Australian Grape and Wine has welcomed the ACCC’s review of the Australian wine industry and agrees with its findings that there remains further room for improvement.
AGW said in a statement, “We are pleased with the acknowledgement of the good work undertaken by the sector to respond to the market study recommendations. We understand there are areas we can improve on, in particular with ways of improving price transparency. We will review the report in detail and implement actions to improve in these areas.”
Two years after its first report was released, the ACCC has called for the Australian wine industry to accelerate its actions to improve price transparency and shorten payment times.
AGW said, “While the ACCC is not recommending a mandatory industry code or any similar regulation be introduced at this time… They conclude that they will consider recommending or taking further regulatory action if improvements are not made on price transparency and lengthy payment terms.”
When the ACCC’s initial market study was launched, it identified areas of concern in the wine grape supply chain, including a lack of competition, potential unfair contract terms, a lack of price transparency, and imbalanced risk allocation in favour of wine makers at the expense of grape growers.
Deputy Chair Mick Keogh said, “The wine grape industry has made important progress in addressing some of the issues identified in our market study but we believe more work is needed to improve price transparency and shorten payment times.
“For example, our initial market study found that some grape growers were being paid up to nine months after their grapes were delivered to wineries. While there have been some improvements, lengthy payment terms remain prevalent throughout the sector.”
Mr Keogh noted that despite the ACCC’s recommendation for a best practice standard of payment within 30 to 60 days of grape delivery, many winemakers have not significantly reduced the length of their payment terms.
The ACCC review is positive about the AGW’S efforts to drive increase signatories to the voluntary industry code with a large increase in the number of signatories to the voluntary Code of Conduct for Australian Winegrape Purchases in the warm climate regions of the Riverland, the Murray Valley, and the Riverina.
Signatories are also committing to adopt a standard grape quality assessment process, which, when adopted, will represent a significant improvement in industry practices.
“The standardisation of quality assessments should make the process of grading and pricing grapes more transparent for growers when dealing with winemakers who have signed the code,” Mr Keogh said.
However, the ACCC found that growers still have challenges getting access to timely and accurate price information.
“We urge winemakers to improve price transparency, which is necessary to allow grape growers to make an informed decision about contract renewals or choosing which winemaker to supply grapes to. It also allows growers to know whether the price they are being paid by a winemaker is a fair market price, or whether they should seek a better offer,” Mr Keogh said.
“The sector has achieved some important progress, however, we will consider recommending or taking further regulatory action if improvements aren’t made on price transparency and lengthy payment terms.”