Australia: Wine grape sector in regulator cross hairs

Harmful market practices are restricting competition in some Australian wine grape growing regions and limiting the potential for growth of Australia’s wine industry, according to an interim report released June 4 by the Australian Competition and Consumer Commission (ACCC).

Through its detailed market study into the wine grape sector, the ACCC has proposed measures to address concerning practices it believes are common across high-production, warm climate wine grape-growing regions.

The ACCC has identified a lack of transparency and certainty over how grapes are priced and assessed for quality, as well as 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 Chair Mick Keogh said.

“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.”

The ACCC is also concerned about delayed payment terms for growers, which can sometimes stretch up to nine months after grapes have been delivered to a winery.