Recent amendments relating to the sale of liquor products in South Africa

The newly inserted clause provides that no person may use, in connection with the sale of a liquor product, whether produced in or imported into South Africa, the words "port", "sherry", "sjerrie", "grappa", "ouzo", "oýæi", "korn", "kornbrand", "jägertee", "jagertee", "jagatee" and "pacharan", unless that liquor product is entitled to be described with such a word under the Liquor Products Act, applicable European Union legislation or an applicable international agreement.

Agreements between South Africa and the European Community

This amendment stems from three agreements that were concluded between South Africa and the European Community a few years ago. These agreements are aimed at facilitating and promoting trade between these two contracting parties.

The first of these agreements is the Agreement on Trade, Development and Co-operation ("TDC Agreement") that was signed by the contracting parties in 1999. The Agreement entered into force fully in May, 2004. However, some provisions have been in force since January, 2000. In 2002, two additional agreements were concluded to supplement the TDC Agreement, namely the Agreement on Trade in Wine and the Agreement on Trade in Spirits.

The Agreement on Trade in Wine provides a reciprocal set of rights regarding the use of protected names of the European Community and South Africa in relation to wines.

The Agreement also mentions the terms of the TDC Agreement and, more specifically, Annex X, which deals with the phasing out of the use of the names "port" and "sherry" on products that are sold in South Africa and exported out of South Africa. These provisions entered into force in January, 2000.

New names needed for "port" and "sherry"

In terms of Annex X, South Africa agreed to phase out the use of the words "port" and "sherry" on all export markets within five years, but for non-SACU (South African Customs Union) and SADC (South African Development Community) countries for which an eight-year phase-out period was applicable.

Furthermore, it was agreed that South African products could be marketed as "port" and "sherry" on the South African domestic market during a 12-year transitional period and, beyond that period, new denominations for these products would be jointly agreed between South Africa and the European Community. In effect, time has now run out and South African "port" and "sherry" can no longer be called by those denominations.

The Agreement on Trade in Spirits aims to ensure the reciprocal protection of certain names that are used to identify "spirits" that originate in the European Community and South Africa.

The Agreement contains specific provisions relating to eight non-geographical denominations of spirits originating in the European Community. These specific denominations are "grappa", "ouzo", "oýæi", "korn", "kornbrand", "jägertee", "jagertee", "jagatee" and "pacharan". In the past, liquor producers in South Africa have also used some of these denominations.

Phase-out period lapsed

In terms of the Agreement, the parties agreed that there would be a five-year phase-out period from the date on which the Agreement came into force, after which these denominations would not be used to denominate any spirits that are produced in South Africa. The only products that would be permitted to be sold in South Africa under those protected names would be those originating in the European Community, imported and then sold as units in South Africa.

As the agreement came into force in 2002, the five-year phase-out period has lapsed. In effect, this means that these eight denominations are reserved exclusively in South Africa to spirits that originate in the European Community and may not be used in any manner other than that which is prescribed in terms of European legislation.

The new amendment to the Regulations finally gives effect to the provisions of these three agreements concluded between the European Community and South Africa.

The practical implication of the amendment to the Regulations is twofold. On the one hand, it will create transparency that will ensure that a consumer, who purchases sherry, will be assured that the chosen liquor is from Spain. On the other hand, liquor producers in South Africa will now have to reconsider the names of their brands and, in particular, the trade marks under which the products are sold, to be in line with the denominations as prescribed by the legislature and the international agreements.