Labelling to promote broad-based Black economic empowerment in South Africa : a case study of the Thandi empowerment label.
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Date
2007
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Abstract
Broad-based black economic empowerment (BBEE) is a policy objective in South Africa. Farmworker
equity-share schemes (FWES) satisfy several of the empowerment goals specified by the
proposed AgriBEE Scorecard. Information about the costs and benefits of subscribing to an
empowerment label will help managers to make more informed decisions about empowerment and
could therefore promote BBEE. The Thandi label is an initiative to market fruit and wines
originating from FWES and farms operated by previously disadvantaged farmers.
A case study of the Thandi label was undertaken to determine whether or not the accredited
empowerment attribute adds value to Thandi products. An exploratory-explanatory case study was
adopted basing questions largely on the theoretical propositions of asymmetric information, the
benefits of product labelling and the preconditions for a successful label. Primary data were
collected via in-depth interviews with managers of Capespan, The Company of Wine People and
empowerment farms participating in the Thandi label. The study made use of in-depth interviews
with key informants to investigate issues considered (on theoretical grounds) to be critical in
establishing a successful label. Responses were subsequently tabulated and compared, where
relevant, across respondents in order to check for consensus views.
Results indicate that the Thandi label had not succeeded in differentiating fruit, whereas the Thandi
wine label had increased sales revenue and was covering accreditation costs incurred by farms as
well as the recurring costs of maintaining and marketing the label. Thandi fruit had not grown its
share of the domestic or export markets and did not command a price premium, Capespan
subsequently discontinued the Thandi fruit label. Thandi wine, on the other hand, had grown its
export market and consumers were prepared to pay a premium for Thandi wine products.
The data indicate that empowerment attributes were useful in finding shelf space for products, but
that quality is essential to grow market share and to earn price premiums. In short, accredited
empowerment attributes can add value to quality products sold to discerning consumers who lack
information about empowerment and quality attributes at the point of sale. Empowerment labels
must include quality attributes. Government should at least absorb some of the transaction costs
confronting producers and marketing agencies in negotiating standards for farms and firms
participating in generic empowerment labels. It could also offer auditing services to local
accreditation agencies to improve their credibility. Further research estimating consumers'
willingness-to-pay for products branded with empowerment labels is necessary to estimate the size of
premiums that different products may command.
Description
Thesis (M.Ag.Man.)-University of KwaZulu-Natal, Pietermaritzburg, 2007.
Keywords
Agricultural produce--South Africa--Marketing., Wine industry--South Africa., Fruit--South Africa--Marketing., Business enterprises, Black--South Africa., Employee empowerment--South Africa., Agricultural labourers--South Africa., Labels--South Africa., Agriculture--Economic aspects--South Africa., South Africa--Economic policy., Theses--Agricultural economics.