Sustainability as seen in the Perdeberg Wine Cellar Primary Agricultural Cooperative (Pty) Ltd (PWCPAC)
BackgroundThis document aims to set out the areas which PWCPAC has identified as focus areas for sustainable business. Sustainability in our organisation relates to many different aspects that will ensure that not only will Perdeberg be a responsible corporate citizen but also how we will ensure that we will be conducting business for the foreseeable future. Sustainability is therefore the result of a real and concrete plan of action which we at Perdeberg aim to make a way of life.
Our stakeholders, the primary ones being the producer/owners of Perdeberg, should take comfort from our initiatives that we are planning ahead and have clear objectives on all focus areas which will ensure the unlocking of value to the stakeholders in years to come.
It is a journey. Whilst many initiatives are in place, many others are in progress whilst more will be added over time. Our organisation operates in a ever changing environment and adaptability to new circumstances will continue to place challenges before us. We aim to always have a plan, as planning nothing will probably get you exactly that – nothing. The competitive environment of current days business, suggest that by doing the same thing as we have always done, means we are planning to fall behind and eventually to disappear. Sustainable business practices therefore recognise the competitive edge for those who continually scan the environment and who changes with the times. Technology alone will drive any organisation to change for survival, or not, for oblivion.
Whilst sustainability could be described in many ways, Perdeberg has chosen to look at it as the flip-side of risk. Identifying all risks, external and internal, and putting in place mechanisms to minimise or eliminate these risks, in our view, ultimately makes you a sustainable business. So to define Sustainability we have defined it as follows:
“Ensuring longevity through managing real and pre-emptive risks”
We have preliminary identified the following areas of focus where we believe sustainable practices should be implemented. These will form the bases of our current and future activities in risk management practice. They are:
- External to Perdeberg
- Environmental Awareness and Impact
- Economic Arena
- Industry Specific
- Social Responsibility
- Internal to Perdeberg
- Quality Maintenance
- Management and Control
- Talent and Skills Availability
External: Environmental Impact
This area relates to the so called ‘green’ issues which has become the most publicly debated as far as sustainability is concerned. Many see sustainability and ‘environmental friendly’ as synonymous and as such much focus is placed on this. Indeed being ‘green’ has developed enormous commercial value. Perdeberg has not lacked in this area. Our current initiatives are:
Effective use of Natural Resources
- Protection of natural uncultivated land – Perdeberg producers boasts 1 hectare of natural land for every 2 under vine
- Our cellar was one of the first Cellars becoming a member of the Biodiversity in Wine Initiatives (BWI certified). Our members through this pledges to adhere to cultivation practices that will not harm but protect our land and environment
- Our members also pledged to keep 1000ha of natural fynbos veld intact.
- Within the natural area, a member has registered the J.N. Briers-Louw Nature Reserve, home to the endangered Geometric Tortoise. The reserve was proclaimed in 1972.
- 75% of our entire vineyard is cultivated as dry land vines. This implies we do not drain water resources and look to mother nature to feed our plants
- Water retention in our soil is critical and we employ the method of planting cover crops. A spin-off of this practice has the effect of naturally improving soil structure and generating organic material in the soils
- Our dry land cultivation practices lowers the pressures on weed control and fungal infections reducing our need for pest controls
- All Perdeberg farmers cultivate according to the Integrated Production of Wine (IPW) standards. This standard drives sustainable practice in the production of wine grapes.
- 50% of our vineyard is Bush Vine. These vines are not managed by machine and huge carbon emission ‘savings’ result during harvest and pruning.
- Perdeberg invested in a Cross flow Filter. This technology assist Perdeberg in avoiding the use of powder based filtration reducing waste disposal
- A change in the chemicals used for cleaning avoids risk of waste water becoming saline
- Large investment in waste water treatment plants has reduced waste and ensures minimal impact on the environment
- Grape skins, a by-product of the pressing of grapes, now goes directly into containers, thus avoiding any soil contamination from wine juice seepage
- Members are incentivised to harvest grapes early in the day to avoid energy usage for cooling down grapes in the cellar. Large scale electricity savings are achieved
Our environmental sensitivity extends to the marketing and distribution of our products, particularly bottled product. Some initiatives in this segment include:
- Ever increasing bulk export volumes ensures that the overall Perdeberg profile of carbon effective transport is continually improving. It is accepted that shipping is the carbon friendliest form of moving goods.
- Increasing the amount of bottling on our premises has saved substantial energy usage in that we no longer have to transport bulk wines to bottling sites
- Packaging materials are continually standardised across our product ranges to avoid wastage
- We are in the process of conversion of packaging all our standard wines in lightweight glass bottles. We hope to have most of our product lines in this segment converted by the next vintage.
- Perdeberg only uses recycled cartons for outer packaging.
Economic and Industry Impact on Business Risk
Sustainable business takes place in the context of the economic environment in which the business operates. Perdeberg’s export strategy and conversion from bulk to bottled business underpins the risk assessment and as such is relevant to our endeavour to do sustainable business within our environment.
Perdeberg like any other internationally operating entity is exposed to economic risk brought about by world trends. In South Africa, being appraised as a third world country by global investors, we are exposed to investment fluctuations. Our currency is extremely volatile against most major currencies which also represent the main destinations for our export products. Worldwide wine consumption is growing and South African wine exports, which currently represents 57% of our production, is continually growing. With this our exposure to modern retail purchasing power as well as profitability sensitivity to currency fluctuation is growing.
Perdeberg’s declared strategy of establishing its packaged trademarks as well as increasing our export footprint naturally increases our business risk with regards macro-economic and industry risks, but of course also increases our returns. Our successful growth strategy dictates that we need to secure additional wines from outside own production. Whilst one naturally assumes these risks through a chosen strategy, there is always much that can be done to mitigate risks and ensuring longevity through pre-emptive risk management. Perdeberg has identified some of these and have addressed many whilst we continue to work on others. Our challenge is therefore one of sufficient and profitable supply over time. Initiatives to address this risk are:
- Maximising own member grape producer payouts to ensure a healthy sustained producer
- Sustainable vineyard management practice which aims to balance the maximum supply with protection of the environment, both soil and vegetation.
- Establishing new vineyards
- Developing supply and cooperation agreements with wine suppliers
- Contractually eliminating the risk of unwanted additives in wines that are bought in – to ensure a healthy product is received
- Working to long term contracts with our client base. This ensures integration of consumer preferences, in style and health, throughout the value chain back on to the producer farm.
As a citizen of South Africa we share in both the benefits and responsibility of a healthy sustainable society. Without support from businesses Government has an impossible task. Perdeberg has accepted its role in this and embraced a number of initiatives which, albeit small, have made some difference. Herewith a number of these initiatives:
- Perdeberg producers have subscribed to a variety of codes that ensures our labour practice on the farm and in the cellar is fair and equitable to all employees. These codes include inter alia IPW (Integrated Production of Wine), DLG (German based codes on environmental and social management practices).
- Perdeberg has submitted an application to the Land Reform Department which will ensure 3 operating farms will transfer ownership to 200 farm workers currently in the employ of our producers. The governing trust will be a member of the Perdeberg cooperative.
- Perdeberg runs a “Cattle Unit Trust” for its previously disadvantaged employees, the dividends of which flows to the workers who voluntarily joined up.
- Perdeberg provides accommodation to cellar workers on premise.
- Perdeberg subsidises electricity use to workers living on premise
- Perdeberg supported employees suffering from alcohol abuse and funds their rehabilitation programmes
- Perdeberg provides basic day-care for toddlers for workers living on premise
- Two Perdeberg producers runs a school on their farms for the workers
- Perdeberg - through its association with David Frost – donates R1 per bottle sold via Pick and Pay to the Raymond Ackermann Golf Academy for Underdeveloped persons.
- Perdeberg supports the Cape Town Carnival which raised funds for the community.
- Perdeberg through its UK based Joint Venture supported the British based Comic Relief programme. This programme supports various South African community based projects like for example the Nelson Mandela Children’s fund.
- Through wine sponsorships Perdeberg continuously supports a variety of community based projects.
- Perdeberg subscribes to the WIETA (Wine Industry Ethical Trade Association). This voluntary association promotes the adoption of codes aimed at improving the working conditions of employees in the agricultural sector.
- Perdeberg has been subjected also to a Fair Trade audit which we passed. Registration for Fair Trade is an objective which will be realised once we have established empowerment at ownership levels. This is in turn dependant on the Land Reform initiative indicated before.
Internal to Perdeberg Quality Maintenance
Long term a consumer is motivated by an emotional satisfaction that value and quality is in equilibrium. I get what I paid for. Quality is therefore the one non-negotiable if you plan sustained long term business. Perdeberg, which is known and respected for its quality of wines over many years recognises this importance and have indeed spent much time in the maintenance of standards:
- Both Cellar and Producer subscribes to the Integrated Production of Wine (IPW) principles. This certification assures our consumers that our produce is environmentally friendly and safe for consumption
- We belong to the Biodiversity and Wine Initiative – both cellar and producer. This partnership with conservation ensures sustainable production whilst protecting the natural habitat.
- Perdeberg is also DLG registered. This German certification is a direct result of our substantial business with the retail sector there and its codes are aimed at environmental sustainability and food safety.
- We are HACCP audited on a continuous basis. Again this confirms Perdeberg’s commitment to adhere to excellent food safety standards.
- All procedures are documented and adhered to. Perdeberg subjects itself to regular audits of standard maintenance as well as Occupational Health and Safety audits
- Perdeberg invested in equipment which allows our internal testing of our wine products specifications to ensure consistent wine making and preparation practices are followed.
Sustained long term business depends on good management and control as much as on anything else. Perdeberg is no exception and we pride ourselves in this department. As the slogan goes, you can only manage that which you can measure. Perdeberg has excellent line of sight on measurement. Control and management is centred around a number of initiatives/ forums some of which are noted:
- A Board of Directors from both Producer/Owner level as well as outside expertise. Sustained business strategy often requires a cold look from the outside and Perdeberg employs such talent
- A Finance committee, Human Resource Committee and Productoin Committee is chaired by Board members. These meet regularly to ensure risks are identified and managed.
- A management team runs the operational side of the business.
- All the above mentioned forums meet on a regular (monthly/Quarterly) basis to discuss pertinent matters.
- A number of management reports ensure good information is available for decision-making.
- Perdeberg is committed also to continuous development of its reporting dashboard to highlight more and more activities related to waste control and environmental matters. We believe in the long term economic value of controlling waste and protecting our environment.
Organisations are managed through people. Good people resources not only give an organisation a competitive edge but in the long run is the difference between a sustainable business or not. Henceforth Perdeberg’s policy is to attract and retain the best in Industry human resources. We aim to secure that through:
- Offering competitive remuneration packages
- Providing skills training - both organisational and personal
- Creating an stimulating work environment
- Being a vales driven organisation. Our values are Integrity, Quality, Good communication, Supportive teamwork and Excellence.
- Applying performance based reviews and remuneration policy
Perdeberg prides itself in being a leader on many fronts within the wine industry. However we realise that past achievement is no measure for future success. We also appreciate the enormous responsibility on the worldwide citizen to sustain and nurture the only planet we have into a long term future. No longer is the profit motive at ‘all cost’ but nowadays the cost of not sustaining your environment or running risks are prohibitive enough to ensure sustainability remains on every thinking organisations agenda.
Perdeberg has embarked on this road, being convicted of its necessity, yet mindful of its limitless possibility. We plan to take all our stakeholders along on this journey.