EU Ambassador to ZA Marcus Cornaro has confirmed to ZA Confidential that a €15m EU fund for supporting the South African wine industry should soon be available.

ZA Confidential understands the payment, equivalent to over R225m, was part of an earlier Wines and Spirits Agreement between Brussels and Pretoria, which also included the condition that ZA should cease using the terms “port” and “sherry” for its fortified wines.

The Ambassador confirmed that this earlier agreement on alcohol was not ratified, but has now been incorporated into the EU’s new Economic Partnership Agreement (EPA), which was recently signed with ZA and its SADC neighbours.

“We have re-committed the €15m,” he said.

“It is a refreshment of an older commitment.

“The earlier agreement was never ratified.”

The Ambassador said that EU officials are in talks with the Trade and Industry Department (dti) and with the Department of Agriculture on details of how the money will be allocated.

Two thirds of the fund will go to boosting employment and BEE, with the aim of securing a genuine impact on transformation and job creation in the wine industry.

The other third would go to supporting the marketing and promotion efforts of the ZA wine industry. “We are about to finalise the modalities and detailed objectives,” said Cornaro.

The EPA itself is also expected to bring additional benefits to the ZA wine industry, allowing greater access for exports to the European market.

 

BREXIT

In another development, the Ambassador suggested that with the EPA negotiations having recently been concluded, ZA is in a far more comfortable position in facing the challenges which will arise from the UK’s Brexit vote.

“With the EPA, SA is not a big demander in the equation,” he stated. “Myself and the U.K. High Commissioner will argue that once the landing zone is clearer, and if SA is happy to preserve the EPA, they are starting it from the most comfortable position of the three.”   (The three parties he referred to are South Africa, the EU and the UK.)

The Ambassador said that the EU was a massive supporter of ZA’s transformation to a democracy “spending €1bn per decade for first two decades.

“I still get credit over a lot of the support which was received,” he noted.

He said that although EU support for ZA has been reduced to around €250m over 4-5 years, ‘we are in a very healthy partnership relationship, using the money to further leverage reforms.”

 

Tweet of the Day:

Jewish Comedians (@JewishComedians): Rodney Dangerfield: My father carries around the picture of the kid who came with his wallet. | #Quotes

 

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Having already argued that South Africa must be aggressive in preserving what has been won in the past, as we enter the rough seas of Brexit trade negotiations, I was pleased to see our trade and industry minister Rob Davies being able to shed a little light on strategy, after addressing an African trade launch in Pretoria.

Davies said the British have told us they foresee no big interruption in our trade, and indeed they may be more open on agricultural regulations than other EC countries.

There is still no clarity on how relations will be structured, but South Africa wants this to be based on the EU’s current regional framework for trade, the EPA.

The EPA and other trade deals gives ZA some advantages in terms of tariff rate quotas, and when the EU enlarged ZA didn’t get additional quotas.

“That being the case, we feel there should be no reduction if a member leaves,” Davies said.

He wasn’t sure when the British will trigger Brexix, but he doubted that all the trade issues could be tied up within the two-years beyond that, as is planned.

“The biggest impact of Brexit is not going to be in trade – the UK only accounts for 4% of total SA trade,” said Davies.   “The biggest impact will be what uncertainty does for us. We are watching it. I did write to the UK High Commissioner to mark our territory.”

Whatever the politicians say publicly, there is a lot at stake, and protectionist forces are bound to rear their heads. It will be a tough few years.

In another development, Davies launched the new Africa Investment and Trade office – ironically on the same day his officials are in Zimbabwe, trying to reverse that country’s recent import bans on ZA goods.

 

Tweet of the Day:

Bill Murray (@BiIIMurray): It’s amazing how many people are allergic to gluten, peanuts, and facts.

 

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For a couple of decades, on and off, I have been keeping an eye on ZA’s trade relations with the EU. Now that the Brits are Brexiting, there are a number of uncertainties and concerns for us.

As one of the most astute ZA commentators and Euro-watchers Dr John Mare suggested to me over what turned out to be a deeply indigestible Col Caccio pizza (not John’s fault – it was probably the raw onions), there are a number of scenarios.

I won’t bore you with them all, save to note that the EU currently has a trade treaty with ZA and its neighbours, and in theory Britain’s exiting from the EU will mean exiting from this relationship, which currently gives us preferential access to the EU (including UK) market.

The most elegant way out of this would be if the EU would just roll over everything in its relationship with ZA, Tippexing out all the references to the UK, and if Britain were to adopt it all, bilaterally, without any fuss.

However, there is always the temptation to meddle, to seek a slightly better deal.

Let us remember that the ‘Club Med’ members of the EU fought hard to water down the agricultural concessions which have been given to ZA in the past, and imposed all sorts of protectionist nonsense – like the rules which prevent us from calling our sherry ‘sherry’ and our port ‘port.’   And don’t get me started on Champagne.   Or rather do – as a drink but not as a topic for debate.

Remember, too, that Europe liked Mandela and was happy to lavish him with support. Jacob Zuma is a very different creature, and far less loved internationally.

So there is scope for damage to ZA’s trade interests, both in new negotiations with Britain and in preserving what it has achieved in negotiations with pre-Brexit Brussels.

We must also recognise that ZA won’t be the top of the agenda in London or Brussels, as there is an avalanche of EU red tape which will need to be Brexited, and trade relations with SA have never been front of the queue.

One encouraging development was the appointment by Theresa May of Liam Fox in a new post as International Trade Minister.

Were I ZA’s Trade and Industry Minister Rob Davies I would be hounding Fox day and night.   Not with real hounds, though.

NB: Having worked alongside Boris Johnson when I was in the Brussels Press Corp I have only one reason to welcome his appointment as Britain’s new Foreign Secretary.   At least he didn’t make it into 10 Downing Street.

Tweet of the Day:

Nigel Farage (@Nigel_Farage): The appointment of @DavidDavisMP & @LiamFoxMP to Brexit and International Trade roles are inspired choices. I feel more optimistic now.

 

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Even if I did not need so much beauty sleep, it is quite unlikely that I would queue all night for a cup of coffee, as some silly sods did when the first SA Starbucks coffee shop opened in Rosebank recently.  I have drunk Starbucks coffee in many parts of the world, enjoy it, but while I admire all the hype and marketing, a long queue is not for me.

Taste Holdings, which came under fire from rivals over the way they earlier secured the Domino’s Pizza franchise, is behind the ZA Starbucks rollout, and I was interested to get some grasp of their strategy when I attended their latest presentation to analysts.

I was recently in the UK where I visited a few Starbucks outlets, which ranged from traditional coffee shops to a rather cold and windy outlet at Reading rail station.   I never had a bad coffee in the UK, although I did feel slightly cheated by the large ratio of foam to liquid in the cappuccinos – a tactic for selling air at a high price.

There are now two Starbucks outlets in SA – the Rosebank one and another in the new Mall of Africa in Midrand.  A third is planned for this calendar year.

I fully understand that the aim in SA is to offer comfortable, cozy and attractive stores, that there are problems in getting the right locations, and that this will take time.

However, it is hard to accept that you can boast a national franchise with just three stores, and I did not get the impression that the roll-out will be accelerated much next year either.   It seems to be a roll-out with square wheels rather than round ones.  Maybe that is an appropriate way of looking at it, as they could be adding some drive-by outlets.

It was also interesting to learn that there were teething troubles with the Domino’s launch in SA, with staff training appearing to be one of the major headaches.  Many lessons will be learnt from this, and will be applied to Starbucks.

As well as a business card draw with prizes of nice watches and pens, a few vouchers for Taste outlets and the traditional information booklets, analysts were each offered a free bag of Starbucks coffee beans.

There were tables serving brewed coffee, but from small and nasty paper cups, which I found a bit of a contrast to the image they are trying to project.

And then there was the food – all prepared by the Starbucks team but brought in for their guests.

As we left the presentation, there was table loaded with sweet stuff, but no sign of the savoury food, which was dribbled out of the kitchens a bit later.

The cheesecake was a bit bland and was icy in the middle, there was a pastry thing which looked as if it might have been stuffed with apple or custard or something tasty, but which turned out to be stuffed with more pastry.  The chocolate cookies were excellent and I must confess that I pocketed a few for a teatime treat.

I did not sample everything, because the hot food then began to arrive.   Not really to my taste.  The pulled pork sandwich was completely underwhelming, with no flavor at all, the croissants with ham and cheese had a filling which was so bland it could as easily have been left out.   The chicken salad was good, but the Coronation chicken wraps were incredibly under-flavoured and really did not delight.  There were bite-sized toasted sandwiches which I found really horrid, and I am normally a great fan of such sandwiches.

So while I have every confidence that once the queues die down a bit, I will be able to get a tasty Starbucks coffee, I do hope they take a long and serious look at their food offerings.   When in England recently I consumed both sweet and savoury Starbucks products, was not that impressed by them, but certainly they were far superior to the SA offerings.

My current favourite local coffee chain is the Seattle Coffee Company, which produces delicious brews, and has pleasant but pricy food.   Maybe the Taste Holdings people should do a bit more tasting? 

Tweet of the Day

Andy Ryan (@ItsAndyRyan):  I had a joke about a neutered cat but it had been done already.

 

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I was in two minds when I read reports today about an insistence that South African chicken must be clearly labeled so that consumers can know they are buying the local stuff and not something that has been imported. While I tend to support the sentiment that we must do all we can to support local businesses, I also believe in free and fair trade (even if it is not yet a reality).   And I am sure than many South Africans are more concerned about price than origin when buying chicken.

However, there is certainly potential to boost local content and to promote local goods where possible and viable.   We have seen several ministers, including President Zuma, stress the importance of securing more locally-made components for the vehicles which are assembled in South Africa, supported by billions of rand in state subsidies. As government plans the successor auto incentive scheme, which will run from 2020, the auto giants should be aware that there is frustration that they are not doing enough to source from local component suppliers, and that penalties may be incurred in future if they do too little.

I was interested when retailer Verimark gave a presentation to analysts at which it said that it, too, hopes to procure more from local producers.   Surely we should now start seeing a better dialogue between companies like Verimark – which appears to get most of its stuff from China – and local manufacturers? Of course, there are some products which the Chinese will always be able to make more cheaply. But how about we bring in the innovators and entrepreneurs and start devising the sort of smart gadgets which Verimark markets, and then producing them from a local base?

With the weak rand, Verimark is trying harder to secure more sales outside South Africa, so any initiative to produce more here would not only reduce imports but could also boost exports as well.

We need innovation, imagination, better dialogue and a strong commitment to reviving South Africa’s manufacturing sector.   Tinkering with the labelling on packs of chicken isn’t going to help much.

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