 Professor Asmal
Chairperson of the South African Wine Council
Ms Thandi Ndlovu
Chairperson of the SA Wine Industry Trust
There have been enormous changes in the wine industry over
the past decade – influenced in no small measure by
agricultural marketing reforms, opening up of export
opportunities and restructuring of the role of the KWV from
about 1997 onwards. Red wines have increased from 15 to 40
per cent of the total – signaling the steady march forward
of civilization; exports have climbed from 12 per cent of
production in 1994 to 45 per cent – the relentless
trajectory of globalisation; production costs have increased
from something like R6500 a hectare to over R20 000;
production revenue has increased to something like R3
billion a year and I understand that profitability remains a
fondly-imagined distant possibility.
But I think we all know that the transformation we have seen
over the past ten years has been just the preparatory phase
for the challenges and opportunities of the decade ahead. So
you will surely agree with me that the establishment of the
South African Wine Council last year, the formation of the
Industry Trust and associated initiatives in marketing,
research and industry development represent most welcome and
timely interventions.
I am honoured to have been invited to join you at this
inaugural Freedom Day lecture. Let me begin by expressing
appreciation for the wisdom and foresight of those who did
the groundwork in bringing the industry together in these
new institutions. Professor Asmal has shared with me his
address at the Vinpro Information Meeting in January this
year, and instructive papers by several participants.
Clearly your debate on challenges and opportunities is
already well under way, and before long you will all,
together with old Father William, be standing on your heads.
This is all for the good, because it helps to look at things
upside down from time to time. Of course I can’t do your
strategic planning for you, but perhaps I can propose a few
wrong-sides up perspectives.
The January meeting correctly indicated the two great
challenges before us: market development and broad-based
empowerment.
Let’s start with growing the market. I understand that you
have identified the United States as a key target market for
the period ahead, and quite rightly, because US sales are
hardly above 3 per cent of South African wine exports at
present.
But the great project of reconstructing American consumption
habits should not be under-estimated. When a nation has
developed a long historical preference for fast-moving
industrial beverages, it is hard to advance the cause of the
noble contemplative arts.
I can probably only tell you what you know already about the
export marketing challenge that lies ahead: there is
over-production of wine worldwide, China is planting 100 000
hectares of vine a year, our industry is fragmented and
production quality cannot entirely be managed or predicted,
with some 600 or so estates and labels it is hard to
coordinate and consolidate South Africa’s marketing efforts
internationally.
But in marketing especially, the upside-down view is the
right perspective on the problem. From the global consumers’
perspective, South African wines are just beginning to come
into view. If we can succeed in expanding that view, then
the global wine lake recedes into insignificance. And so we
need to ask what it is that keeps our wines in view, in
mind, on menus, on order lists, on investment portfolios.
Wines of South Africa has got off to a great start as a
collective marketing initiative, and its work in packaging
and positioning our brands internationally is clearly
central to the market development challenge. This is not
just an advertising account, it is the much more difficult
and organizationally demanding project of constructing a
partnership across some 60 cooperatives and 500 private
cellars, and of collectively branding up to 4 500 distinct
products.
Expanding the visibility of South African wines in the view
of the consumer is about penetrating the fog of confusion
that accompanies information overload in the global product
market. Selling South African wines requires a clear and
consistent message, and clarity of message requires an
industry that works together and combines its resources
effectively.
What should be the content and strategic focus of our
marketing efforts? Those are questions I can’t answer, and
they need detailed and careful review. I can’t even help
very much on how you should consolidate financial resources
for an expanded marketing strategy, except to say that it
can be done and it is a lot better that it should be done by
the industry acting collectively than by government
department acting on your behalf.
But I can say this, because the broad principles of growing
an industry are not dissimilar to the challenges we face in
growing the wider South African economy. You have to take a
long term view, you have to think ten, twenty, thirty years
ahead; you have to let the numbers and the analysis speak
and be wary of pat answers and sweeping judgments; you have
to listen to the experts and let the debate unfold even if
it leads in uncomfortable directions; you have to confront
barriers and difficulties boldly and forthrightly.
There are also several pressing challenges, globally and
domestically, that your industry unavoidably shares with
other sectors and indeed with wider humanity.
Environmental considerations are already recognised in your
Council’s agenda and have come to the fore in various
projects, on individual estates or jointly. Effective and
responsible management of water is an issue that I know
Professor Asmal will keep under close scrutiny. Habitat
conservation, and the appropriate balance between adaptation
and preservation of the landscape that is under your
trusteeship, may appear in the short-term to be complicating
and cost-raising factors. But these are also central aspects
of long-term sustainability and they bring at least some
opportunities for diversification that holds commercial
potential.
Research and technology improvements are important elements
in long-run industry development, and in this respect as in
the environmental arena, I am mindful that there is scope
for better cooperation between industry and government. We
have considerable strengths on which to build – good
research facilities and excellent university resources,
sound environmental legislation, for example. I am advised
that in the SA Wine and Brandy Company’s 2006 submission to
the Ministerial Review Committee on Agricultural Marketing,
several recommendations were made for improvements in
research cooperation, in combating crime and fraudulent
activities, addressing congestion or delays in the ports and
speeding up international negotiations that affect market
development, amongst other matters. Ongoing and better
focused dialogue between industry and government is the key
to making progress in these areas.
I understand that the industry submission also proposes that
the excise duties on wine are excessive. This is a view that
enjoys my sympathy, and I will pass on the concern to my
officials. But I need to caution that on these matters
industry objections and Ministerial sympathy are not always
sufficient to counter the weighty advice that the Treasury
musters each year when it comes to constructing the annual
budget.
Tax is just part of the larger framework of control over the
use of alcoholic beverages, but it is a reminder that we
still have some way to go in addressing issues of social
responsibility in this industry. We should think of this as
part of both the empowerment and social transformation
agenda and of market development in its more inclusive
long-term sense. I have in mind both the general
contribution of the wine industry to promoting responsible
drinking and to the more specific challenge of addressing
alcohol abuse on farms and its various effects, which
include the continued high incidence in the Western Cape of
foetal alcohol syndrome. I believe the industry needs to act
more decisively in this area and should not shrink from
doing so publicly, in partnership with other role-players.
But the positive sides of empowerment and social investment
also need more visible expression and public discussion.
Housing, access to education and health care, deliberate
interventions focused on the quality of schooling, training
and business partnerships, co-ownership and joint ventures
with new entrants to the wine industry – are all
contributing to building a South African future in which
growth and opportunities are shared. Progress in these
activities needs to be accelerated.
Although individual efforts on farms and in factories and
local communities will always play a prominent role in the
progress of working conditions and social advancement,
collective undertakings also have their place. I am mindful
that government, for its part, has concentrated efforts over
the past decade on policy and programmes of general
application. Indeed in several respects we were
Constitutionally bound to take this route.
But in the decade ahead, we need to recognise also that
social progress will depend increasingly on adapting
development programmes to the particular circumstances of
different industries and communities and groups.
In the challenge of building a broad-based social security
system that contributes to improved unemployment insurance,
survivor benefits and retirement savings for working people,
for example, we are going to have to confront the particular
difficulties of accommodating seasonal and irregularly
employed farm workers.
In the challenge of creating job opportunities for rising
numbers of young work seekers we clearly have to do much
better at adapting training and further education programmes
to both the sectoral and industrial skills shortages that
are emerging and the shortcomings of the school system at
present.
In the challenge of building welfare services that meet
people’s practical social needs we have to adapt to the
impact of HIV and Aids on families and communities, but also
to the particular kinds of social fragmentation or
dysfunctionality that characterise Western Cape farms or
townships.
In the challenge of building industries that can grow and
compete successfully on the global market, we have to locate
the particular technological shortcomings that may be
holding back progress or the logistical bottlenecks that
interfere with more streamlined market access or the special
skills requirements that need to be met through a new
training or education programme.
In the challenge of constructing a public administration
that adapts to modern requirements we have to invest in IT
systems that actually work and municipal planning processes
that keep pace with residential and commercial and
industrial development opportunities.
And in the challenge of managing a faster growing economy,
we have to find the right ways of ensuring that marginalised
people are not left further behind, and that the benefits of
growth reach those without skills or education, reach rural
villages and congested townships; that constructing
universal access to the internet does not come at the
expense of universal access to sanitation.
The challenge
before us is no less than this: to give considered,
intelligent, practical effect to both market development and
empowerment across an increasingly broad array of social and
economic opportunities. That is what growth brings: more
opportunities; greater challenges. Building a future in
which freedom is fully enjoyed by all remains a formidable
challenge for us all. But with the right institutions in
place, and with the kind of leadership that can bring
together those who need to work together, I know that the
wine industry can play its part, and more.
Thank you.
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