prepared by the

through consultations by the

various SAWB Chambers

representing the

SAWB Drafting Team:

SAWB Management Team:

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

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

• Strategy 1: Economic empowerment and development …………….. 17
• Strategy 2: Social development and upliftment ……………………… 21
• Strategy 3: Human resources development ………………………….. 24
• Strategy 4: Market development and promotion ……………………. 28
• Strategy 5: Knowledge and information systems …………………... 32
• Strategy 6: Technical innovation and transfer ……………………… 33

1. The way forward ………………………………………………………… 43

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 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 the repositioning of the sector which has recently moved away from a highly regulated environment to face global competitiveness.

The South African Wine Industry Strategy Plan (WIP) is a watershed commitment, driven by the South African Wine and Brandy Company (SAWB) on behalf of the South African wine industry to deal with these fundamental changes. 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 recent 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 and 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".

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 "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".

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 of the industry envisages that 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 of historically disadvantaged and economically marginalized South Africans. Through all this the industry will perform as a dominant economic force in the SA economy."

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

• 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 strategic goals will be implemented through six industry programmes:

The core focus of this strategy will be on economic development in general, to support Black Economic Empowerment and to enable historically disadvantaged groups in the wine industry to create economic infrastructure, exploit and participate in business opportunities along the full value chain in the industry.

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.

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 to historically disadvantaged groups and persons to participate in a productive and sustainable manner.

The core focus of this strategy is to promote "Brand South Africa" through generic market development and provide promotional, marketing and business development services to the whole industry. 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.

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

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.

The purpose of the Wine Industry Strategic Plan is to align and focus the wine industry into coherent and integrated strategic activities 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;
• 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 transformation strategies and be monitored by the SAWB. A proposed checklist of indicators will be developed within the following categories.

• Human resources development
• 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
• 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 levels and time scales for the different stakeholders. Once industry 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" and hard targets concerning the proportion of enterprises that achieve a satisfactory rating based on the Scorecard (for example 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.

Thus, the SAWB Mission is to "create a better life for all in the wine industry through collaboration and strategic leadership", the core tasks of the SAWB are:

• To establish strategic collaboration and leadership in the wine industry;
• To represent the wine industry; and
• To initiate, co-ordinate, drive and monitor the implementation 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; Technology Innovation and Transfer through the Winetech network; Market Development and Promotion through the expanding activities of Wines of South Africa 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.

Systems will be introduced to institutionalise a coherent system of corporate governance. These will include a "code of conduct" and the institution of a corporate management matrix. Systems 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, 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. The wine industry provides significant economic and employment development opportunities in production, trade, exports and tourism. The role of government in aspects such as research and technology development, export promotion, infrastructure development and social and human upliftment will be highly relevant to facilitate and support the wine industry. 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 process to finalise (and evolve) 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 ministeries, 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, will be positioned as first steps in this regard. The aim will be to establish 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 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 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 9^th 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.

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. 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 effective engagement with government agencies and global governance structures to promote these aspects such as GATT, EU, the World Wine Trade Group, OIV, etc. At an industry level three thrusts are clearly important in this 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.

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 of Agriculture and Land Affairs, other senior cabinet members of the Economic Cluster, and the agricultural industry on 21 November 2001 as thé 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 contextualize the 2003 initiative towards a Wine Industry Strategy Plan.

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

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 & 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 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 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.

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.

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 complementarily 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.

Conditionality in planning is nevertheless necessary because the wine industry - being agricultural 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 the 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 need to be dealt with through 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 needs 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 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 focused 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 Wijngaard.
• 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 had 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 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 from 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
• Structure an effective research, technology development and transfer system for the industry.

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 Spirits Industry (BAWSI), focussing on socio-economic empowerment and human resources development, 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, NGO’s 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 SAWB, with the great majority of industry stakeholders represented in four Chambers - Wine Farmers, Labour, Cellars and the Trade – is responsible to align the total wine industry and implement a strategic plan, accommodating all the above considerations.

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

The close alignment of such a 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, 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.

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 levels 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 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 the value chain. 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 competitiveness of the industry. This means that the value chain has to be managed as an integrated network rather than as a series of linearly connected functions. 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 variety of different avenues for empowerment that results from this approach has the added advantage of catering for the different needs and capacities of the participants in empowerment programmes.
• The need to accommodate to 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.

In 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 effort should be on "win-win" solutions. Appropriate strategies and mechanisms to foster such outcomes should therefore guide application and implementation.

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 were:

• 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.

All 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 "dove tailing" 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 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. Thus lies the identification and implementation of strategies for the future development of the industry, given the conviction that access and equity is a key to the achievement of the other strategies. A more detailed exposition of these aspects will be required in a comprehensive wine industry strategy plan. Further, 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 be on 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 dealt with. The operational strategy will be to define social empowerment mechanisms and targets 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 to 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 on the promotion of "Brand South Africa", provision of generic market development, promotional, marketing and business development services to the whole industry; to promote socially responsible consumption of the produce of the vine; 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 concentrates sub-sectors to operate 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 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. These will include 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, coordination and financial support mobilisation to link service providers to industry needs.

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.

The core purpose of the Wine Industry Strategy Plan is to:

• provide the strategic focus, leadership and indicators of progress for the 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

In order to achieve the Core Purpose and Vision, the WIP will focus on the following strategic goals and programmes:

• 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.

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

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.

There exist a range of government policies, laws and regulations at national and provincial level that are 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 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 targets set. To succeed, the industry requires an institution whose main purpose will be to represent its interests in the process of restructuring, and in co-ordinating 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:

1. 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 into the evolving policy framework;
• Undertake a pro-active advocacy role in representing wine industry interests in empowerment policy debates in South Africa.

• 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 that 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 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 Land Bank 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.

3. 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 particular 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 inter alia mentorship programmes;
• 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.

• 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, bench mark 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).

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.

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.

There are a wide range of government policies, laws and regulations that 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 to improve access to health services, especially for the rural poor in the wine industry.
• Social policies, including welfare, housing, youth, gender, recreation etc. and its impact in the wine industry.

The labour legislation identified above applies to all facets of the wine industry. The WIP intend to facilitate the application of these 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 2003. Further, research shows that, while there has been some 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 marginalized 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 in 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 focused 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 that it is more difficult to assign accountability for any progress against these targets. Nevertheless, the main purpose of the social developed strategy of 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 set in place mechanisms to ensure that these targets are not only met, but continuously improved upon. In this respect, it is clear that the principle objectives around which such targets should be set are to ensure that all role players can:

• Achieve a representative voice of 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 this 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 families should be a particular focus area.

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

1. Social development in the industry:

• Develop a strategic plan to direct social development in the wine industry;
• To 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.

1. 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.

1. 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.

• 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.

The core focus of this strategy is to promote human capacity 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 resource 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 resource 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 for formal primary and secondary education towards learners and institutions from the poorer communities of South Africa, and away from a purely academic focus to accommodate a wider range of learner needs;
• 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 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 (SETAS).

It is furthermore evident that the field of human resource development has changed radically in the past decade, and creates unique opportunities for the wine industry in tailoring 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 be attended to:

• To promote the wine industry as a viable, professional and exciting workplace;
• To institute and develop an integrated and co-ordinated industry wide human resource development plan to facilitate HR policies, objectives and strategies to benefit both the industry and the people that 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 that have been identified throughout the value chain of the industry;
• To identify and fill the gaps in training, through engagement with service providers and to promote career opportunities and a culture of life long 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 to farm ownership 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;
• 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:

• To develop a Human Resources Development 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 Resource Management industry standards (taking into account international Best Practice) to be used as a benchmark for the stakeholders.

• 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 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.

• 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.

The core focus of this strategy is to promote "Brand South Africa" through generic market development and promotional, marketing and market development services to the whole industry.

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 dealt with. The initial focus in the WIP will be on wine and brandy.

Serving the Wine Sector: The wine sector is changing fast 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 focused 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 ten fold 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 higher quality segments. Unequal "playing fields" in the global trade environment also needs to be dealt with. 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, BEE’s and PDI’s 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 to promote socially responsible wine consumption, the consumption of good wines, to grow the capacity of existing and new entrants especially BEE initiatives and assist wine tourism ventures to increase profitability through participation in the wine business.

Strategic programmes, activities and tasks:

1. Promote "Brand South Africa":

• Develop the "Brand South Africa" concept as an exclusive protocol related to promote and protect 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 promotion 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 to provide the signing of the particular memorandum.
• To support the effective positioning of "Brand South Africa" in the global market through effective quality and logistics management innovation;

1. 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.

• Develop a comprehensive information resource on South Africa’s key markets, which is constantly updated. This will be disseminated through publications and workshops.
• SMME’s 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 high 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 into trade policy development initiatives (ATF; DTI initiatives, etc).

1. 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 promotion 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.

1. Support socially responsible wine consumption:

• Promote socially responsible and health focussed campaigns;
• Support ARA initiatives;
• Consider market initiatives to deal with the "foilbag" dilemma.

1. Support marketing development skills:

• A legacy of the past is a racially and gender skewed wine marketing corps. The industry will set targets for changing 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.

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, 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 promoting 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 would benefit persons from previously disadvantaged communities in the marketing fields of advertising, public relations, promotions and tourism.

Strategic programmes, activities and 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 on the brandy industry and focus on the following:

1. To support a value growth strategy in key markets

• Develop a strategic approach to local and global markets;
• Develop unique Brand South Africa protocol;

• 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;
• To support the effective positioning of "Brand South Africa" in the global market through effective quality and logistics management innovation;
• To support the effective positioning of "Brand South Africa" in the global market through effective quality and logistics management innovation.

• To develop an innovative Brandy tourism strategy;
• To 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.

1. Market information and intelligence service (in collaboration with Strategy

• To redefine its target markets in terms of priority and to proactively disseminate information to these respective audiences;
• To 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;
• Supporting publications and providing 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 attended to;
• Establish appropriate mentorship programmes;
• Link into trade policy development initiatives (i.e ATF, DTI, etc).

3. Support marketing development skills:

• 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.

• Promote socially responsible and health focussed campaigns;
• Support ARA initiatives.

The core focus of the knowledge and information systems programme is to provide trusted knowledge based industry information and generic intelligence 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 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 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:

1. Information provision:

• Accelerate dissemination of standardised information outputs developed in response to industry needs. Previously excluded groups will be a particular focus group.

1. Management information systems:

• Ensure that a coordinated 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.

1. 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.

1. Dissemination:

• Accelerate dissemination of information outputs.

1. 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.

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.

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 high emphasis on the operational application of wine industry R&TD. All this implies enhancing inventiveness and innovation in the wine industry through technology transfer. This will be achieved through initiatives to:

• enhance the 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 on it.

Direct interaction with other SAWB strategic programmes to enhance and, where possible, develop integration and complementary between these activities 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.
• identification of training needs and facilitating the training of resource poor producers.

Transformation (exposure, training and research support of previously disadvantage groups) should be supported by:

• making bursary funds available for PDI`s students participating in wine industry related research projects.
• funding wine industry related research projects where PDI`s are involved as project leaders and/or technicians.

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 coordination 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 research programmes have been identified:

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. Details will be developed through industry wide consultation processes with stakeholders along the lines of the following table:

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 regards, SAWB will be charged with responsibility to monitor progress with implementation, and will be subjected to agreed-upon "Codes of Good Practice" 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.

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 "create a better life for all in the wine industry through collaboration and strategic leadership".

The core tasks of the SAWB in achieving this mission are to:

• To establish strategic collaboration, networks and representative leadership in the wine industry;
• To represent the industry; and
• To initiate, co-ordinate, drive and monitor the implementation of the WIP.

The South African Wine & Brandy Company 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 programme. In this manner organizational structure will be developed to optimise the implementation focus of the SAWB business units.

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, farmers, 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. Five offices are planned to support the SAWB: CEO viz Socio-Economic Development; Human Resources Development; Technology Innovation and Transfer by the Winetech network; Market Development and Promotion through the expanding activities 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, monitoring, industry intelligence, the legislative framework, rationalisation and organizational development, etc.

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

3. The SAWB structure must be racially and gender representative at Board level and at functional business unit level.
4. SAWB units/offices will be structured to allow innovation and optimal stakeholder participation.
5. SAWB units/offices will have an own constitution. The SAWB Board will approve and amend the constitution.
6. Each functional business unit/office will have a Council consisting of the relevant stakeholders and experts in order to recognize diversity in the industry and optimise stakeholder engagement to provide strategic leadership and support.
7. 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.
8. Each business unit/office will be funded as a separate entity.
9. Financial support arrangements per business unit will not be jeopardized in the process of restructuring and alignment within the SAWB system.

SAWB matrix management system: One of the main tasks of the SAWB is 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 approach. Management integration and alignment will be directed at three levels viz

• Corporative 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 (focused 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 institutionalize a coherent system of corporate governance. These will include a "code of conduct;" the link up of business unit councils into the SAWB corporate management matrix, transparent business plans and the setting of targets, etc. Corporate support systems will be designed to accommodate innovation, participation and optimal stakeholder collaboration.

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 in aspects such as research and technology development, export promotion, infrastructure development and social and human upliftment will be highly relevant to facilitate and support the wine industry. 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.

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 mobilization of appropriate "source and application" opportunities and projects (levies, donor contributions, membership fees, etc.).
• The relationship with government institutions to mobilize statutory levies and other provisions will be formalized 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 normalized 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.