11 January 2005
The Widow's words disputed: The Cape Wine Academy and Distell

An objection from an important source has been made to some remarks of the Widow about the Cape Wine Academy in the current print edition of Grape. We give here:
1. The original remarks, extracted from The Widow’s sour grapes column
2. A letter from Mr André Steyn, Corporate Affairs Director of Distell
3. A response from Grape editor Tim James (the Widow feeling herself to be rather above responding to criticism...)

From The Widow’s sour grapes (Grape 25):

I’m far too superior a person to ever say ‘I told you so’. However (don’t you just love that word!), a reader reminded me (on my word of widowish honour) that I’d been rather sceptical about the future of the Cape Wine Academy when it was taken over by a bunch of venture capitalists called PointBreak who cared approximately zip about wine. In a splendid deal for them a few years back, they bought it from Distell for a token R1. In Grape 18 I suggested that if the CWA was ‘driven into the ground, or into being a moneymaking scam, it will be shameful reflection on Distell and on a whole industry’.

Well. They’ve done their best. The million rands that was part of what was bought for that princely R1 dried up, helped along by them paying themselves R25K per month for ‘administrative fees’ (nice work if you can get it). Then, without letting the minor shareholders know, Point-Break started the process of putting the Academy into voluntary liquidation…. Why keep it on, after all, seeing their ‘administration’ hadn’t brought in more cash? Fortunately, what they were doing was noticed and fought against by people who cared, and it looks likely the CWA might survive, with new ownership and management, for at least a little longer.

Let’s hope they find some students. Numbers have plummeted, no doubt largely because of greatly risen fees – but, frankly, jettisoning some of their better Cape lecturers and replacing them with some rather dubious ones can’t have helped much either….

One casualty of a liquidated Academy might have been the Cape Wine Master programme – not that many would have really noticed its demise. In what appeared to some as another derogation from responsibility a few years back, Distell and the KWV stopped funding the programme, and the Cape Wine and Spirits Education Trust, under the doughty Prof Joel van Wyk, chose to hand over the CWM ‘brand’ to the now profit-oriented Academy.

This was actually a massive betrayal of the CWM Association (the body of CWM graduates), which wanted to be in charge of the qualification, and keep it a non-profit affair....

Letter to Grape from André Steyn, Corporate Affairs Director, Distell

As a director of the Cape Wine Academy (CWA), I believe it my responsibility to draw your attention to some of the inaccuracies in the Widow’s Sour Grapes column of Grape’s January to March 2005 issue.

Stellenbosch Farmers’ Winery, now part of Distell, established the CWA in 1978 to promote a culture of wine appreciation among South Africans and ran it as a corporate social investment initiative from its inception until 2002. The KWV was a joint sponsor until the early 90’s when they withdrew funding as a result of the establishment of the Wine Industry Trust. During this time, CWA grew its presence, opening offices and satellite offices in a number of major centres in South Africa and even offering programmes to wine students in the UK. With the advance of the South African wine industry and the growth of several major domestic producers on global markets, Distell appealed to the industry to assist in the funding of the CWA that had become increasingly costly to run. Despite many approaches to other large producers, Distell was not successful in securing any financial support for the CWA and the running of its operations.

It was against this background that Distell agreed to venture capitalist group PointBreak’s proposal to take over the running of the CWA. PointBreak’s offer came with a business plan to make the CWA a viable and sustainable operation that would no longer be solely reliant on donor funding. The intention was to introduce ways to cover the running costs by building student enrolment and developing co-operative programmes with the hospitality and allied industries. With one of its principals a wine producer himself, there was a high level of commitment to the project and a strongly articulated desire to grow wine appreciation among the public and the hospitality trade. The Widow’s claim that PointBreak ‘cared approximately zip about wine’ could not be further from the truth.

Moreover, PointBreak made it clear that its goal was not to turn the CWA into a ‘moneymaking’ venture but to break even and as a result of its involvement, it would have a network of producers and representatives within the sphere of wine tourism that could be explored for potential profit opportunities.

Distell’s agreement with PointBreak was to write off an amount owing in excess of R1million, to continue to provide the CWA with infrastructural support for two years, taking care of accommodation and some general administration costs, while also extending a further interest-free loan facility, to enable the CWA to be restructured in accordance with the business proposal.

Marilyn Cooper, who had been running the Gauteng branch of the CWA was made a shareholder and director and was also later appointed principal of the CWA.

After the two-year period, when PointBreak came to the conclusion that it was unable to continue its financial subsidisation of the CWA, Marilyn Cooper put forward a proposal to buy the CWA and run it herself. However, the two parties were unable to reach agreement and a consortium of buyers led by Solly Kramer, owner of Norman Goodfellows in Gauteng, has now taken ownership of the business of the CWA. Marilyn Cooper is a member of this consortium. Distell has extended the interest-free loan repayment facility to the new owners. PointBreak is also committed to honouring all the obligations of the CWA, not taken over by the consortium.

At all times the affairs of the CWA under the auspices of Pointbreak have been conducted in line with the highest standards of corporate governance and with complete transparency.

For the Widow to claim that the Cape Wine Master (‘CWM’) programme is a ‘casualty of the liquidated academy’ is erroneous. The CWM programme was never funded by the CWA, which in any event, has not been liquidated. The CWA’s relationship with the CWM was to provide an administrative infrastructure only. Moreover, Distell was never directly a co-funder. KWV and the Cape Wine & Spirit Institute were joint funders of the master’s programme, that was always conceived as a self-liquidating venture, in line with MBA and other master’s programmes run by academic institutions all over the world

I hope this clarifies Distell’s involvement in terms of both the CWA and the CWM.

Response from Tim James, for Grape

Thanks to Mr Steyn for supplying some selected bits of background to the affair, although I would dispute some of his conclusions. A few points need to be made in response.

–   Whether or not PointBreak’s takeover of the CWA was motivated by their devotion to wine or to money must remain a matter of interpretation. Presumably we should agree, however, that their failure ‘to make the CWA a viable and sustainable operation’ implies that either their ‘business plan’ was wrongly conceived (and Distell’s admiration for it misplaced), or that their expensive administration of the CWA was incompetent. It is, I believe, a fact that in 2002 there were other offers made for the CWA when Distell decided to give it to PointBreak. The Widow did point out, of course, that Distell’s abandonment of the CWA also reflected badly on the industry as a whole.

–   Mr Steyn says that PointBreak was ‘financially subsidising’ the CWA. He does not dispute that they were drawing (at least) R25 000 per month. It is not clear where subsidies come into it, given that Distell were also still effectively subsidising the project too.

–   Regarding the ‘high standards’ and ‘complete transparency’ of PointBreak: I am reliably informed that, as the Widow suggests, the decision to liquidate the CWA was made without reference to minor shareholders; they were informed at the beginning of November that the CWA was to be liquidated at the end of November. (This with the approval of the Board, which included Mr Steyn, who apparently does not dispute the Widow’s accuracy in this regard.)  

It was apparently only at this late stage, when the Principal of the Academy (Marilyn Cooper, who was also a shareholder) learned what was going on, that she started trying to find a way of saving the Academy – fortunately with more success than PointBreak had had. (Perhaps Pointbreak, devoted to the interests of wine as they are, were simply too heartbroken at having to liquidate the institution to put much energy into trying to save it; the Board likewise.)

–  As to what Mr Steyn suggests the Widow erroneously said about the Cape Wine Master programme, he is simply wrong and really should read a little more carefully and accurately. The Widow did not say that the programme was a 'casualty of the liquidated academy’; she said that: ‘One casualty of a liquidated Academy might have been the Cape Wine Master programme’. That is, there are two events mentioned (a liquidation and a casualty), both as hypothetical.