The top empowerment company in the food & beverage sector is Illovo, whose approach to black economic empowerment (BEE) is multifaceted as well as integrated.
It encompasses meaningful and sustainable participation of black people at all levels of operation of the company.
It has specific objectives for achieving employment equity targets. A formal policy is in place to promote preferential procurement and outsourcing to black enterprises and service providers.
In 1997 Illovo launched its medium-scale farm development programme to promote the participation of black people and communities in the sugar cane business.
To date, cane farms sold to black medium-scale farmers as a percentage of cane land owned by Illovo amounts to 26,5%.
The group also provides considerable support to small- and medium-scale cane farmers.
As far as employment equity is concerned, the transformation process involves measures aimed at achieving equitable representation of blacks across all occupational categories and levels.
As with most other large SA industrial companies, the focus is on designated appointments in the more senior levels of management where there is an under-representation of blacks.
In line with Illovo's objective that there should be direct and meaningful BEE participation in the SA sugar milling industry, the company has entered into an agreement to sell the Gledhow sugar factory and cane growing estates on the north coast of KwaZulu Natal. The purchaser, Grand Bridge Trading 40, is a broad-based BEE company whose major shareholders are the Sokhela Family Trust and the Gledhow employees. Provided the deal is endorsed by the competition commission, the purchase price of R335m will be settled in cash and Illovo will provide management support for five years after the transfer.
SABMiller
SABMiller, the third-largest brewing company in the world, has its roots firmly in SA through SA Breweries (SAB). It is ranked second in the food & beverage sector. While other companies scramble to construct ever-more complicated schemes, it is refreshing to reflect on the progress that SAB has made, using simple techniques that empower previously disadvantaged individuals.
Beer consumption in SA is in line with the demographics of the country. Black people drink more than 90% of the total beer consumed in SA; blacks make up about 80% of the total population.
SAB realised this in the 1980s, the dark days of apartheid. However, recognising that one's customer base is black is one thing, doing something about it is another. Few if any other companies in SA were doing anything to uplift disadvantaged people in those staid and sterile days. SAB embarked on an aggressive economic empowerment campaign during the 1980s in an effort to place a considerable portion of its business with black suppliers.
"The campaign attempted to alleviate historical inequalities and provide skills and training to disadvantaged individuals," says SAB MD Tony van Kralingen.
"In its procurement, outsourcing and contract-awarding activities, SAB favours companies that have demonstrated a commitment to the principles of BEE. Our company's focus on outsourcing key services and creating wealth for new players is not new. In 1987, we introduced our owner-driver project, which allowed former employees of SAB to form their own companies to distribute SAB's product brands to the trade. To date, SAB's investment of about R2bn has resulted in more than 248 owner-drivers distributing more than 50% of SAB's volumes."
In its financial year to March 31 2004, SAB invested about R730m in a variety of empowerment schemes.
Even by the early 1990s, before the 1994 election, few companies were doing anything on the training front. Job reservation was no longer allowed and many industries had adopted an equal opportunities outlook, but there was little evidence of on-the-job training. "In those days, companies were far more interested in adapting to changing global circumstances than in local issues such as education and training in the workplace," says BusinessMap director Reg Rumney.
Van Kralingen says SAB's structured focus on identifying, mentoring and encouraging black suppliers has borne fruit and will receive more attention in future.
Sustainable entrepreneurship is also demonstrated through SAB's Northern Cape black barley farmers programme in Taung and Vaalharts, which supports more than 170 emerging farmers.
SAB KickStart, one of the company's corporate social investment projects, has equipped more than 22 000 young adults with business skills and provided many of them with seed capital to set up their own businesses.
Since 1995 SAB has invested more than R31m in this project and helped to launch more than 2 000 businesses. Many of these enterprises have grown into multimillion rand concerns, employing many people. Ninety percent of those entrepreneurs who started their businesses three years ago are still in business today.
The liquor industry has formed a steering committee to formulate a liquor industry BEE charter. The process is under way and involves key players in the industry.
"We believe economic transformation in the liquor industry will ultimately be achieved through the licensing of retailers. At present more than 80% of them are unlicensed," says Van Kralingen.
"Licensing would result in the recognition of almost 1m formal jobs in the economy, improving SA's formal employment figures considerably. This is significant, given that SA's formal employment figures are taken into account when the country is economically assessed."
SAB believes that licensing, though a provincial responsibility, will help to achieve two objectives of the National Liquor Act - economic empowerment and the combating of alcohol abuse. Licensing itself is not covered in the Liquor Act.
