On 24 September 2019, the Australian Competition and Consumer Commission (ACCC) released its Final Report.
ACCC Releases Wine Grape Market Study Final Report
On 24 September 2019, the Australian Competition and Consumer Commission (ACCC) released its Final Report resulting from its Wine Grape Market Study which made 10 recommendations which it considers will improve the future growth prospects of the Australian wine industry.
In June I posted a blog following the Interim Report issued by the ACCC which in summary identified a number of practices in grower-winemaker relationships which were categorised by the ACCC as concerning.
In its Final Report, the ACCC has now made a number of recommendations which are summarised below.
1. The Australian Wine Research Institute should work with the National Measurement Institute and the industry to develop uniform national standards for testing and measuring grape sugar levels and colour;
2. Winemakers should use well-documented and objective testing and sampling methods for quality assessments in the vineyard and at the winery;
3. The Australian Wine Research Institute, in consultation with industry stakeholders, should review current industry guidance on quality assessment standards, and amend the guidance to clearly reflect current best practice and to provide detailed information on standards for sampling in the vineyard and at the weighbridge;
4. Supply agreements should clearly outline the testing and sampling methods that winemakers will use to assess grape quality;
5. Warm climate grape grower representative organisations should deliver accessible, relevant and timely analysis of market trends to warm climate growers;
6. For grapes purchased from warm climate regions, wine grape buyers should be required to provide pricing information to Wine Australia. Wine Australia should aggregate and publish this information by winemaker, for each variety in each warm climate region, before the end of each financial year;
7. Long term payment periods should be phased out of standard form contracts;
8. A best practice standard of payment within 30 days of the final grape delivery should be adopted for all winemakers in Australia with total processing capacity across all wineries, including subsidiaries, of over 10,000 tonnes;
9. The Australian Wine Industry Code of Conduct should be substantially strengthened, and all winemakers that purchase grapes from growers should become signatories to the Code; and
10. Winemakers should review their standard form contracts and remove any “unfair contract terms.”
The Final Report indicates that the ACCC intends to review the progress of the industry in adopting its recommendations in 12–18 months’ time. In addition, the ACCC will continue to monitor competition and fair trading issues more broadly.
What you need to do
Winemakers and growers need to review the Final Report and ensure that they are aware of its implications. A copy of the Final Report is available from this link. The recommendations made in the Final Report have significant implications for growers and winemakers – in particular, the potential for enforcement action in relation to unfair contract terms, the shortening of payment terms and the mandating of the Code of Conduct. Winemakers should immediately review grape supply arrangements to address any potentially unfair contract terms.
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