February 2015

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1 - TransformationTransformation is an integral part of the South African economy – a reality that can either be viewed as a threat or an opportunity. The wine value chain wants to show its intent to promote transformation proactively in all subsectors involved and embrace the opportunity to grow from transformation initiatives. This may include among other things a look at land reform, promotion of corporate social investment, as well as promotion of black owned brands (development, greater access, etc.). This specific WISE project clusters together a number of different actions / sub projects pertaining to transformation.

Currently the South African wine industry reaps the benefits of generic international marketing of Brand SA, through Wines of South Africa (WOSA) which has this as their mandate. However, through the WISE process the need was identified for greater efforts for generic marketing of wines in South Africa in order to increase the market share of the South African local market for beverages. The aim is to work towards making wine a lifestyle choice, more than an alcoholic beverage. This need forms the basis for this project which will include not only exploring opportunities for a possible new structure with this purpose but also efforts to educate the local consumer to reach previously untapped consumer groupings. Phase 1 of this project will entail research and Analysis and Phase 2 Strategy Development. During Phase 1 (currently under way) and As-Is analysis will be conducted of the alcohol beverage market, wine consumer education, “Brand SA”, International local wine market development case studies and whiskey, chocolate and olive oil consumer market development case studies.

2 – Brand SA local marketing strategy

3 – Wine tourism baseline study & strategy developmentWine tourism is a rapidly growing subsector of the South African tourism industry. Many wine cellars have on-site restaurants, speciality tasting experiences such as food and wine pairing, guest houses, and even adventure offerings such as mountain biking and hiking trails. This subsector is already playing a large role in supporting wine cellars / farms, especially in the off-season. It has potential to further support the wine industry by providing marketing opportunities for wine, better utilisation of seasonal farm workers all year round and a steady extra income stream. The main goals for this project are:

• Build an understanding of the current wine tourism industry. What kind of wine tourism offerings currently exist? Who are the tourists? Local vs international? How can we measure or track wine tourism to better understand it and pre-empt the needs of tourists?

• Make projections as to where the industry wants to go / what are goals to be reached within 5/10 years?• Develop a strategy for wine tourism to move from the “as is” to the “to be” state. This should include exploring the best ways to promote wine tourism (in SA

and internationally). Include possible ways to link with SA Tourism, Wesgro, Cape Country, individual wine routes, etc. to provide more support for wine tourism.

4 – Single SA wine industry portal and search engineThe SA wine industry is served by a number of different information systems, databases and libraries. It has become apparent, however, that there will be great value in combining these into one single portal in order to be more accessible and better utilised. There is also a need to incorporate in this portal new electronic services and databases that may be identified as value adding. This project is aimed at the development of such a centralised portal and search engine, and should include: the following: • The portal should be a single point of entry to a number of incorporated services, libraries, databases, etc.• The search engine should search across all incorporated websites and databases, including but not limited to: WOSA library; SAWIS library (journal TOC’s, Cab

abstracts, FSDA, Euromonitor, etc.); Winetech database; Any relevant VinPro databases & services; Relevant websites; BI article domain

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5 – Strategic market and consumer research

The South African wine industry needs to make more informed decisions, market, consumer and supply chain insight. Over the past decade global trade in wine has increased, and new markets have emerged. In light of this more complex, globalised industry, discussions go beyond which label to use, what consumer group to target and how. It extends to which market to invest in, what product to offer in each one and how to tackle the supply chain. The scope excludes the local market.

Markets will have different levels of potential for each country based on factors such as:

• Geographical location (in both target and adjacent markets)• Existing presence in market• Existing distribution channels and routes to market• Product portfolio (country of origin, varietal, price point)• How consumers react per market segment

6 – Price point analysis of supply chain – packaged & bulkThe wine industry needs to understand the South African supply of wine as well as the supply from their 10 greatest competitor countries in terms of the following: how are price points established and what kind pressures would warrant a lowering of prices? The focus of this project therefore is to build an understanding of value chain elasticity in order to better drive prices of SA product in the future. The project can be subdivided into two sections: a look at SA supply in terms of price points, as well as international supply – in particular SA’s 10 greatest competitors. Separate service providers may also be appointed for the two subsections.

7 - Wine Social Compact

WISE has as its high level objective to develop a strategic framework that is adaptable, robust, globally competitive and profitable. However, the wine industry does not operate in a vacuum and its objectives cannot be achieved without including all relevant stakeholders in the process. What is needed in this regard is an agreement or social compact between the industry, labour, government and civil society. This terms of reference will set out the project steps for a Wine Social Compact to take shape.

The Wine Value Chain should be focused on meaningful engagement with all stakeholders and developing a plan for implementation of the Wine Value Chain’s development goals. The focus should be on the implementation of tangible projects and initiatives by all parties involved, taking into account the capabilities and responsibilities of each. A Monitoring & Evaluation Framework should govern the implementation timeline, keeping all parties accountable to the Compact.

8 – Implementation plan for Learning and Development in the wine value chain

The development of human capital will play a significant role in improving the sustainability, competitiveness and robustness of the wine industry going forward. PricewaterhouseCoopers (PwC) has prepared a Learning & Development Strategy for the industry, which makes a number of recommendations. The vision of this Learning & Development strategy is to further develop the wine industry into an industry that is built on the capabilities of its people, is able to maximise its return on investment, and is an industry/employer of choice for new entrants into the industry. The aim of this specific WISE project is to implement the most essential of those recommendations and create an enabling environment for the other recommendations to also be addressed within the structures created.

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9 – Technology transfer and innovation strategy for wine value chainFor the wine value chain to be sustainable, profitable and adaptable, technology transfer and innovation is of critical importance. Any technology, methodology or science utilised by the industry needs to make business sense and drive profitability. Therefore, no overarching strategic exercise for the wine industry would be complete without an assessment of technology transfer and innovation. The aim of this project in summary is to assess the current state of technology and innovation usage through a SWOT analysis, plot the ideal future state on a ten year horizon and provide a roadmap to reach this future state. The relevant question is where does the industry want to move and why? Is there currently enough technology available to support the wine industry to reach its ideals?

During the past year a Winetech Operational Review was conducted by Ian Dean. This document makes recommendations for Winetech on an operational level as well as for the industry on a strategic level to improve technology transfer and innovation. The recommendations with an operational focus will be addressed by Winetech internally. However, the more strategic recommendations should be considered by our service provider in this project, building a wider strategy for technology transfer in the wine industry value chain.

10 – Non-tariff barrier analysisA need has been identified in the SA wine industry for a non-tariff barrier (NTB) analysis. This analysis should follow the framework of UNCTADs classification of NTBs. This essentially provides categorisation of the various type of NTBs applied in practice, and is useful for setting the research scope on an NTB analysis.Practically when using this framework each of the priority markets for wine should be researched to assess:

• What type of NTBs are applied in practice;• What is the impact thereof on the SA wine industry (i.e. what is the practical commercial implication thereof for a SA wine exporter);• What is the recommendation of the SA wine industry per NTB;• Prioritise the list of NTBs on which it wants to drive lobbying actions (these would typically be those NTBs that are the most severe in terms of commercial

impact occurring in the industry’s top priority markets);• Identification of the key government/non-government stakeholders relevant to the NTB which should be lobbied by the industry for its removal or effect

changes to the NTB.

This analysis will serve as a valuable input for our government to inform its trade agenda on wine in bilateral and multilateral trade engagements.

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Timeline

Business Government

Civil Society

Baseline & Literature review

Identify key enablers

Work streams

Develop ToRs and appoint implementation agents

Monitor project implementation phase

Phase 1: Develop baseline report and identify stakeholder needs

Phase 2: Work streams and project identification

Phase 3: Project implementation and monitoring

• Vision 2020, WIP 1&2, FISC, NDP, etc.

Actions:• Questionnaires• Priority matrix• Key enablers and

themes• Future state• Sign-off

Actions:• Workshops – task

team and work streams

• Identify challenges and opportunities in current state

• Workshop “to be”

• Input from subject matter experts

• Identify projects to develop ToRs

Actions:• Develop ToRs• Appoint service

providers/ implementation agents

Actions:• Consultation• Monitor project

roll-out• Timeous

feedback to task team

• Project management

January – September 2015

Final Sign-off in form of Social Compact

May 2014

June – October 2014

November – December 2014