Draft regulations under Western Cape Liquor Act bad news for wine industry

Monday, 16 February, 2009
Cluver Markotter Incorporated
Draft Regulations under the Western Cape Liquor Act were published for public comment in December. The period for comment ended on 30 January.
The Act was signed by the Premier last year and it is expected to come into effect around the 20th of March after the comments on the Regulations have been processed and approved by the Minister.

According to Danie Cronjé, the Director of the Liquor Law Department at Cluver Markotter Incorporated, the draft Regulations contain a number of provisions that will have a negative impact on the wine industry.

Additional requirements in respect of applications for new liquor licences will increase the costs associated with the application. It will also probably take longer before a licence is issued. The application fees payable upon lodgement of applications have been increased significantly. This also applies to applications to amend the conditions of existing licences and transfer thereof to new owners.

The annual licence fees for certain businesses has also been increased significantly. A wine shop will pay annual licence fees of R5,000 and wine estates between R500 and R7,500 depending on the production. Both wine shops and wine estates will have to make application at considerable cost to extend their trading hours beyond 18h00 and will have to pay an additional R4,000 per year in respect of these extended trading hours.

In terms of the draft Regulations off-consumption licenced premises such as liquor stores and wine estates will not be allowed to sell more than 30 litres of wine or 10 litres of spirits to one person on a particular day unless that person has obtained permission from the Chairperson of the Liquor Licencing Tribunal. It further prescribes that a person without a liquor licence will not be allowed to have more than 30 litres of wine or 10 litres of spirits in his/her possession without permission from the Chairperson.

As these requirements will obviously have severe consequences for the wine industry if they remain, Cronje submitted representations on behalf of role players in the wine industry requesting that these limitations be scrapped.

The organisers of festivals or special events who will be using temporary licences or special event licences will also be affected by the draft Regulations. In terms of the application process prescribed in the draft Regulations the granting of these licences can take up to two months. In addition to the application fee of R250, the temporary liquor licence will cost R350 per day and a special events liquor licence R500 per day.

It is unlikely that applicants will apply for the on- and off-consumption licence which was eagerly awaited by many wine estates to accommodate both the tasting room and restaurants, as the annual licence fees for such a licence will be R6,500, while the licence fees for a separate restaurant licence will only be R1,500 and for the micro-manufacturing licence i.r.o wine sales will only be R500 (for a wine estate which produces less than 250 000 litres of wine annually).

The owners of hotels and pubs will be aggrieved by the fact that their annual licence fees will be R5,000 whereas as a restaurant, sport club, or coffee shop will only pay R1,500.

Wine producers who lease cellar space will have to apply to the Liquor Board for permission to do so in a procedure that could take up to two months. The application for permission lease cellar space was retained in the Act despite the fact that representations was submitted to the Portfolio Committee requesting that producers who lease cellar space be allowed to do so without formalities as long as the premises are licenced under a provincial liquor licence or national registration as manufacturer.

Despite indications given during the hearings on the Western Cape Liquor Bill that this request will be accommodated that was in fact not included in the Act.

Cronjé, who submitted representations during the public participation process on behalf of the wine industry confirmed that he directed an enquiry to MEC Strachan (who was Chairman of the Committee at the time) on how the omission could be rectified. His reply is currently being awaited.