Responsible corporate citizenship is key to Distell’s long-term sustainability and the longevity of the communities it serves. We unlock long-term value by engaging our stakeholders, understanding their needs, identifying opportunities for innovation and growth, and then working collaboratively to achieve shared goals. We continually refine the list of key corporate responsibility issues that affect our ability to enrich the lives of our people, shareholders and the communities where we live and work.
Our key issues are:
- Responsible drinking
- Excise and illicit trade
- Our people
- Supply chain
Distell encourages the moderate consumption of alcohol as a socially acceptable and enjoyable way to celebrate and relax. We also recognise that alcohol can harm people who drink irresponsibly, as well as those around them.
We welcome broad-ranging consultations among all stakeholders and, together with leading international manufacturers, regularly engage with and urge government to address the irresponsible production, marketing and consumption of liquor.
Leading practice starts at Distell. Many of our employees have access to, or are exposed to, alcohol within the workplace during the production of wine, spirits and RTDs. We have a strict company-wide alcohol policy, enforced by management, and we supplement employee education and training programmes with practical interventions to ensure responsible employee behaviour. We also support a variety of life skills and youth development programmes through the Distell Foundation to address underage drinking by redirecting the energy of the youth, building their resilience and empowering them to make healthy lifestyle choices.
One of the dilemmas of the South African Government is that, when it legislates to prevent health or social harm, it should not inadvertently cause economic harm through the unforeseen consequences of its actions. Thousands of workers in the Western Cape are dependent on the health of the industry. We are in full support of efforts by government to develop interventions that integrate social, health and economic considerations. However, the government’s progress in developing legislation concerning alcohol abuse is slow, being managed at all three tiers of government and across nine provinces. Government’s aim to harmonise legislation is hampered by a lack of consensus.
he South African Government has embarked on various policy interventions focusing on the following four key issues: reducing underage drinking, preventing fetal alcohol syndrome, controlling the sale and marketing of alcoholic beverages, and reducing drinking and driving.
Reducing underage drinking
The most contentious issue is the proposed increase in drinking age limit from 18 to 21. Underage drinking and alcohol abuse among the youth is a significant problem in South Africa and, according to the government, costs taxpayers approximately R17,2 billion a year.
While an optimal solution demands agreement and collaboration between all stakeholders, including parents, teachers and wider society, we endorse the current legislation against alcohol being sold to anyone under the age of 18 and are convinced that enforcing our existing laws would be the most effective means of reducing underage drinking. In support of this stance and as a member of the ARA, we (and all other ARA members) comply with and promote the ARA Code of Conduct among our distribution channels. We also continued with our Age Watch campaign across all our retail stores. The campaign is aimed at preventing alcohol being sold to anyone under the age of 18.
Preventing fetal alcohol syndrome
The high reported rate of fetal alcohol spectrum disorder (FASD), which can be caused when a mother consumes alcohol during pregnancy, is a pressing socio-economic issue in South Africa. The neurological damage caused by FASD is irreversible and can worsen many of the social ills faced by communities, including unemployment, crime and violence.
As awareness, prevention and treatment programmes for women addicted to alcohol can dramatically reduce the incidence of FASD, we have increased our investment in projects addressing alcohol abuse by pregnant women. Apart from our involvement with ARA’s initiatives, we support the Foundation for Alcohol-related Research (FARR), the Goedgedacht Trust and FASfacts to help raise awareness around the consequences of drinking while pregnant, and urge our sales and distribution network not to sell alcohol to visibly pregnant women.
FARR has been successful in reducing fetal alcohol syndrome (a subcondition within FASD) by 30% in De Aar. We will continue to invest in opportunities where we can link our life skills, art, music and drama therapy projects to FASD prevention and responsible drinking awareness programmes. Our overall aim is to systematically establish a more holistic support framework for communities at risk.
Controlling the sale and marketing of alcoholic beverages The Department of Health proposed an outright ban on all liquor advertising. Irresponsible alcohol advertising can create false impressions of alcohol, increasing social problems. On the other hand, responsible advertising can inform consumers about the dangers associated with alcohol abuse and influence consumers to switch from illicit, unregulated and potentially dangerous substances to legal, safe and regulated products.
We maintain that an outright ban on liquor advertising will not be effective in combating alcohol abuse and agree with the studies recently conduct by Econometrix and the Department of Trade and Industry, where they found that a ban on advertising is likely to result in unintended consequences such as job losses, reduced taxes and an increase in sales of illicit alcohol products. In addition, our marketing channels and material are tailored towards specific markets targeted to exclude the youth and communities at high risk.
Our advertising strategy is aligned with the ARA’s Code of Commercial Communication and Conduct and we ensure that all relevant people involved in distribution are properly trained. This initiative has resulted in a noticeable drop in the number of advertising complaints registered at the ARA that relate to Distell and its brands. All advertising complaints are investigated and, if required, the ARA will refer cases of non- compliance for independent arbitration or legal action. This year none of the complaints registered at the ARA related to Distell and none of Distell’s advertisements were withdrawn.
Reducing drinking and driving
Distell firmly maintains that people should not drive while intoxicated (DWI). The large number of motor vehicle accidents in South Africa involving intoxicated drivers has prompted government to propose a reduction in the blood alcohol concentration (BAC) limit for drivers from 0,05 to 0,02 grams of alcohol per 100 millilitres and that for novice drivers to zero.
While we support government’s proposal for novice drivers, we oppose the intended reduction for all other drivers. People often enjoy alcohol beverages with their meals and do so responsibly. Imposing a zero- tolerance policy on all drivers runs the risk of potentially criminalising the actions of responsible and productive citizens. In order to improve the safety for motorists and pedestrians we need more effective enforcement of existing legislation, rather than additional legislation for experienced and responsible drivers.
We communicate the dangers associated with both alcohol abuse and drinking and driving by putting warnings on our product labels and in our advertising and marketing material. Billboards and pamphlets carry responsible drinking messages and distribution staff are trained to discourage patrons from excessive consumption and driving while intoxicated. When hosting company-related events, sales staff have access to a driver service to ensure they do not drink and drive, and to set an example for their clients to follow.
Distell and other ARA members continue to run campaigns raising awareness about drinking and driving. These road safety campaigns also include pedestrian safety as pedestrians account for approximately a third of all road fatalities in South Africa.
The 2010 National Treasury review of excise policy in the Southern African Customs Union (SACU) led to the announcement, in February 2012, of new tax incidence targets of 48% and 35% for spirits and beer respectively. Wine remains at 23%. To achieve these targets, increases of 10% and 12% excise tax on spirits was announced in 2013 and 2014 respectively.
The South African Government, supported by some concerned stakeholder organisations, advocates for the continued increase in excise tax to tackle harmful use of alcohol. Although we strongly support the objective of reducing the misuse of alcohol, we question the efficacy of excessive excise tax increases to achieve this goal.
Excise increases penalise all alcoholic beverage consumers for the behaviour of the minority who abuse alcohol. This latter group, meanwhile, is significantly less responsive to price increases
South Africa has among the highest income inequalities in the world, with a large proportion of the population living in poverty. Tax increases on alcoholic beverages hit low-income households hardest as they spend a significantly larger proportion of their income on consumables, including alcohol.
The South African brandy industry has been impacted by real increases in excise on spirits, resulting in sales volumes falling by 8,4%. This has significant implications for the local wine industry, considering that it takes on average five litres of wine to produce one litre of brandy. The Department of Agricultural Economics at the University of Stellenbosch estimates that the decline of brandy in South Africa over the past eight years has resulted in a loss of R1,56 billion in economic value add to the South African economy and a loss of 7 526 job opportunities foregone economy-wide.
Beyond the negative economic impact of increasingly high excise duties, the latest increases in excise tax will provide yet another catalyst for illicit trading and the further consequence of tax evasion on a large scale. According to the World Health Organisation (WHO) illicit (unrecorded) trade in alcoholic beverages in South Africa was estimated to have accounted for 26% of total alcohol volumes per capita (in litres of pure alcohol) consumed in 2010.
Illicit trade in alcohol results not only in foregone revenue to the government, it also poses serious health risks since producers of illicit products seldom adhere to South Africa’s manufacturing regulations, designed to ensure products are safe for human consumption. The larger the unregulated, informal alcohol sector the more difficult it is for government to reduce alcohol abuse. We maintain it is crucial for government, law enforcement and the alcohol industry to address issues linked to illicit alcohol.
Any assessment of the effectiveness of excise increases, as a policy intervention to curb alcohol abuse, needs to take into account the above-mentioned economic and socio-economic considerations, as well as the government’s capacity and determination to effectively contain probable increases in illicit trade.
Distell, along with its industry peers and the South African Liquor Brand Owners Association (SALBA), continues to participate in the government’s review of SACU’s excise policy in 2014, with the aim of providing constructive inputs that objectively consider all the consequences of excise policy, unintended as well as intended.
We also work as an industry to develop, in collaboration with key government and non-government stakeholders, a coherent framework of action to quantify and mitigate the strategic risk to the industry posed by the illicit liquor trade in South Africa.
We endeavour to participate constructively in the communities in which we operate, because strong and healthy communities offer a measure of protection or prevention against abusive practices, including alcohol abuse. With investments and in-kind support for more than 80 projects, Distell aligns with the United Nations’ Millennium Development Goals and the 12 key outcomes of the South African Government’s ‘Programme of Action’.
Over the past three years we have shifted our CSI focus towards life skills and alcohol-usage related programmes to achieve better alignment between our business and our affected communities.
Distell has been involved with the South African art world for over 48 years, and arts and culture make up 45% of our annual CSI budget. We also focus on specific social issues such as education, unemployment, health and awareness of responsible drinking.
We have been particularly active in supporting arts and culture outreach programmes, including seven festivals around South Africa. At home our Oude Libertas Centre in Stellenbosch plays an important role in the development of the local creative arts and entertainment industry. We sponsor five annual awards recognising excellence in arts and support the development of classical, jazz, contemporary and African music through a number of festivals and projects.
We continue to link the arts with life skills education by supporting organisations such as Chrysalis Academy, Goedgedacht Trust, Vision AfriKa and the South African Life College Group. We also support other skills development projects such as the Pebble Project Trust, the Anna Foundation and the Trauma Centre.
Our approach to education is multifaceted and ranges from supporting candidates in higher education to addressing the needs of unskilled and unemployed candidates and combating illiteracy among farmworkers.
A number of our properties possess heritage buildings of historical importance. During the year restoration work was done at Nederburg, Mon Repos, Plaisir de Merle and three sites in Stellenbosch.
This year the Distell Foundation began to collaborate with Distell’s environmental unit to develop and invest in projects that deliver both improved environmental and social benefits such as the newly established Stellenbosch River Collaborative. In partnership between local industry, conservation organisations and governmental departments, the Collaborative aims to address the deteriorating water quality in the Eerste River catchment area
In support of employee volunteerism, Distell matches funds raised by employees, up to a maximum of R5 000 per employee. This year more than a 100 Distell volunteers committed approximately 700 working hours to 27 projects, either individually or as teams, in addition to their own personal time.
We aim to attract and retain talented, diverse and motivated staff who find career fulfilment in delivering outstanding quality products for Distell. Employee surveys show a positive trend and serve to guide our people development programmes.
This year Distell’s staff complement increased to 5 284 (2013: 5 066), after acquiring Burn Stewart Distillers (BSD) in Scotland. Of the total, 90% of all employees are located in South Africa. Of our total South African staff complement 71,79% are historically disadvantaged individuals (HDIs) and 12,57% are female HDIs. Staff turnover increased marginally to 8,96% (2012: 7,4%) and appointments remained stable at 10,2% of our total permanent headcount for the year.
Employee relations and employment practices
Distell’s employee base in South Africa is 33,76% unionised, and several unions are represented. Signed collective agreements address organisational rights and conditions of employment, while labour legislation regulates union recognition across our operations. Distell engages with staff through workplace forums, 284 mission-directed work teams (MDWT) and annual negotiations with representative trade unions. Despite tough economic and labour market conditions wage negotiations were concluded successfully and without industrial action while an unprotected strike at our Springs facility led to the dismissal of 80 employees.
Employee relations and employment practices Distell’s employee base in South Africa is 33,76% unionised, and several unions are represented. Signed collective agreements address organisational rights and conditions of employment, while labour legislation regulates union recognition across our operations. Distell engages with staff through workplace forums, 284 mission-directed work teams (MDWT) and annual negotiations with representative trade unions. Despite tough economic and labour market conditions wage negotiations were concluded successfully and without industrial action while an unprotected strike at our Springs facility led to the dismissal of 80 employees.
Our line management and human resources practitioners are well trained in the application of the Corrective Action Code. This year 21 cases were referred to the CCMA, with 20 resolved in favour of Distell.
Aside from basic legal compliance, all employees have access to a subsidised retirement or provident fund and the Group’s closed medical aid scheme. Leave benefits for most leave types are in excess of the minimum legislative requirements. Distell also provides bursaries, study assistance and study leave for employees who are actively pursuing their own personal development.
Talent management, training and development
We attract diverse and motivated staff by participating in career fairs at tertiary education institutions and targeting experienced employees through a number of channels and events. During the year 86,37% (2013: 87%) of all new appointments were previously disadvantaged individuals (PDIs) and 90,71% of all promotions were awarded to PDIs, while 79% were awarded to HDIs.
In March 2014 regional talent review forums were held around the globe and a global talent management review forum is scheduled for August 2014. A major focus area is training and development. This year our training spend increased by 8% to R15,7 million (2013: R14,5 million) of which R8,1 million was spent on training initiatives at a regional and operational level.
The foundation of our succession planning is our middle management development programme, introduced in 2010. Of the 57 employees who have participated since the programme started 89% were HDIs and 47% were female. Eight employees are currently enrolled. On completion candidates are tracked and supported by continued interventions to enhance their individual development.
In 2013 we introduced a senior leadership development programme to speed up transformation at strategic levels within Distell. All six participants completed the programme successfully. This year eight employees are partaking in the programme, six of whom are HDIs.
We have seven learnership programmes providing 128 (2013: 114) employed and unemployed individuals with training opportunities across our value chain, from winemaking to retail distribution. A further 38 recent graduates or students are completing internships as part of our workplace experience programmes. In support of our transformation goals 77% of our total training spend and more than 90% of learnership, internship and leadership spend is allocated to previously disadvantaged individuals (PDI).
We promote occupational health and safety (OHS) through various education initiatives across the business and offer health interventions to reduce the incidence of illness. We adhere to the principles as set out by the Fertilisers, Farm Feeds, Agricultural Remedies and Stock Remedies Act 36 of 1947 regarding training, protection against toxic agricultural chemicals, testing and safe disposal or removal, and we subject ourselves to external third-party audits as part of the IPW certification system.
The injuries resulting in lost time increased marginally to 146 (2013: 139), while the number of lost days decreased from 1 601 (2013) to 1 534 due to less severe accidents requiring shorter periods off duty.
This year nursing staff at our on-site clinics carried out nearly 31 000 consultations, addressing a variety of wellness issues, including voluntary counselling and testing (VCT) for HIV/Aids.
Staff make use of our ethics line to report both human resource issues and ethical concerns. Grievances relating to an employee’s working environment, salary or wellness are channelled to our HR department for resolution, while other concerns are channelled to other units depending on the nature of the complaint or allegation
This year we received 23 calls, of which seven related to human resources grievances. All calls were investigated and resolved, except for one call that was still under investigation at year-end.
Transformation is a continuous journey, integrated into all aspects of the business. It helps us build a high performance culture through effective leadership, communication and commitment to a common set of goals. Distell strives to be representative of all South Africans and everyone who represents its operations outside the borders of South Africa, irrespective of their origin, belief system, physical abilities, gender or class status in society.
Progress on transformation is monitored by the social and ethics committee and our transformation strategy consists of four pillars: broad-based black economic empowerment (B-BBEE), employment equity, talent management and skills development. Our overall score increased to 64,06 (2012: 62,87) and we maintained our status as a B-BBEE Level 5 contributor. We are working towards creating long-term empowerment through our integrated transformation strategy and in doing so endeavour to regain our B-BBEE Level 4 contributor status.
In addition to our annual transformation roadshow, we partnered with The Human Capital Engine, an organisation specialising in organisational transformation and since 2012 have conducted 78 leadership, transformation and diversity workshops across all employee levels and business units. To date we have reached 1 265 employees. We will continue to roll out these workshops across the business, aiming to reach all employees by June 2017.
Distell exerts influence over – and invests in – its supply chain to secure raw materials at the appropriate quality, volume and price. Our primary production comprises raw materials such as grapes, wine, grape juice concentrate, distilling products, apple juice concentrate and cream to the value of R1,3 billion. Our secondary production phase is mainly concerned with the labelling and packing of products for distribution and sale.
Primary production activities
This year we secured a total of 350 million litres of grape, wine and wine-related products, representing 29% of South Africa’s total wine production. Of the total, 96% was sourced locally and nearly 98% from independent wine cellars or growers.
More than 5 000 hectares of land, either wholly or partially owned by Distell, fall within the Cape Floral Kingdom (CFK). Many of our independent suppliers also reside within the CFK where one quarter of the more than 6 000 endemic plant species are threatened. The Biodiversity and Wine Initiative (BWI) was formed in 2004 through a partnership between the South African wine industry and the conservation sector in order to contribute to the protection of this national heritage. Through the BWI and other conservancy organisations we have set aside 39% or 2 017 hectares of the land we either wholly or partly own for conservation
In order to uphold responsible agricultural practices, all Distell farms are registered with the Integrated Production of Wine Scheme (IPW), which aims to reduce the environmental impact of agricultural activities as well as reduce industrial inputs into wine-growing. The scheme requires accurate record keeping of all vineyard activities and since the 2010 vintage. All of Distell’s certified wines carry the IPW sustainability seal issued by the Wine and Spirit Board. In certifying our wines under the new South African wine industry sustainability seal we ensure that all our independent suppliers are IPW accredited.
Distell is a founding member of the Wine Industry Ethical Trade Association (WIETA), formally established in 2002 to bring together stakeholders in the Western Cape wine industry to discuss and debate issues around ethical trade. We are committed to ensuring that all the primary production suppliers adhere to the WIETA code by the end of 2017. We are on track to achieve this target with 66% already accredited and an additional 24% in the process of obtaining accreditation.
The Swiss-based Société Générale de Surveillance (SGS) is a major international body that certifies organically grown agricultural foodstuffs. SGS has again confirmed accreditation of Papkuilsfontein Vineyards’ 166,3 ha of organically cultivated vineyards, which we jointly own with a consortium of black entrepreneurs and a local community trust. SGS has also accredited our Nederburg and Adam Tas cellars for the production of organic wines. An additional area of 5,6 ha is expected to qualify for SGS accreditation within the next three years.
In the long term, climate change holds significant risks for the agricultural sector, and specifically the cultivation of grapes. To adapt to our changing climate we are diversifying our supply chain by developing vineyards in new wine-growing areas. We pioneered wine-growing in Elgin over 30 years ago, more recently in Gansbaai and have several experimental plantings further inland. These are well isolated from other wine-growing areas, thereby reducing risk from viral infection.
We have access to a dedicated vine nursery through a preferential supply agreement to ensure a consistent supply of good-quality vine plant material and first mover advantage on scarce cultivars.
In order to promote the entry of new role players in grape and wine supply we embarked on a long-term process of assisting the establishment of new vineyards in the Northern Cape region in 2003. Government’s role is to supply the funds and land; viticulturists from a nearby independent cellar provide technical expertise and training; the cellar processes the grapes and Distell purchases the wine production. We have played a leading role in bringing together the respective stakeholders and managing the working groups. We envisage that this project will lead to the establishment of approximately 500 ha of vineyards for the production of brandy. By year-end a total of 86,6 ha had already been established.
Secondary production activities
Annually we spend more than R3 billion on packaging materials. In order of spend this consists of glass, cans, cartons, closures, labels and various other packaging items such as foils and shrink-wrap plastic. Other goods and services include bulk transport, packed product transport, business support services and marketing.
For key commodities such as glass, labels and cartons, we have specific sourcing strategies in place which take into consideration not only cost and continuity of supply, but also other aspects such as local supplier development, preferential procurement and lead time considerations. These strategies are updated regularly.
Over the past financial year we spent approximately R3 million on packaging materials and, where feasible, sourced materials as close to our production sites as possible in order to reduce logistical costs. Local supply also assists in limiting our exposure to foreign exchange fluctuations.
Over the last two years we focused on improving our sales forecasting system. Together with regular demand reviews and sales and operations planning meetings, we managed to improve our sales forecast accuracy from 78,6% to 80,5% over the past year. Various improvements in the stability and reliability of our outbound supply chain have allowed us to improve our service levels to retailers and reduce our packaging inventory cover from 30 to 25 days.
Upholding human rights
We embrace the United Nations Global Compact (UNGC) and officially became a member in 2013. We undertake to respect human rights and to ensure that the company is not complicit in human rights abuses.
While there were no known instances of human rights violations by Distell during the period under review, the treatment of workers and their families on farms that supply the agricultural processing industry remains a controversial issue. We adhere to and exceed the standard requirements set out in South Africa’s Basic Conditions of Employment
Act and underline this compliance with a number of benefits, including participation in the Distell Provident Fund, subsidised medical funds and employment-linked housing. All employees, including farmworkers, have the right to join or form trade unions. The majority of farmworkers are represented in this way.
Our farms are subject to external third-party audits as part of the IPW certification system. All hazardous chemicals, such as post-process laboratory chemicals, are stored in dedicated storage areas. Used chemicals are removed by an external contractor on a regular basis, treated and disposed of at certified hazardous waste sites. Safe disposal certificates are kept on record.
Sharing in benefits
Together with a group of Gauteng entrepreneurs and a local community trust, Distell is the joint owner of Papkuilsfontein Vineyards, a 975-hectare farming venture. Established in 1998, the project is underpinned by an extensive transfer of skills, including wine-growing, wine farm management, winemaking and marketing.
Following the successful introduction of our Fairtrade-accredited Place in the Sun wine brand in 2011 we introduced our second Fairtrade-accredited wine brand this year called Earthbound. This organic wine brand is produced primarily from the grapes from the Papkuilsfontein farm.
The personnel policy applied to Papkuilsfontein is also applied to all our wholly-owned farms and has again been given a clean audit by Department of Labour inspectors. Our labour practices on LUSAN farms are based on the same principles followed at all Distell wine farms.
A shared-ownership scheme has been part of the Durbanville Hills company structure since its inception, and 50 000 shares (5% of total shares) have been issued to the Durbanville Hills Workers’ Trust. A director elected by the employees represents the farmworkers on the board of directors. The Workers’ Trust drives several development initiatives within the farmworker community, including adult education programmes and the funding of high school fees for children on the supplier farms.
Distell is wholly dependent on the long-term health of the environment from farm to consumer. Environmental processes and resources such as the soil, climate, water and energy form the basis of our products.
Changes in climate and the quality and supply of water have a major impact on our operations. We recognise that these changes are at least partly a result of industrial activity, from the burning of fossil fuels to the negative effects of emissions, effluent and waste.
We are continually improving our production processes to combat the rising cost of energy. Improving the energy efficiency of our production processes and substituting fossil fuel with renewable energy solutions, where possible, has become a major focus.
Governance and management
Distell’s social and ethics committee oversees all of its environmental practices. We are progressively implementing the ISO 14001 environmental management system at all our primary and secondary production facilities. In total, 88% of our sites (2013: 59%) are actively implementing ISO 14001 and 47% (2013: 41%) have already been externally certified. In the new financial year all four secondary production sites will be taken through the rest of the ISO 14001 implementation process.
Our environmental policy is available online at www.distell.co.za.
We regularly review all new and proposed environmental legislation, regulations and policies to assess their potential impacts on the business, and provide feedback to government where appropriate. This gives us the opportunity to engage with the regulatory bodies and proactively take the necessary steps to ensure compliance. This reporting year saw the amendment of all the primary environmental legislation as well as the promulgation of a vast number of new regulations in terms of these Acts.
The most significant impacts include:
- Carbon Tax and offset – due for enforcement in 2016, the proposed tax rate is R120/t CO2 e levied after an initial 60% tax-free threshold. A 10% annual tax rate increase has been proposed for the first five years, while the 60% threshold will be revised only after five years.
- Air quality legislation – a number of small boilers fall under this legislation, increasing the burden on reporting and compliance.
- Waste management legislation – the thresholds for environmental impact assessments (EIA) have changed and waste generated from the production of alcoholic beverages is now defined as general waste, necessitating revised monitoring and reporting methods
We further engage with local authorities, in particular the Stellenbosch municipality, to ensure that concerns of mutual importance, such as the treatment and control of effluent discharge, are dealt with responsibly.
Since its implementation in July 2010 our greenhouse gas (GHG) reporting database has played a critical role in monitoring and managing our environmental management practices at an operational level. In addition, we developed a site services dashboard (SSD) to monitor our performance against our resource usage reduction target related to water, electricity and fossil fuel-based energy.
The roll-out of the SSD system to all our fully-owned secondary production sites and the majority of our cider and spirit primary production sites has been completed. The LUSAN sites and our last outstanding primary production sites will come on stream during the new financial year. The SSD is also being implemented at our new Ghana production facility and we will be further rolling it out to our international facilities in France and Scotland.
In 2011 Distell established a company-wide Go Green movement and developed training material highlighting Distell’s environmental management programmes across our various facilities. We also contracted an external organisation to raise awareness around water, electricity and fossil fuel usage at our sites. We plan to make this function a permanent position. This will be supplemented with e-learning programmes.
Climate change and carbon footprint
Our direct emissions (Scope 1 and 2) decreased by 4,4% to 153 646 tonnes CO2 e (2013: 160 636 tCO2 e). We also managed to reduce our emission intensity per litre of product slightly by 0,8% to 257 tonnes CO2 e per million litres of packaged product. The decrease was partly due to a 3,6% decrease in production volumes, but also to electricity and fossil fuel energy reduction projects which led to the 0,29% reduction in electricity usage and the 9,23% reduction in the coal used in our production boilers.
Our largest impact on climate change is caused by burning fossil fuels on-site to generate steam for our boilers (42,5%), as well as the purchase of mainly coal-based electricity from Eskom (53,9%). To reduce our impact (using our 2009 usage as a baseline) we aim to achieve a 25% reduction in on-site energy usage from fossil fuel and a 15% reduction in electricity usage per litre of packaged product.
This year we achieved our 2018 reduction target for fossil fuel, though we need to continue our savings initiatives considering the extent to which energy usage fluctuates year on year according to both market demand and stock management planning. Initiatives implemented this year included insulation to reduce steam losses, further development of biogas boilers and methane capture, as well as experimentation with wood chips as an alternative energy source to coal.
We are making slower progress in achieving our electricity usage reduction target. While our total electricity usage declined due to the reduction in our production volumes, our electricity intensity per litre of packaged product increased to near 2012 levels, despite the implementation of a number of electricity-saving projects. Nonetheless, our overall energy reduction since 2009 is 11,33% against our 2018 target of 15%. An estimated saving of 1 678 MWh of electricity was achieved during the reporting year by implementing energy-efficient lighting upgrades at Green Park, Adam Tas, Durbanville Hills, Nederburg, in Port Elizabeth and Worcester, optimised refrigeration at Adam Tas, and the installation of various variable speed drives on motors and pumps
We are also able to reduce our non-energy-related GHG emissions by capturing, purifying and then using the carbon dioxide (CO2 ) released during the fermentation of the apple juice to carbonate our products. This, in turn, reduces our CO2 purchases. While carbon capture increased in 2013 by 15% as a result of the expansion of our Monis cider plant in Paarl, carbon capture dropped this year by 23% (back to 2011 levels) as a result of lower and more fluctuating production activity.
Water usage and sustainable water supplies
Distell is dependent on water for the agricultural production of its raw materials, and for its production processes. The importance of securing a reliable supply of water – and ensuring that the quality of the water is protected – is critical as climate variability becomes more evident. The availability of good-quality water is already limiting agricultural expansion and the situation is likely to deteriorate further, especially considering that water availability will be significantly affected by climate change.
The implementation of the National Water Act, 1998, and specifically its compulsory licensing requirements, could severely impact Distell’s long-term sustainability. Competition for water for environmental, social and economic needs is a complex issue, particularly in relation to the historical distribution of water and its link to land ownership. Redressing this situation could have a negative impact on agriculture and agricultural industries if it is not managed proactively and judiciously.
All water usage at the different Distell sites is measured and recorded on a continuous basis, to allow for improved management and reporting of water usage at a corporate level. Our total water usage decreased marginally to 2,3 million cubic metres. However, our water usage intensity declined to 3,89 litres of water per litre of packaged product when factoring in the 3,6% decrease in overall production volumes.
This equates to an 8% reduction in water usage compared to 2009, against our 2018 target of 10%
Water reduction initiatives were implemented at various sites and an upgrade of the irrigation system for our Goudini site’s lawns reduced groundwater usage by approximately 11 000 m3 .
The majority of our waste consists of organic primary waste as well as inorganic waste like glass bottles and other packaging waste. This year saw a further 3,9% increase in the volume of organic waste recycled and recovered, giving a 28% cumulative increase since 2011.
We are actively working to reduce, reuse and recycle our glass packaging. This year we used a total of 263 397 tonnes (2013: 326 592 tonnes) of glass bottles, of which 75,6% We are actively working to reduce, reuse and recycle our glass packaging. This year we used a total of 263 397 tonnes (2013: 326 592 tonnes) of glass bottles, of which 75,6% (2013 76,2%) comprised new glass and the remaining 64 168 tonnes (2013: 77 802 tonnes) comprised reused bottles. The reduced tonnage of new glass bought in is attributable to using lighter glass, collecting and reusing through our ‘Give back, Get back’ campaign, introducing bag-in-box (BIB) packaging for wine and cans for ciders, and exporting our products in bulk containers for bottling overseas. This year we collected and reused 64 168 tonnes of glass bottles (2013: 77 802 tonnes), representing 24,4% of our total glass bottle requirements.
Effluent and waste water
Waste water is generated primarily as a result of washing and ‘cleaning in place’ (CIP) practices at the different sites. CIP is critical to ensure our products comply with product quality and health and safety standards. Waste water is also produced as a by-product of the brandy distilling process. The volume of waste water per litre of packaged product increased to 2,32 litres of effluent per litre of packaged product (2013: 2,30 l/) The waste loading of our effluent, as measured by its chemical oxygen demand (COD), increased significantly to 6 727 104 kg COD (2013: 4 629 459 kg COD).
While decreased volumes of waste water is advantageous, reducing the water component results in increased effluent concentration per litre of waste water and the risk of environmental damage if not treated properly. Our approach to waste water disposal is to look for ways to reduce the load on the local authorities and use treated waste water for irrigation while minimising our environmental impact.
Our plans to construct effluent treatment plants at our Goudini Distillery and Adam Tas sites are progressing well. During the period under review we completed EIAs for both sites and received environmental authorisation to proceed with construction. We are also evaluating the feasibility of upgrading our treatment facility in Wellington and constructing an anaerobic treatment system at our Worcester site. This latter will reduce the water’s organic load and facilitate the production of biogas (methane) for our boilers.