Sunday 15 December 2019

ACCC Final Report on Wine Grape Market Study: What you should do next

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On 24 September the ACCC released its Final Report resulting from its Wine Grape Market Study, just in time for the 27th annual Finlaysons Wine Roadshow, which hits the road on 14 October.

At this year’s Finlaysons Wine Roadshow, a group of experts with proven industry knowledge and experience will assist you to make sense of the ACCC’s recommendations.

The CEOs of Australian Grape & Wine and Wine Australia will also join the Roadshow to discuss their agendas, and provide insight into the state of the industry (including export market access and development, the anti‑alcohol lobby, Brexit, USA-China relations, protection of European names (e.g. Prosecco) and container deposit legislation).

In its Report, the ACCC made 10 recommendations which it considers will improve the future growth prospects of the Australian wine industry.

Although some recommendations apply exclusively to Australia’s “warm climate” growing regions (and others exclusively to “large winemakers”), if the ACCC’s recommendations are implemented by lawmakers and the industry (and, in some instances, if they are not implemented by the industry), the Report is likely to have far-reaching consequences for growers and winemakers across the entire nation (including for growers and small winemakers in “cool climates”).

Many of the recommendations have been welcomed by the industry. However, some have “raised eyebrows”.

 The ACCC’s Recommendations

 The Final Report contained 10 recommendations. Most relevantly, the ACCC recommended that:

In relation to grape quality assessment

The industry develop standardised sugar/colour measuring methods and review/amend guidance on quality assessment standards;

• Winemakers use well-documented and objective testing and sampling methods (which should be clearly outlined in a grape supply agreement);

 In relation to payment periods

 • Long term payment periods be phased out of standard form contracts;

 • The adoption of a best practice standard of payment within 30 days of the final grape delivery by all winemakers with total processing capacity (across all wineries, including subsidiaries) of over 10,000 tonnes;

In relation to the Wine Industry Code of Conduct

The Code be substantially strengthened, and that all winemakers (irrespective of size or region) become signatories to the Code;

 In relation to contracting practices

 • Winemakers remove any “unfair contract terms” from their grape supply contracts;

In relation to price transparency in “warm climate” regions

 • Grower representative organisations deliver accessible, relevant and timely analysis of market trends to growers;

• Grape buyers be required to provide post-vintage pricing information, by winemaker, to Wine Australia for publication and distribution before the end of the financial year.

What now?

Growers and winemakers need to understand the Report and its implications.

As a starting point, it is important for winemakers to review their standard grape supply agreements and immediately remove potentially “unfair contract terms”. As part of its Market Study, the ACCC reviewed many grape supply agreements across the nation, and has warned that enforcement action is contemplated in a manner which is ‘not dependent on a winemaker’s size or region’.

Furthermore, the industry generally, through its representative bodies, needs to advocate to Government concerning the potential practical consequences of some of the recommendations.

Gain a better understanding, know what you should be implementing and understand the repercussions if you fail to be proactive. Finlaysons Wine Roadshow 27, “Levelling the Playing Field”, gives you the opportunity to gain expert insights on where to from here?

Wine Roadshow 27 details

The Finlaysons Wine Roadshow travels to 10 leading Australian viticultural regions annually, to give legal and commercial advice to winemakers on topical industry issues relevant to their businesses. This year, Wine Roadshow 27 will focus on the impact of the ACCC’s Market Study, plus the CEOs of Wine Australia and Australian Grape & Wine will be in attendance to provide updates on their respective agendas.

To register for a seminar in or near your region, click here

Margaret River

14 October

Barossa Valley

17 October

Launceston

21 October

Mornington Peninsula

22 October

Rutherglen

23 October

Riverina

24 October

Hunter Valley

25 October

Riverland

6 November

Coonawarra

25 November

McLaren Vale

27 November

 

For further information, please head to the Finlaysons website or contact Sara Bradshaw on sara.bradshaw@finlaysons.com.au or telephone 08 8235 7771.

 

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