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PREVIOUS WINELAND ARTICLES   |   WINELAND HOME Money makes the wine go round - but who foots the bill? South African wineries and producers pour out R44 million in statutory levies over a 12 month period into a range of industry activities, including a voluntary fund of R1,4 million to help nurture responsible drinking of alcohol products. ARNOLD KIRKBY made some enquiries to find out how the money flows. According to the South African Wine Industry Council (former SAWB), these levies all focus on implementation of the four objectives of the Wine Industry Strategy Plan (WIP), namely competitiveness, transformation, sustainable natural resources management and social responsibility. The statutory levies are collected under the Marketing of Agricultural Products Act of 1996, in terms of which the Council applies to the Minister of Agriculture every four years to have the levies reviewed. The current period is for 2005 - 2009. Statutory levies focus on generic export promotion, research and development, empowerment and transformation and industry information. Of this 20% must be directed towards transformation activities within these focus areas.The four wine industry business units tasked with implementation and which benefit directly from these funds are: Wines of South Africa (Wosa) South African Wine Industry Information Systems (Sawis) Wine Industry Network of Expertise & Technology (Winetech) Wine Industry Development & Transformation Unit (DTU). The Executive Office of the Wine Council (former SAWB) is also partly supported by these levies, the balance paid by Sawit, VinPro, wine merchant body Salba and Wine Cellars South Africa (WCSA). Wosa receives in the region of R19,5 million a year from the levies. It also receives additional funding (R4 million) from Sawit to help with its myriad projects in the global market to promote South African wines. The Wine-Online project, which was introduced recently, receives R1,4 million. A proposal has been tabled to industry about a further voluntary levy for the Wine-Online project, but this is yet to be accepted. Su Birch, CEO of Wosa, said that in the first year that the Wine-Online project had been in operation, it saved the industry R6,5 million in reduced tariffs. She said Wosa would not survive without levies. With a reliable income stream it was possible to do long-term planning and run projects such as Cape Wine. Birch said voluntary levies don't work. Sooner or later the people who are paying get tired of the freeloaders and it all then falls apart. "We are very aware that no one likes to pay levies, so we really do our best to optimise every cent in the best interest of South African wine. Winetech, which is responsible for initiating, co-ordinating and evaluating scientific and research projects, receives R13,5 million from the research and development levy, as well as additional funding (R7 million) from Sawit. Sawis, which has among its responsibilities the collection of all industry levies, has been mandated with the gathering, analysis and dissemination of wine industry information to all members of the industry. It receives R6,5 million a year to do this. DTU, the new industry business unit to co-ordinate transformation initiatives of the Wine Council still has to get off the ground - an Advisory Council needs to be appointed and a business plan worked out. Until this is done, the R1,88 million from the statutory levy, available for the management and administration of the unit will be banked on its behalf. One of the major tasks of this unit will be to mobilise additional transformation funding on a project basis from bodies such as Sawit, Setas, government agencies, etc. This unit will also be tasked with the monitoring and evaluation of the industry-wide implementation of the Wine Industry Transformation Charter and Scorecard. Voluntary levies don't work. Sooner or later the people who are paying get tired of the freeloaders and it all then falls apart - Su Birch In addition a voluntary grant of about R1,4 million is paid to support the Industry Association for Responsible Alcohol Use (Ara) to assist with the promotion of responsible alcohol consumption, research on alcohol related problems, etc. This is on the same basis as the information, DTU and research & development (good wine component) units. Yvette van der Merwe, executive manager of Sawis, says that no-one hesitates in paying these voluntary dues and they have an almost 100% contribution flowing into the coffers. Her unit has a double industry function: information gathering and dissemination, which fall under the statutory levy and the other is the administration of the industry's Wine of Origin system, whose costs are covered by the Wine & Spirit Board. Through co-ordinated management and cost-effective systems, Van der Merwe's personnel cover both tasks, but there is careful monitoring and recording of services and no cross-subsidisation is permitted. Levies are strictly monitored to achieve the stated objectives. Each of the beneficiary business units, Wosa, DTU, Winetech and Sawis is not only accountable to the Wine Council for such spending, but also to the National Agricultural Marketing Council, their audit conducted by the office of the Auditor-General.

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