BBC Home
Explore the BBC
BBC News
Launch consoleBBC NEWS CHANNEL
Last Updated: Monday, 9 October 2006, 21:14 GMT 22:14 UK
Black vintners face challenges in SA
By Jamie Robertson
BBC World business reporter in South Africa

Wine making at South African vineyard
The SA wine industry is aiming for 10% black ownership by 2014

The wine estates of South Africa's Western Cape have a unique association with the white colonisation of the country.

The first grapes were pressed just seven years after the settling of Cape Town in 1652.

Huguenot refugees from religious persecution in France brought their expertise 30 years later.

The land, the huge variety of territories, almost unrivalled on the planet, and 300 years of hard work by both owners and employees did the rest.

But the owners were white and the workers on the land were black. Even the end of apartheid didn't change that. Just 1% of the land has moved into black hands.

'Real challenge'

Now the government and the industry is hoping that the Black Economic Empowerment rules brought in three years ago will redress the balance.

But progress is painfully slow.

Black Economic Empowerment has a qualifying clause: it has to be "broad based", which means that companies can qualify as being "BEE compliant" by hitting targets in a broad range of areas, achieving scores on a scorecard.

Wine barrels at South African vineyard
Black vintners require capital to make a success of wine-making

To date the government has allowed different sectors to make up their own scorecards and targets within individual charters.

The wine industry has just completed its own BEE charter and set itself a target of 10% black ownership of land by 2014.

The problem is that even the chief executive of the South African Wine Industry Trust, (SAWIT) Charles Erasmus, is doubtful that this modest target can be hit.

"The real challenge for us is finance," he says. "We have to find the required capital to empower emerging farmers and black people to acquire land and also to build the necessary capital and skills to work that land."

And while the investment has been forthcoming the skills have not.

No guarantees

Several black investment groups have come unstuck. The market is highly competitive with new entrants coming from Eastern Europe and South America, and they found that revenues simply didn't give them the cash flow to support their debt.

And as they turned to SAWIT for support, Mr Erasmus had to choose between hitting BEE targets and commercial logic.

Wine grapes at South African vineyard
The SA wine market faces challenges from Eastern Europe
Business sense prevailed. He said: "If these businesses had an opportunity for five years to succeed and haven't, what guarantees are there that they will succeed in the future?

"We have asked the community to go back and start out over again and this time work closely with people who possess the capacity and required skills."

The wine industry is capital intensive. Modern wine making equipment is expensive and part of the wine industry's charter demands that estates increasingly buy their supplies from black empowered companies.

Mr Erasmus insists that this hasn't inflated costs, and says that white suppliers have rushed to find black partners so they can continue to do business with the industry.

If the wineries are struggling to hit BEE ownership targets they are doing better training and educating their employees.

'Better person'

Moira van de Merwe is a taster on the Bilton wine estate near Stellenbosch. She was brought up in the vineyards.

Her parents were labourers and under apartheid there was simply no prospect of her ever rising into the upper echelons of the industry.

But under a SAWIT scheme she became one of a small band of black employees selected to be trained in the Burgundy wine growing region of France.

The wine producing region of Stellenbosch in South Africa
Stellenbosch is 30 miles away from Cape Town

She brims over with excitement at what she learned and at what she might now achieve.

"It's made me a better person" she says.

"It's given me self confidence. You see the importance of the role you have - even if you are just a worker in the vines - you are still part of the wine, the Merlot or the Pinotage."

She even plans to develop with Bilton labourers their own blend that they can market under a new brand.

And, it seems Burgundy has given her a taste for travel as well.

"I don't want to be just a taster girl," she says. " I want to do the marketing, to go all over the world, and promote the Bilton wine estate."

Aims of the Black Economic Empowerment initiative

SA farmers hope for wine profits
18 Jan 05 |  Business
SA firm's 'fictitious black boss'
12 Nov 04 |  Business
SA firm in wine empowerment deal
04 Dec 03 |  Business

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific