master in Wine Management, we observed that while official reports and documentaries* highlight alarming working and living conditions suffered by wine farm workers, hundreds of South Africans dedicate their lives to the entire sector’s transformation. The industry still heals from Apartheid’s legacy and can’t hide reminiscent scars such as violent protests less than 5 years ago but professionals and institutions are determined to restore this situation.
Why does the situation still struggle to recover?
The sector’s difficulty of the industry to settle profitability result in persisting inequalities and social tensions. In a recent article**, Jonathan STEYN, OIV MSc in Wine Management graduate and who convenes The Business of Wine at the University of Cape Town says :
SA is the 8th largest wine producer in the world with 4,1% of the global volume. Export is massive, nearly 60% and most of it reaches the EU and the UK … in bulk for the majority. Valorized export faces coexistent major obstacles as currency volatility and high exchange rates. A privileged axis to transform, is local market boost, with an increased but responsible consumption. It currently only reaches 6l per capita. Another axis is to encourage more packaged sales (Vs Bulk).
A qualitative image building as part of the change
According to Jancis ROBINSON : « South Africa makes great, distinctive and under-valued white wines, yet too few people seem aware of the fact ». White wine represents 54% of SA’s production. Chenin Blanc covers nearly 20% of the 98600 ha of the national vineyard. The country owns the world-beating dedicated surface to this rising star. However, gaps in value are as big as double price or more for « 90 pointers » from France or Italy compared to their SA equivalent! The challenge of a qualitative image is partly assumed by WOSA, Wines of South Africa, the industry-wide institute in charge of marketing and communication abroad, one of the pillars of the transformation project.
Together towards a WISE project
Wine Cellars Manager at VinPro, Cristo CONRADIE, underlines that: « Return on Investment of the industry is as low as 2% at the moment ». In other words, it struggles to make any profit at all. « it needs to reach a more viable 5% by 2025 if we want the wine business to build profitability and robustness ». VinPro is a well-established organization representing 3500 SA wine producers and cellars. As a leader for equity and professionals’ rights protection, it is involved in an industry-wide collaborative project with SALBA –SA Liquor & Brandowners’ Association - its equivalent for larger manufacturers and distributors. The project is called WISE –Wine Industry Strategic Exercise. It sets up goals for a more adaptable, competitive and profitable future. A further challenge now is to convince the government to more participation. The project is currently auto-funded by over 80%.
Three cooperating units also interact with VinPro and SALBA into a TRANSFORMATION PROJECT,*** a general initiative for improvement in the industry. Each unit has a specific field of action:
Economic growth needs ethical improvement
With THANDI in 2003, SA became the 1st FAIRTRADE accredited wine producer. It is now the largest with 66% of global volumes. A national equity accreditation entity was also created in 2002: WIETA - Wine Industry Ethical Trade Association. It plays a key role in workers’ rights protection and will multiply audits to accredit the entire volume of wine produced nationally by 2025. Today it reaches only 48%. So far, 45000 wine farm and cellar workers are employed by accredited producers and this number is due to increase.
Ethical also means equal access to work and ownership. Despite the 44 current projects of BEE - Black Economic Empowerment - in the wine industry today, less than 40 brands are black owned. Black community represents 90% of SA and owns only 2% of wine producing land. This is also meant to change in the WISE objectives and should reach 20% by 2025.
Individual initiatives showed the way long ago. FAIRVALLEY’s Charles BACK, since the 90’s, enabled farm workers to own 60% of the company and use the land for their houses and schools. David SONNENBERG, launched empowerment at THOKOZANI since 2007 with the contribution of 35 stakeholders for a sustainable community. BOSMAN, which is another pioneer, is the biggest BEE deal in the wine industry to date.
Education as a main ground for emancipation
From crèche to University, support can be found in several organizations to transmit to the young generations ethical values :
They also provide with comprehension and consideration of proper wine consumption as well as the opportunities it offers to them and to their country.
Being wise and patient is sometimes the best way through an active transformation. Don’t we also assume about good wines that: the bigger the ambitions, the longer the process?
Special thanks to Jonathan STEYN
Marie-Céline WALLERAND & Marie AMIOT
OIV MSc in Wine Management students P29
* 2011 Human Rights Watch report, 2015 ILO Report and 2016 Tom Heinemann’s documentary : Bitter Grapes
** Jonathan STEYN’s article for Business Day, 03/2017 A troubled legacy keeps shackles on wine sector : https://www.businesslive.co.za/bd/opinion/2017-03-28-a-troubled-legacy-keeps-shackles-on-wine-sector/
*** Taking Transformation Forward : http://capewine.org/Transformation/flipviewerxpress.html
Unathi MATSHONGO, VinPro Transformation & Development Office