Adapt or die the death of negative growth and non-relevance, warns BEE consultant

Friday, 20 August, 2004
Jeanine Wardman
At a panel discussion on Black Economic Empowerment (BEE), organised by financial consultants and auditors, Deloitte, this week, experts urged the wine industry to consider BEE as part of their businesses' growth strategy and as contributing to the industry as a whole in terms of increased productivity and improved international competitiveness.

Cormac McCreesh, a partner in Deloitte's corporate finance division, told an audience of 150 that gains in market share would reward BEE pioneers in the wine industry. He added that negative growth and non-relevance await those who procrastinate indefinitely.

Dr. Johan van Rooyen, CEO of the South African Wine & Brandy Company (SAWB), represented producers' interests and called BEE 'a management issue'. Government incentives, a realistic timeframe and flexibility were some of the issues Van Rooyen raised.

Nosey Pieterse, President of the Black Association of the Wine and Spirits Industry (BAWSI), represented labour on the discussion panel and criticized  'pseudo-empowerment' and a 'soup kitchen mentality' whereby empowerment transactions are structured around 'the scraps off the table' of white-owned wine businesses.

Pieterse said that the South African wine industry has grown from exporting 20m litres to 220m litres in 10 years and questioned whether corporate social responsibility investment has increased as exponentially as export volumes.

Mr. Jeffrey Ndumo from the Department of Trade and Industry urged the wine industry to 'do it right' by ensuring broad-based BEE is achieved. He said that real BEE is more than shareholding and that the criteria qualifying as 'indirect empowerment' on the proposed wine industry BEE scorecard, incorporating aspects such as corporate social responsibility, employment equity, skills development and training, are very important.

Skills development and training as well as the empowerment of procurement, i.e. empowerment of the complete wine value chain, will stimulate industry growth and ensure sustainable prosperity by 'growing the cake'. Ndumo emphasized that investments in growing the local wine market will safeguard the industry against the cyclical ebb and flow of international markets and currency fluctuations.

'BEE is imperative for democracy and economic growth as it ensures that current economic bystanders are given a stake in the progress and stability of our national economy.'

Ndumo said that a positive attitude towards BEE would secure government's support of the wine industry and its efforts in this regard.

Answering a question from the floor, Cormac McCreesh said that in his opinion the corporitisation of co-operatives is 'the only way forward' in terms of BEE and that the existing co-operative business model does not lend itself to the successful and strategic implementation of BEE.

McCreesh offered the following key BEE considerations for the wine industry:

1.BEE should be part of a business' growth strategy.
2.BEE should be implemented using a holistic approach and address all the criteria of the scorecard, not just equity.
3.The successful implementation of BEE largely depends on one's mindset, e.g. is BEE seen as a cost or an investment.
4.Vendors should be prepared to contribute in some way toward the funding of BEE transactions.

Media queries: Sue Brewitt, Corporate Communications Consultants
Tel: 011-783 8926

Michael van Wyk, Deloitte
Tel: 021-670 1528