just the answer – Thandi Wines
Growth in ethically-traded goods has been a prominent feature of the food and drinks sector in recent years, and while there is concern that the recession will dent that progress, the signs are that sales are holding up well. For this month's just the answer interview, Chris Mercer spoke with Vernon Henn, general manager of South African Fairtrade wine producer Thandi.
just-drinks: Thandi announced last month that it aims to transfer full ownership to its farm workers by 2014. Can you tell us a bit more about how Thandi works at the moment?
Vernon Henn: Today, Thandi has four shareholders and the Company of Wine People (CWP) is one of them. The other shareholders are the farms of Lebanon (52% share), as well as Nietbegin and Paardenkloof.
CWP has a 34% stake and it owns the Thandi cellars, but we will use the cellars as our office space. CWP still has a winemaker on the site, but the whole office will be branded as Thandi. It is a virtual business model.
j-d: The Company of Wine People has helped you with brand development and cellar space. Why has it decided to do this?
Henn: For them, the Government's black empowerment policy works on a scorecard. So, if they support Thandi, they can get some points as well as grow sales for Thandi wines. We've had a lot of support from CWP with brand and business development, and, of course, there is a fee payable to them for this.
j-d: What is the biggest challenge you currently face at Thandi?
Henn: We need to be more creative in getting more suppliers. Right now we are very focused on supply and how to extend that. There are opportunities for us in a lot of countries, like the US and also Hong Kong.
j-d: How much wine are you currently able to produce?
Henn: We are producing around 30,000 [nine-litre] cases per year. We cannot sell wine that we do not have. Two farms have approached Thandi recently and said they want to be part of Thandi's operations. Together they are 200ha, which would double our vineyard area.
We sell all the varietals - Cabernet Sauvignon, Merlot, Pinot Noir, Sauvignon Blanc, Semillon, Chardonnay and Chenin. We sell a lot of Chenin in Finland. In the UK, we sell to Tesco, as well as ethicalsuperstore.com and independent merchants.
j-d: You were the first Fairtrade-certified wine in the world in 2003. Is the market for Fairtrade developing as you hoped?
Vernon Henn, general manager of Thandi
Henn: Fairtrade will be a global phenomenon, yes, I believe that. The awareness of consumers has started to grow, and Thandi needs to make sure that it is there. More and more people are coming into the Fairtrade market.
j-d: Some people are against having larger producers involved in Fairtrade. What do you think about this?
Henn: In my opinion, Fairtrade was set up for small producers. If big players come in and demand market share then the movement could lose credibility. It is a free economy, but I believe there should be a special place for Fairtrade. We joined the movement because it creates a platform for us to compete effectively.
j-d: You have mentioned black empowerment in South Africa. How many black people are in senior positions in the South African wine industry?
Henn: There are still very few. There are black-owned brands but it's a battle. Firstly, you still have to be able to compete. Your wine needs to stand on its own, after you strip away all thoughts of sympathy.
We have seen people coming and falling. We have sweated blood and tears and there have been big problems we had to overcome. But now there is a lot of optimism; there is a lot happening.
Thandi Wines has got a black winemaker. That was part of my plan; we have a training scheme for black workers to learn about winemaking. Four people are in the system and one person has already passed through. We also now have representatives for black-owned brands on the Wines of South Africa board, as of January this year.
j-d: How has Fairtrade certification helped you in building the Thandi business?
Henn: Fairtrade takes black empowerment a little bit further. With black empowerment, a lot of promises were made, but people have become disillusioned about where the better life is that they were promised.
With Thandi we have 250 families. If we own the company then we have the profit, which means individual producers see the benefit.
We are the first Fairtrade wine and we are the first black-owned wine company. We are showing the world that it can be done, and for the people coming behind us, it will help them.
j-d: This interview would not be complete without talking about the dreaded economic downturn. How are you faring and can Fairtrade wine maintain its momentum during the recession?
Henn: We are priced between GBP4.99 (US$6.91) and GBP6.99 in the UK and we are competing effectively there. We are looking for savings, although the exchange rate is in our favour. Consumers are still buying Fairtrade, but it is important that they buy Fairtrade for the same quality. The quality must come first - that is the most important thing.
j-d: Can your business model be a beacon for others around the world?
Henn: Perhaps, but it is difficult. We have a unique situation in South Africa due to the political landscape.
j-d: Going forward, are you confident that Thandi can achieve full independent ownership?
Henn: We think that we have everything in place and there is funding in place with two banks. We must maintain the momentum of Thandi. We must keep the plane flying in the air while we refuel.
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