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ACCC calls out power imbalances between winemakers & growers

ACCC calls out power imbalances between winemakers & growers

The Australian Competition and Consumer Commission’s (ACCC) interim report into Australia’s wine sector has called out a range of harmful market practices it says are limiting the wine industry's potential for growth.

The wide-ranging report highlighted numerous areas of concern, including a lack of transparency and certainty over how grapes are priced and assessed for quality, and supply contracts that run for multiple years but do not offer price certainty to growers.

"We found that winemakers do not publicise the prices they pay to growers and often have confidentiality terms to prevent growers from disclosing their indicative and final prices to other growers," ACCC deputy chairman Mick Keogh said on Monday.

"Meanwhile, various supply arrangements appear to favour incumbent buyers of bulk wine grapes, such as exclusive supply clauses, automatic and long term contract extensions, and difficult contract termination obligations on growers."

Keogh said there were significant bargaining power imbalances between large winemakers and the small growers who supply them.

"Increased transparency over indicative and final prices is likely to lead to greater competition between winemakers, and better outcomes for growers," he noted.

It also noted that wine grape growers were not paid until nine months after their fruit was delivered in some cases, with the wine grape industry "characterised by imbalances in bargaining power between major buyers (winemakers) and growers".

The competition watchdog wants payment terms shortened so growers are paid in full within 30 days of delivering grapes.

The report focused on the three grape growing areas: the Riverina in NSW; Riverland in South Australia; and Murray Valley in the Murray Darling area.

Australian Grape & Wine said it welcomed the release of the interim report. 

"This is an important milestone in the ACCC’s process of taking a deep and comprehensive look at the Australian wine sector’ said Tony Battaglene, Chief Executive of Australian Grape & Wine.

"We appreciate the ACCC’s efforts to engage closely with Australian Grape & Wine and our members, and we look forward to continuing this collaborative approach."
The interim report presents a set of draft findings and recommendations for consideration by the sector. It offers an opportunity for anyone interested in the Australian wine sector to have their say on its future.

"Australian Grape & Wine looks forward to reading this interim report in detail and working with the ACCC to ensure its final report reflects the needs of Australia’s winegrape growers and winemakers," said Battaglene.

"Australia’s wine sector is now in a relatively strong position. At the same time, any opportunity to further strengthen commercial relationships in the Australian wine sector is positive. We encourage winegrape growers and winemakers to make sure their views are taken into account in the process."

The interim report can be found here and the ACCC will be accepting submissions until Friday, June 28, 2019.