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If you talk about black economic empowerment in government circles, or where big business boffins gather in boardrooms, it has a very different meaning. Turn the bottle around, look at the front label and empowerment has a different face: Black economic empowerment is an integrated, coherent socio-economic process by which management, control and ownership is transferred in such a way that it achieves sustainable development, economic growth and prosperity.
The concept of Black Economic Empowerment (BEE) was introduced to South African politics in the late 1980s, reflecting the realisation by both government and business that quantitative and qualitative redistribution of wealth was essential to ensure the future viability of the South African economy.
It means ownership, influence and management in black hands - still a rare picture in South Africa's wine industry. The presence of black companies, directors and shareholders might still be lacking, but this should nevertheless not deny the transformation efforts and huge strides that have been taken in the industry in the past few years.
"We need a snowball effect," is how Marthinus Saunderson of the South African Wine Industry Trust, describes the need for more rapid transformation in the industry.
Papkuilsfontein
The highest profile project that involves black business in the wine industry up to date is Distell's Papkuilsfontein Vineyards in Darling. The establishment of a joint venture in 1998 involved a Gauteng-based group of taverner entrepreneurs, Leopont 98 Properties (Pty) Ltd (five of the directors from Gauteng and one from the Western Cape), which holds 36% of the shares, the Maluti Groene-kloof Community Trust (comprising Papkuilsfontein workers and disadvantaged community members) holding 15% and Distell taking a 49% share in the development.
Distell will divest itself of its shareholding as the start-up capital is repaid. This is anticipated to take about 12 years and will be funded from the proceeds of the sale of grapes. Papkuilsfontein grapes are used for the Tukulu brand, which also belongs to the joint venture partners. As Papkuilsfontein does not yet have its own cellar, Tukulu wines are made at Distell's Nederburg cellars by winemaker Wellington Metshane, the first recipient of the Patrick Grubb Scholarship.
KWV
Another leading player in the wine industry, KWV, is focussing its empowerment projects solely through its extensive funding of SAWIT. Both KWV International and KWV South Africa, however, have received the Impumelelo Top 300 Black Empowerment Companies Certificate for social responsibility in the past few years.
Winds of Change
Swiss owned Savisa refers to its empowerment brand, Winds of Change, as "a business proposition with a social dimension". This empowerment project on the slopes of Paardeberg took the social responsibility philosophy another step further - the Sonop vineyards being worked by the Mountain View Communal Property Association are all organic. Sold under the Winds of Change label, part of the income generated from the wine is channeled back into the community. Commitment to the project also extends beyond the borders of the farm: everyone in the production chain - grower, agent and retailer - has agreed to share their margins with the project by ensuring that every case of wine sends £1 back into community coffers.
VinPro view
Where empowerment projects at farm worker level are concerned, Adrian Fry, a viticultural consultant for VinPro specialising in new farmers, talks about three different groupings.
Many of these projects, especially in the first category, are run independently, and are not registered in any formal structure. In contrast to that, several examples from the other two categories are well-known, even far beyond the boundaries of the industry.
New Beginnings
A local role model in transformation, and one that took the very first steps in granting black vineyard ownership, is New Beginnings (initiated by Alan Nelson from Nelsons Creek). To outsiders, tourists, politicians, academics and more, New Beginnings was their first case study of farm labourers pooling the housing subsidies granted by government and establishing a company that has built up 20 hectares of land. The company has bought its own pick-up truck and its own trailer. Each one of the members has life cover, a retirement annuity and all valuables are insured. Each family has also received cash as dividends from their shareholding.
Thandi
Much in the same vein as their Paarl counterpart, Thandi - an empowerment project in Grabouw - has evolved through a partnership between Paul Cluver, Safcol (department of forestry), the local community and an Anglican social development body in 1999. Other shareholders include farm workers, and black-owned Umhlobo Investments. Safcol has subsequently withdrawn, while UK retailer Tesco has come on board to mentor the project in conjunction with Vinfruco. Kromco, the Elgin fruit company and Capespan now also form part of a "network of caring supporting organisations". With the grape farming part of the operation well on its way, Thandi's shareholders are planning to build a cellar for their wines.
Fair Valley
This initiative from Charles Back of Fairview, follows a similar pattern. Altogether 16 worker families own about 17 ha of land in Paarl. Their company, the Fair Valley Workers Association, has 'the responsibility of generating income for the future development of our farm.' Fair Valley wines are currently made from grapes sourced elsewhere and produced in the Fairview cellar. Business income for these workers, however, extends beyond vineyards and wine to include cheese packing and several tourism initiatives.
Goedemoed
A recent initiative in the Olifants River has seen workers benefit from Absa financing an empowerment project through Khula Enterprise's land reform credit facility. Goedemoed's deal, where farm workers became 30% shareholders, was made possible by an agreement between KWV director, Abrie Botha and the land affairs department to share the cost of building an irrigation dam. The trust that was set up will manage production from 50 hectares of vines.
Bawsi's reservations
"Many of the current transformation projects are pseudo empowerment", is Nosey Pieterse's comment on behalf of the Black Association of the Wine & Spirits Industry (Bawsi). "The fundamental characteristic of any empowerment initiative is independence, and we see many of the people currently involved in empowerment projects still wholly dependent on a farmer or owners. Often these projects are also simply a marketing ploy". Nosey emphasises that a commitment to black economic empowerment must result in changing the life of people, and the ownership of land, sustainably and permanently.
Legislation to set targets
Government's policy on black empowerment will soon pave the way for legislation to guide the empowerment process. It seems that it will be expected of every industry to draw up charters on empowerment through a voluntary process that includes the various stakeholders. The liquid fuels charter that has set a 25% black ownership target in the energy industry by 2010 is the model.
President Thabo Mbeki himself has said: "We want to embed empowerment more lastingly and solidly in the economy." For every party involved this means projects and partnerships that are sustainable and make economic sense.
The wine industry will have no choice but to adhere to these guidelines. A key requirement in this process will be a broader perspective from all sectors of the industry - one that has a very internally focussed perception of black empowerment and transformation beyond the vineyards and into the boardrooms of our industry.
More detail on transformation initiatives in the South African wine industry is available on WOSA's website.
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