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Transformative wine estate faces sustainability issues

The Department of Rural Development and Land Reform has undertaken to initiate a turnaround strategy and a restructuring of the operations at the Solms Delta Wine Estate, which was acquired as part of the pilot phase of the Policy Framework on Strengthening the Relative Rights of People working the Land, commonly known as the 50/50.

Through an agreement reached between the owners of the Solms Delta Wine Estate in Franschhoek and the department, workers acquired a 45% stake in the winemaking business.

The acquisition of the wine estate by the department in 2016 was to secure tenure, maintain the jobs of farmworkers and to give workers an opportunity to participate in the winemaking business, as envisaged in the 50/50 policy framework. At the time, the farm was on the verge of collapse owing to a variety of challenges, including facing possible liquidation due to accumulated debt and poor management.

However, despite the intervention by the department, including the provision of financial support for the business, the project continued to operate at a loss, for reasons that included poor wine sales (both local and international), underresourced teams (management, sales and hospitality marketing) and inefficiencies in the running of the hospitality business,

In July 2017 the directors voluntarily placed the company under business rescue, as the cash flow situation continued to deteriorate. A business rescue practitioner (BRP) was appointed from 27 July 2017.

The challenges that have arisen have forced the Department to cease the continued funding of Solms Delta in its present form, a move which is likely to lead to the liquidation of the business by the BRP.

A solid turnaround strategy encompassing diversification and restructuring of operations will ensure sustainability and profitability of the business.

The department is committed to working with the farmworkers to ensure that they are supported in order to continue operations in a manner which will secure their employment and improve their livelihoods. In addition to this, the department will also secure the property as the landowner.

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