Procurement of grapes for KWV from South African suppliers

Abstract

The history of KWV is entwined with that of the South African wine industry. In order to better understand the challenges faced by KWV today it is of the essence to attain a thorough understanding of its past and subsequent transformation from a quasi governmental organisation into a company. During this transition the role of KWV as a buyer of products from the vine also changed. The shift of its focus from surplus removal to economic survival has meant that at times KWV has taken the role of referee and player. As such it is not surprising that KWV relinquished all statutory powers during the 1990’s in order to focus on commercial activities. The procurement of products has thus taken on a different dimension to support the organisational strategy. Given the highly competitive nature of local and international wine markets, it is of utmost importance to ensure the sustainable production and supply of suitable quality and volumes of raw material; an aspect that is especially relevant given the limited availability of high quality raw material in the South African wine industry. The procurement approach employed by KWV must therefore incorporate these sustainability and other “best practice” principles in order to establish sound supply relationships and ensure the supply of qualifying raw material. The ultimate success of KWV is dependent on a good strategic fit between the quality/price requirements of wine brands and the sustainable cost of raw material production. The brand mix and volume requirements, given the planning horizon, will dictate the cultivar, quality, style and price requirements and indicate a suitable lead time to make provision for volume growth. The procurement approach must therefore be a key element of the marketing and sales strategy in order to ensure suitable resources.

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