For the latest Die Vine Intervention wine tasting podcast, food and wine guru Michael Olivier introduces a dry and refreshing Cape bubbly – the Perdeberg Chenin Blanc Brut Reserve 2012.
John Fraser is joined in the Johannesburg studio by branding legend Jeremy Sampson and by Malcolm MacDonald from Tersos.

Reserve Bank Governor Gill Marcus announced no change in interest rates today, following the latest meeting of the Reserve Bank’s Monetary Policy Committee (MPC), but she certainly did not rule out rises at future meetings.  She said 5 members of the MPC wanted to hold rates, while 2 wanted to raise rates.  The Governor noted that at 6.1% CPI inflation, the rate has moved above the 6% ceiling – and is expected to remain outside to 3% to 6% target band for some time.  There is a host of worrying economic data.  The strike in the platinum sector is expected to have a significant negative impact on exports, as stocks of platinum are depleted.  The Bank’s GDP prediction for this year has been revised downwards from 2.6% to 2.1%.  Unemployment remains elevated in a declining growth environment.  Sobering stuff.  But what did our experts make of it all? 

Dr Andrew Golding, CE of the Pam Golding Property Group:

Maintaining stability in the interest rate sends a positive message and reinforces much-needed confidence among home buyers and investors, and hopefully will further improve sentiment and add impetus to the recovery in the property market. Coupled with this is the fact that mortgage lenders are demonstrating an increased appetite for lending which is ultimately the most important driver of activity in our property market.  One does however need to be circumspect regarding this optimism  in the light of the Consumer Price Index inflation edging upwards – and as a consequence the fact that consumers continue to be beset by rising food and fuel costs, as well as electricity, water and municipal rates and tariffs, all of which erode disposable income. Another source of concern is the extent to which the country’s GDP growth is lagging targets required for sustainable growth, which is necessary for the property market to prosper and thrive.

Ian Cruickshanks from the SA institute of Race Relations:

This decision not to change interest rates was expected.  The Reserve Bank’s economic forecasts have led to expectations of stagflation, with GDP growth downgraded from 2.6% to 2.1% for 2014, with downside risk.  This comes with the JSE at record high prices, at levels difficult to justify.  

Sizwe Nxedlana from FNB:

Despite the Reserve Bank’s decision not to raise interest rates at today’s meeting we think it is only a matter of time before interest rates are raised further. Domestic inflation is now above the upper limit of the Reserve Bank’s 3% to 6% target. We expect inflation to accelerate further and to remain above 6% for the rest of this year. The South African economy also remains vulnerable to rising global interest rates given its large current account deficit, which has been placed under more pressure by the impact of labour unrest on platinum production and exports so far this year. Rising US rates will increase the difficulty of funding the current account deficit. This is likely to keep the rand under pressure and place further upward pressure on consumer inflation. Against this background we think it is only a matter of when, not if, interest rates will be raised again. However, the magnitude of the interest rate hiking cycle may not be as severe as previous cycles given current weak economic growth.

Nedbank Economic Unit:

The inflation outlook has improved on a firmer rand and growing evidence that the change in US monetary policy is unlikely to alter global liquidity dramatically in the short term or result in a one-way bet against emerging market assets and currencies. The risk to the inflation outlook remains on the upside given the rand’s vulnerability, sticky administered prices and the negative relationship between wages and productivity growth. The Reserve Bank tweaked its inflation forecasts slightly downwards, with headline inflation now expected to rise to a peak of 6.5 % (6.6 % previously) in the final quarter of 2014, before drifting back into the target band by the second quarter of 2015. Real economic conditions deteriorated sharply in the first quarter and the outlook for growth remains subdued. The strikes in the platinum mining industry continue to cast a long shadow over the economy, undermining confidence throughout and limiting the upside for the year as a whole.  The MPC is still left with the unenviable task of countering rising inflation in a weak and vulnerable economy. With inflation already outside the Bank’s target range and expected to remain so for some time to come, the Governor once again reiterated the MPC’s bias towards tighter monetary policy over the medium term. The pace and magnitude of the tightening will depend on trends in the rand, inflation and the real economy. Given the setbacks to the economy and the lack of underlying consumer and business confidence, the MPC will try to limit rate hikes to modest increments until more convincing evidence of economic recovery emerges. We expect that the MPC will raise rates by only 25 basis points in two of next few meetings, with the repo rate ending the year a cumulative 100 basis points higher.

Conclusion:

A sigh of relief from borrowers, but no joy for lenders.  But what was really of note was the catalogue of economic woes outlined by the Governor.  Especially the downgrading of expected GDP growth this year.   Not good for job creation! 

ZA Confidential is a subscription newsletter.   For subscription details or any other communication, please contact:    zaconfidential@gmail.com

 

CPI inflation in April rose above the target band of 3-6%, registering 6.1%. This is not good.   Most commentators feel this won’t prompt an interest rate hike tomorrow, but it doesn’t help, and inflation is generally a horrid thing, particularly in a country like ZA with such sluggish GDP growth…

But what do our experts say? 

John Loos from FNB:

Most obvious, given that the overall CPI inflation rate has risen further and is outside the 3-6% target range, is that the numbers exert potential upward pressure on interest rates. Indeed, we do expect further mild interest rate hiking during the course of 2014, to a level where the Prime rate ends the year at 9.75%. However, our CPI forecast is an average of 6.1% for the entire 2014, implying that we don’t expect it to get much worse from here on. And there are encouraging signs in form of a Rand that has behaved itself fairly well of late. This has resulted in a diminishing year-on-year depreciation in the Trade-Weighted Effective Exchange Rate, from a low of -19% in February 2014 to -12.3% as at May (to date). This should see a diminishing imported inflationary effect from currency weakness in the coming months should the Rand continue its period of relative stability.   The 2nd impact of the elevated CPI inflation is likely to be increased downward pressure in Real Household Disposable Income growth, which has already been slowing gradually in recent years. The cumulative rise in consumer price inflation, which amounts to 0.8 of a percentage point since November 2013, increases the possibility that Real Household Sector Disposable Income growth in real terms has slowed further from its 4th quarter 2013 rate of 2.1% year-on-year, especially given the signs that economic growth slowed once again in the 1st quarter.  A 3rd key impact can be in the area of the Food and Beverages Sector. Given that food is where the sharpest inflation surge has been in recent months, one could expect some consumer belt tightening in this area, resulting in further weakness in real Food and Beverage sales especially in the Restaurant and Catering sector, but also in the area of Food Retail. Finally, the 4th of the key impact points that are worth highlighting is the fact that food price inflation has shown a sharp acceleration, and the fact that this impacts more severely on the poor, given the higher weighting of food expenditure in their overall expenditure basket. Therefore, whereas the “Very Low Expenditure Group” (now termed Expenditure Quintile 1) had a 4.7% consumer price inflation rate at the end of 2013, compared to the Very High Expenditure Group’s (Expenditure Quintile 5) significantly higher 5.6%, by April the Very Low Expenditure Group’s inflation rate had accelerated to 6.5%, now higher than the Very High Expenditure Group’s rate of 6%, and the gap is widening.   While a higher overall inflation rate, and potentially higher interest rates, are a negative for everyone, the 4th potential impact, i.e. the greater impact of food price inflation on the poor, remains a key concern in the current time of elevated” social tensions and their potentially disruptive nature towards the economy.

Nedbank’s Economic unit:

On a monthly basis, inflation rose by 0,5 % mainly as a result of a 1,4 % m-o-m rise in food prices which led to a 0,2 percentage point contribution from the food and non-alcoholic beverages category. We expect inflation to rise further in the short term and to remain above the Reserve Bank’s 6 % upper target range throughout this year and into the first half of 2015 due to a fragile rand and higher food prices.    The inflation outlook remains poor in the short term. The Reserve Bank has made it clear that we are in a rate-hiking cycle, but the extent and speed will be rand and data dependent. We do not expect the Reserve Bank to raise rates at this Thursday’s meeting, given that the rand has strengthened substantially since the bank’s last meeting. However, given the need to balance growth prospects with higher inflation we anticipate that rates will rise by 25 basis points at two of the following four meetings.

Annabel Bishop from Investec:

Demand pressures remain modest in South Africa on low confidence, weak employment, slowing real disposable income growth and high indebtedness. The economy continues to run well below potential, and no further increases in interest rates are warranted this year, particularly as economic growth is at risk of coming out below last year’s 1.9% y/y. However, the SARB has communicated its intention to hike interest rates further, even though the signalled sedate trajectory of global monetary policy normalisation over the next twelve months does not warrant it.  The 50bp hike in interest rates in January will serve to moderate demand further this year, keeping the demand component of CPI inflation (CPI excluding all administered prices and food and beverage prices) subdued.  The marginal uptick in CPI inflation in April should not be misinterpreted to read that demand price pressure is rising worryingly, or even that higher prices at the tills are being absorbed by the consumer, and so will become entrenched. Instead, retailers have been battling under sharply escalating State controlled prices such as water, electricity, property rates and taxes and transport. Labour costs have been rising rapidly too, partly also because of the escalation in administered prices. Consumers will not necessarily absorb the higher prices at the tills. 

 

 

Conclusion:

For many South Africans, high inflation is terrible news, and it is worrying that this strike-bound, snail-pace red-tape tangled economy also has high inflation.  

 

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What is Vodacom doing wrong that Woolworths is doing right?  Well, a recent announcement by the Reputation Institute suggests that the telecoms giant is not doing a good job at managing its reputation, while the retailer is doing a stellar job.   To find out more about the research, ZA Confidential spoke to Trevor Ndlazi, country manager for the Reputation Institute in South Africa:

 

ZAC:   What is Woolworths doing right that many other firms are failing to do?

TN: Woolworths have embedded into their business culture and business processes a way of doing business that has as its outcome a strong reputation. They are not building reputation by PR and marketing but by actually doing business in way that talks to the needs of their stakeholders. This is captured in their Good Business Journey approach.

 

ZAC:   Is its strong reputation just a feel-good matter, or does it help the business? 

TN: Reputation drives support, so it is absolutely critical to business. People will support a business, either by buying from it, recommending it, saying good things about it, etc, based on its reputation. All of these things have an impact on the bottom line.   Reputation is therefore critical to sustainable business success.

ZAC:   To what extent might a new threat be just around the corner – as it was with Woolworths over allegations it had breached the rights of a small producer when it produces a Ginger Beer, and also with its perceived whites-only recruiting stance?

TN: It is because a new threat is around the corner that companies need strong reputations. A strong reputation allows companies to survive these types of threats because the company builds goodwill and reputation capital over time and when mistakes in companies happen, as they invariable will, the reputation that has been built helps the company to weather the crisis as stakeholders’ faith in the company will allow them to give the company the benefit of the doubt.

 

ZAC:     What has Vodacom done wrong to suffer such a big fall?

TN: It is difficult to say with absolute certainty, as we did not ask respondents for reasons for their ratings. We do know however that negative changes in reputation perceptions are preceded or triggered by incidents or events. These events would generally be where the company acts in a way that stakeholders did not expect it to act, for example the company may have positioned itself as working to give stakeholders the best value. But if it happens that the company is then found or seen to be acting against this position, this may damage its reputation. We suspect that may be the case with Vodacom and the mobile termination issue.

ZAC:  Neither the mining nor the financial services sector do well, either.   Might it be that we now live in times when most people are pretty suspicious of corporates?

TN: We have witnessed declines in scores in all but two companies; we also see a similar trend internationally. There does seem to be a loss of faith in companies currently happening, post the global financial meltdown.

 

ZAC:  The construction sector suffered a lot of reputational harm due to many breaches of competition law over bids for World Cup Stadia, Gauteng highway improvements, and other projects.   Is this reflected in your research?

TN: Yes. The construction company that was included in the study was placed with the mining companies in terms of its reputation score.

 

ZAC:  Do you do a similar exercise on political parties, and if not what do you think it might show?

TN: No we do not. It would be very difficult to speculate, but might show interesting results.

 

Conclusion:

I am not sure about this research.  While Woolworths may be doing well, my own annoyance at its recent failure to sell wine on a public holiday, when it was on sale at a rival supermarket, really annoyed me.   It probably happened after this research, but I was even more annoyed when Vodacom offered 1Gig of free data on a recent Sunday – but the network was rubbish and I am not sure I was able to get any benefit from it.  Will Woolworths latest corporate expansion in Australia boost its image, or does it face a big disaster, as has happened to other ZA companies in Oz? Admittedly Woolworths knows the Australian market well, and has a CEO who worked there.   And how will Vodacom’s reputation fare in the tie up with Neotel?  If this leads to new offerings at good prices, it will win my vote.  And let’s face it, the borderline anti-white bosses at Telkom are not likely to win much respect from many South Africans. 

 

Tweets of the Day:

Funny Tweets (@Funny_TweetsQ):  Top 10 things men understand about women:

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Funny Tweets (@Funny_TweetsQ):  

Boy: I love u.

Girl: Aww really?

Boy: Yep, It’s my favourite vowel.

 

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The biggest announcement of the month – and possibly of the year for the ZA IT world – is that Vodacom has concluded its negotiations to acquire Neotel. 

The big winner is obviously Vodacom, which now has a fixed-line infrastructure so that it can offer a full range of services. 

This will make it an even bigger player in South Africa.

The big loser is likely to be Telkom, which struggled and failed to launch an efficient mobile offering.   It is still an important player with a massive network, but the latest announcement that it is targeting white males in a new retrenchment exercise has led to a lot of resentment and annoyance.. especially among white males.

Another loser is likely to be DSTV, the dominant supplier of satellite TV services.   If Vodacom and Neotel can really get their act together with a TV offering into our living rooms – which is something Telkom has disastrously failed to do – and can find the right partners and content, it should be able to poach a lot of customers from the established player.

Competition is only good if you have robust and well-run competitors, and I have a strong suspicion that the Vodacom/Neotel union will bring the SA market exactly what it needs.

Which should mean that another big winner – will be the consumer. 

ZA Confidential is a subscription newsletter.   For subscription details or any other communication, please contact:    zaconfidential@gmail.com

 

A rousing red from the Cape is the focus of the latest Die Vine Intervention wine tasting podcast.
Food and wine guru Michael Olivier introduces a red blend, the High Road Director’s Reserve.
John Fraser is joined on the tasting panel by Tsogo Sun Group Sommelier Miguel Chan, analyst Chris Gilmour and economist Mike Schussler. The panel also chat about some of ZA’s barmy liquor sales restrictions….

Visiting wine expert Robert Joseph gave an interesting speech in Cape Town this week, and I can’t say I agree with all of it.  However, he did make an interesting comment when he questioned the wisdom of wine estates charging visitors for tastings.   According to a news release on his speech, he said that those wineries which seem to think that they don’t charge for tastings are wrong: 

“Everybody who walks through your door is paying you – with his or her time. They could be spending – note the term – that hour on the beach, or shopping or in a gallery. Charging for tastings means that you are not doing anyone a favour, and you have to offer value for your customers’ money,” said Joseph.  

I have had some wonderful tastings in the Cape Winelands, but I have also left a tasting room without paying the designated fee, because the service was unimpressive, and the estate (Kanonkop) had none of its finer wines on offer. In fact, it had just two offerings and wanted to be paid for a thimbleful of each.  

But what do our experts make of it all?

Wine scribe and vendor Neil Pendock:

At the Pendock wine gallery @ taj (the Taj Hotel in CT) we do both. When an exhibition opens during the First Thursdays perambulation around Cape Town every month, tastings are free and the curator speaks about the wines which constitute the exhibit.  Otherwise we charge R30 to taste 6 wines to cover our costs, as we buy the wines from producers and receive very limited tasting stocks.  It’s like admission to museums and public art galleries. Some charge, some do not, depending on finances and philosophy. We wish all our tastings would be free, but cannot afford to do so.

Warwick CEO Mike Ratcliffe:

If you give something away, it loses its value. If you charge a fair amount of money for a service or product that you are offering, you should be sure to over-deliver in every aspect of that service or product. Quality wine consumers are not looking for free wine – they are looking for value – at every price point. Quality wine consumers are searching for authentic wine experiences. Activities like tasting, touring, education, food pairing and nature all play a role in delivering the appropriate experience. On the other hand, the tasting is in effect the sales pitch and this delicate balancing act should be acknowledged. A sale is not the stated intention. At Warwick our stated objective for providing a tasting is start a relationship that can be carried forward for years to come. We believe wholeheartedly in reimbursing any tasting fees fully at purchase and this has worked well for more than a decade. Follow us @WarwickWine and join the conversation.

Food and wine guru Michael Olivier:

I know Robert Joseph and admire much if what he talks and writes about.  Having worked at Boschendal in the 1980s, we were inundated on Friday afternoons with students who wanted to have wine for free.  I think much the same happened in Stellenbosch where most of the wineries were close to the University. I feel that to charge for a tasting is fair if the amount is refunded when a purchase is made.

Lawyer Emile Myburgh:

For us lawyers, time IS money.  While I’m tasting wine, I could be billing time, in fact, maybe I should bill the winery for my time.  

Bartinney CEO Rose Jordaaan:

We don’t currently charge for tastings on the estate as we feel that people have made an effort to come and experience the Bartinney story on-site.  We do charge for tastings at the Bartinney Wine Bar (in Stellenbosch), however!  We also only offer the 3 Bartinney wines to taste, not the other brand offerings we produce (eg the Noble Savage collection, the Brut Savage, Elevage). And we also reserve the right not to allow tastings of wines which are almost sold out.   We want people who visit Bartinney to feel they have received a treat and something special and are as privileged to be here as we feel privileged they have made the effort to come.

Former SATSA CEO Michael Tatalias:

There certainly is something to be said for a small charge – in that it forces the wine farmer to consider their wine tasting and customer interaction as a business – where the focus needs to be on superior customer service, and the farmer needs to apply significant thinking to the whole experience to make it an event worth paying for. Also it makes them consider it a business (either on its own, or a supplement to the winery itself, and thus a potential income earner), which means that days open and hours open have to be aimed at the tourists, not at what suits the farmer – which then forces the farmer to hire dedicated staff, and that is good news.  Far too many farms offer a slapdash experience, and are never open on Sundays or public holidays – when the local tourist wants to spend money. Also they need to decide if and how to deal with different types of tourists: local, international; kombi loads, cars/self-drives, coach loads. All need to be handled differently, and carefully so as not to overwhelm other user groups. But to make it too expensive to keep the riff-raff away is also risky, as it is very easy to out-price oneself.  The price needs to be realistic, and to cover only an aspect of fixed costs (like the wines used, or the staff on duty).  Farmers considering charging need to go and benchmark the opposition, and see what is charged by very well-known establishments (great brands) and see what the customer experience is like, plus ease of access (road conditions, signage, etc). Will you offer food, and if so of what quality?  Kanonkop and Warwick are across the street neighbours, and have completely different approaches to customer service and the experience on offer – both work, and Warwick needs to be different, as Kanonkop is/was the established brand. Other top brand wine experiences: L’Ormarins is different (given Johann Rupert’s resources), but the Franschhoek Motor Museum is a great way to add value to the wine experience, where the wine tasting is secondary to the cars – but right there and very accessible with excellent levels of staff service, food and tea. And they only charge for the people actually doing a wine tasting. Overall, I reckon it is a good thing to consider an entrance fee, or at least a tasting fee – as it forces the farmer to think carefully through the options and take it seriously and treat it like a proper business.  Far too many farms do not.  The old advice is also true – if you aren’t going to do it well, don’t offer it at all.

Jeremy Sampson, Executive Chairman of InterbrandSampsonDeVilliers:

I totally agree with the concept of providing value.  However, that means different things to different people around the world. In South Africa I suspect that to some the prevailing culture is that anything that is free gets little or no respect, and is open to potential abuse. The writer has a background in journalism, is based in the UK and travels the wine world as a commentator of note, so knows how to write a good story.  Locally it is at the discretion of the farm/estate to decide on the need to have an entry fee (as at Vergelegen) and/or a tasting fee that can fall away if purchases are made.  Wine estates sometimes think visitors simply want to drink and perhaps buy wine – and some do – but many will have children in tow and will want to enjoy the total brand experience of being in the country in idyllic surrounds as at Spier, Fairview, Warwick, and many others. The writer is correct that everyone has options as to how they ‘spend’ their time, a reason to make an estate a seductive destination brand of note, that the visitor will return to – and to charge what the market will stand.

 

 

Dino Fagas from Prosopa restaurant in Pretoria:

I agree that wineries should charge for tastings, but perhaps should waive this charge if someone buys at least a case of wine, or wines for a minimum qualifying value.  Also they should know when trade people are there (or if trade people introduce themselves with a business card) so they do not get charged – because they are the ones promoting their wines in stores, etc.  People are there to see and taste what the wineries have to offer. They choose to be there instead of on the beach. In Europe you even pay to be on the beach!   Wineries spend good money refurbishing their tasting rooms and making their offerings more attractive in order to promote their brands further. And, at the end of the day, they are there to make a profit.

Corlien Morris from Wine Concepts:

I’m afraid I don’t think there’s a blanket rule for this one. Some farms have small productions of pretty expensive wines and they can’t just simply open bottle after bottle for free. However there’s always a way to handle this in order to get the best of both worlds.  A farm on Stellenbosch main routes would definitely get streams of students drinking away in the tasting room if everything’s for free, where the guy out in the sticks would probably be all too happy with every single person who made the effort to drive all the way out to his farm. Then we also have to remember that today’s student is tomorrow’s CEO and if you treat him well as a student he will support you when he actually has the money to do so. My feeling is that a minimal fee would keep the drinking student out and bring the really interested student closer.  For the guy on the highway, I think it’s fair to charge a fee for tasting, but it makes sense to waive the fee should the customer actually purchase a minimum amount of wine. What’s the minimum becomes the next question, then? I know there are farms who offer free tastings; however there’s a fee if you wish to taste their top super-expensive flagship wine, selling for over R500 a bottle. That also seems fair to me. I don’t mind paying for a tasting, but then the person on the other end must know what they’re talking about and give me value for my money and not simply pour wine after wine and leave me to figure things out for myself. I don’t like paying for bad service!  Give me an experience and the money is all yours.

Conclusion:

If you charge me to taste your wines, make it a pleasurable experience, offer a good variety, and make me feel special.  And refund the fee if I buy a bottle or more.  If you have turned your wine farm into a family fun park, and it is noisy and unpleasant, with an over-crowded tasting room, then forget it.   Offer me a relaxed cellar tour and a tasting with your winemaker.  As they used to do at Klein Constantia and still do at Warwick.   Then you will have a friend, a fan, a brand ambassador, and a customer for life.     

Tweets of the Day:

Simon Rademan™ (@simonrademan): Soup should be seen, and not heard

NotKennyRogers (@NotKennyRogers):  I’m pretty sure Billy Joel could write an entirely new “We Didn’t Start The Fire” just based on stuff that has happened this week.

Funny Tweets(@Funny_TweetsQ):  Whenever you feel sad, just remember that somewhere in this world there’s an idiot pulling a door that says “PUSH”.

 

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Once again food and wine guru Michael Olivier guides a quartet of inquiring palates to a fine Cape wine. This week it is a woodless chardonnay – the 2013 from Ayama.
John Fraser battles with little success to keep order in the Johannesburg studio with Tsogo Sun’s group sommelier Miguel Chan, Barclays Africa’s Chris Gilmour and economist Mike Schussler.

Top economist Raymond Parsons says the hesitation and waiting must end now that the ANC has been re-elected in this month’s national poll, and that moves to boost the economy must be unleashed.

He was addressing the media at the Johannesburg HQ of Business Unity South Africa (BUSA), in a discussion on the economic prospects for President Zuma’s second term. 

Parsons, who is a former BUSA Deputy CEO, said that there is now a degree of certainty following the election, and that while business had been in a holding pattern, the National Development Plan (NDP) must now be implemented. 

He called for “an implementation plan, with timelines” to move from strategy to action.

“We want to see the government hitting the ground running,” said Parsons.   

He suggested that government could triple the size of the economy in the 16 years to 2030 with a successful economic strategy, and “that is a prize worth seeking.”

He claimed the NDP would lead to a more predictable and certain policy network, and so business must make sure the NDP will prevail.

He said business must become more proactive, to influence government well in advance of policy formation, as opposed to reacting after the event. 

And he also called for more business unity among the country’s different business groupings, “with one telephone number for government to call.”

Parsons suggested that the NDP has identified lack of trust as a serious constraint, and said that closing the trust deficit is going to be a “top priority” for business.

Parsons questioned whether the ANC’s tripartite alliance with partners COSATU and the Communist Party has run its course.  He suggested ANC policy is “diluted” through this alliance.  And he wondered whether the economic cost of the alliance now outweighs its political benefits… 

Theo Venter from the NWU University Business School said at the presentation that it is unlikely Zuma will serve a full five year term in office, but suggested that he is not likely to leave office soon.

He said the ANC will need time to regroup and see where it is heading, and the ANC will take a decision to “protect the dignity of the man” – maybe by saying his health is poor. 

“I don’t see that happening early,” he said. 

Parsons suggested that Jacob Zuma’s legacy should be an economic turnaround, and that business should support this. 

Responding to Parsons’ comments on the tripartite alliance, Venter suggested that the problems in SA education will never be resolved until the strong link between government and the unions is broken.

BUSA’s acting CEO Cas Coovadia concluded that “we talk a hell of a lot in SA”, but there has been too little discussion on the “hard issues”.  He said business should take the lead.

Hard issues that worry him include corruption, labour issues, inequality, and the business environment – with concerns such as FDI, employment, education and SMEs. 

He also expressed concern about service delivery. 

He noted there is resentment about the wide gap between basic pay in SA and executive salaries, and said this must be discussed. 

Coovadia agreed with Parsons on the need for greater unity, and said there needs to be a common agenda for business – and added that he is not interested in “turf issues”.  He said BUSA itself must concentrate on strategic issues, leaving matters like trade visits to other business organisations. 

He also called for reform of NEDLAC – the forum which brings together business, labour and government. 

 

Conclusion:

The SA economy did pretty well until Jacob Zuma came to power, and business may be a tad optimistic in suggesting that the NDP will solve much.  Certainly, the SA institute of Race Relations has claimed, with some credibility that its ambitious goals just cannot be funded.  However, there is every reason to support a more robust dialogue between business and government.   One indication of the President’s willingness to boost the SA economy will come when he announces his new Cabinet.   The same old faces are likely to repeat the same old mistakes.  

Tweet of the Day:

Fake Dispatch (@Fake_Dispatch): FAKE DISPATCH GARDENING AND MARITAL ADVICE: Q: My wife wants to plant one tree, but I want two. How can I stand up to her? A: Grow a pair.

 

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Corks have been popping in the ZA wine industry with the news that one of this country’s most respected businessmen – ex FNB CEO Michael Jordaan is now chairman of Wines of South Africa, or WOSA.   It is an industry with many challenges, ranging from fierce foreign competition to less than helpful government regulation.  He is a wine farmer himself, and is well equipped to take on this task.

ZA Confidential caught up with Michael to get his perspective on his new challenge:

ZAC:  How much work do you think is needed to get the industry to band together and to work together?

MJ: My sense is that the industry has matured over time from one where we saw everyone else as a competitor to one where all producers/ winemakers know that we can all benefit from export growth. We realise we do not compete against each other abroad but against a host of new world nations such as Australia, Chile and the USA. The debate is more on how best to position SA as a wine producing nation.

ZAC: What do you see as the biggest threats/challenges?

MJ: The challenge is how to lift the brand of SA in general and specifically our wine producing heritage, diversity and quality.

ZAC:  AT FNB you drove a lot of innovation.  Is there also room for more of this in the wine industry?

MJ: I hope so – certainly there is scope for using social media much more given how inherently social wine enjoyment is.

ZAC:  The Treasury recently launched a discussion document on wine taxes, looking at health issues.  Are you not worried that the industry is a soft target, and is perceived as bad, with a negative image?

MJ: Scientific opinion is that responsible wine usage (a glass a day) is actually healthy. Nevertheless taxes on alcohol is a reality in nearly all countries. Jokes about “sin taxes” aside, the Treasury proposals recognise that the industry is an important job creator and export earner.

ZAC:  Is enough being done to promote wine tourism, given the way in which so many estates now offer so more than just tastings?

MJ: Generally tourism in SA still has major growth potential. Our wine estates are amongst the most beautiful in the world and can certainly be used much more to help both the tourism industry and subsequent wine exports.

ZAC:  Since leaving FNB you have launched a venture capital operation, you chair Mxit and you are a non-executive director at the JSE Ltd. You also lecture.  And now this wine post.   Are you not over-stretching yourself?

MJ: My board positions are ideal for me in that I can contribute strategically but do not have operational responsibilities. Since leaving FNB I have been able to structure my life to spend more time with my family and friends as well as look after my health. Chairing WOSA is about giving back to SA and an industry that I feel passionate about.

Conclusion:

We have long held Michael in high esteem, and are convinced that his appointment is a good move.  

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