ACCC calls for more transparency in wine grape sector

The Australian Competition and Consumer Commission (ACCC) has said that current market practices in the wine grape sector are hampering competition in certain regions and limiting the potential of the industry.

ACCC deputy chair Mick Keogh said: “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.

“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.

“There are significant bargaining power imbalances between large winemakers and the small growers who supply them, a dynamic that is common between suppliers and processors across the agricultural sector. This power imbalance is particularly evident in the bulk wine grapes industry.”

After conducting a detailed market study into the wine grape sector, the ACCC has proposed some measures to address these practices.

The watchdog has proposed that winemakers located in the warm climatic regions should provide indicative and final grape prices to an independent third party for simultaneous public release, and that payments for wine grapes should be delivered to the growers within 30 days of delivery.

In addition, the ACCC suggested that standardised testing for wine grape quality assessments should be developed, and that dispute resolution mechanisms in the Australian Wine Industry Code of Conduct should be improved.

Keogh further added: “The ACCC recommends that Australian winemakers with more than 10,000 tonnes of processing capacity sign the code.

“If more big winemakers don’t sign up, a mandatory code may be needed to bring about the required industry reforms.”

The ACCC has raised additional concerns over a lack of transparency over grape pricing and quality assessment.