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Opinionista

Some handouts are more equal than others

Michael Fridjhon is South Africa's most highly regarded international wine judge, the country's most widely consulted liquor industry authority, and one of South Africa's leading wine writers. Chairman of the Old Mutual Trophy Wine Show since its inception, he has judged in countless wine competitions around the world. Visiting Professor of Wine Business at the University of Cape Town, he has been an advisor to the Minister of Agriculture and is a recipient of the French Chevalier de l'Ordre du Mérite Agricole. Worldwide winner of the Louis Roederer International Wine Columnist of the Year award in 2012, he is the author, co-author or contributor to over 30 books and is a regular contributor to wine publications in the UK, France, Germany and China. He is the founder of winewizard.co.za , a site which specialises in scoring South Affrican wine and guiding consumers to excellent value for money and quality.

Twenty-one years into democracy we are not even close to a self-sustaining economic equilibrium and there's no sign that this is likely to change in the foreseeable future. It would be naïve to imagine that the grants are going to go away, which means both the expectation and the dependency are likely to become ever more structural and inflexible. However, not all handouts, not all skewings of the natural order, are equal.

There’s a mischievous mail doing the rounds which juxtaposes a communication from SANParks with one from the Department of Social Development. The former urges visitors not to feed the animals because “the animals will grow dependent on the handouts and will not learn to take care of themselves”. The latter deals with the social grant system administered by the department and claims credit for “assisting 16 million unemployed and other people in need of help”.

There’s no doubt that the redistribution effected by taxing the roughly six million South Africans whose official income exceeds the tax-free threshold in order to provide hand-outs for the indigent, the orphaned and the disabled contributes significantly to the country’s social stability. In an ideal world a decent and properly accountable education system and an economic environment free of unnecessary regulations would have been preferable to the grant dependency which contributes to the ANC’s hold on power. Twenty-one years into democracy we are not even close to a self-sustaining economic equilibrium and there’s no sign that this is likely to change in the foreseeable future. It would be naïve to imagine that the grants are going to go away, which means both the expectation and the dependency are likely to become ever more structural and inflexible.

However, not all handouts, not all skewings of the natural order, are equal. How much longer must the children of previously disadvantaged obtain preferential treatment – priority access to tertiary education and to employment, for example? They were never victims of Apartheid, just victims of the democratically elected government. As long as there is an expectation that the normal laws of the universe – everything from gravity to performance criteria – can be suspended, people won’t see labour as the essential pre-requisite to obtaining an income. A social grant which keeps a family alive, which brings food to children where there is no adult head of the house and keeps the disabled and elderly from starvation, is vastly different from some corporate hand-out designed to satisfy a BEE criterion, and where the recipient feels no obligation to do anything in return for the payment.

Massmart has been operating an empowerment project in the wine industry. Under its umbrella about a dozen “brands” (“labels” might be a better term) that are nominally black-owned have enjoyed preferential listings at the Makro wine stores, together with generous funding to drive brand-building and sales. The idea appears to be that if these products gain some traction, either in the traditional trade or because they obtain support from black consumers finding their way into the market, it will make a valuable contribution to transformation in the industry. As an added (and potentially more important) benefit, at least from a revenue perspective, these ranges have also obtained listings in Walmart stores abroad.

On paper, this is a bold and potentially valuable contribution to effecting a level of change in the ownership of brands in the industry. I must assume that the beneficiaries have not been asked to commit serious sums upfront: they have to manage their supply relationships, they have to assist in selecting product they deem suitable for their target market, and they have to invest time and effort in getting real momentum behind their wines.

Most of these brands have been present at a series of wine shows I am involved in organising. Their set-up arrangements are organised for them, and the costs of their being there, (stand space, transport of trade samples, etc.) are funded by Massmart. Unlike other exhibitors who have to manage their own paperwork and their own logistics, these beneficiaries of Massmart’s generosity merely have to swan in, stand behind their stands for four hours per day, and talk their products on to the market.

What struck me – and it took a little time for this to dawn on me – was the absence of the principals at these events. Promoters had been roped in (and presumably paid for by Massmart) to do the talking, selling and brand building which ought to be – as I see it – the key responsibility of the brand-owners. Unsurprisingly, the rent-a-promoters could never be as convincing as a brand owner. Besides the palpably different levels of commitment which characterise an engagement when the owner, rather than an employee, speaks on behalf of the product, there’s the much more tangible question of product knowledge. Even the best trained promoters are unlikely to be able to answer the kind of questions wine buffs like to pose, and it is in that kind of nuanced communication that the authenticity of a wine is actually established. Asked, for example, where the fruit for some of the more impressive brands had come from, I was told nothing more precise than “somewhere in the Cape”. Since most of these so-called empowerment brands operate as joint ventures with established wineries, the one critical piece of information relates to origin.

Many of the wines are actually very good, and almost all of them are under-priced. Thembi & Company offers a very good 2014 Cabernet for the princely sum of R50. Ses’fikile’s Cabernet is equally good, and just as attractively priced. Cape Dreams sells its 2013 Cabernet for R44 (and a pretty attractive off-dry Colombard for R32). Seven Sisters has several very good wines – a R40 Merlot that is soft and easy to drink and a petillant Moscato (at R30) that was dangerously refreshing. The Euphrosyne Cabernet 2011 – probably the most expensive of the group’s wines – was still good value at R100.

Clearly there’s nothing wrong with the role played by the producer side of the joint venture. The problem I suspect is the generosity of the Massmart handout: it’s all too easy to be in business when there’s no financial risk and someone else does all the work. The model, however, is unsustainable: Walmart’s not going to be picking up the tab forever, and the wineries aren’t going to carry on bottling and labelling product which isn’t gaining a foothold in the market – merely to score BEE points.

I imagine that it must feel quite grand to be the co-owner of a wine business, though the knowledge that you came to the position by way of a handout, rather than through hard work or special expertise must be pretty galling. At a deeper level, this discomfort must undermine the very sense of self-confidence a share in the venture should induce. Even if the whole project were to work – enough buyers somewhere in the world to maintain the long-term viability of the label (so that it becomes a brand) – knowing that your share came by way of a press-ganged gift is unlikely to fill you with pride. In fact, your real self-worth could be at stake, given that the one job you were expected to do, namely, to build the market, you abdicated to a third party. I have a terrible fear that if the effect of 19th and 20th century colonialism (and the racism inherent in the system) was to promote feelings of cultural and personal inadequacy, the end result of the handout culture engendered by BEE will be no different. DM

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