Riverina growers and winemakers were given a deep dive into a recent report from the Australian Competition and Consumer Commission (ACCC) as part of a travelling roadshow.
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The Finlaysons Wine Roadshow stopped at Quest Griffith to discuss the implications and thinking points of September's ACCC report into the Australian wine industry and how the local industry can adapt to the 10 recommendations put forward by the report.
The Riverina was one region particularly highlighted by the report, with the ACCC noting no wineries in the region are signatories to the Australian Wine Industry Code of Conduct and informal annual and multi-year agreements between growers and wineries are more common in the region than anywhere else in the nation.
The recommendations handed down by the report include the mandating of the code of conduct and a proposal for all wineries with a processing capacity of more than 10,000 tonnes to ensure growers were paid within 30 days of final grape delivery.
Partner at Finlaysons Lawyers Andrew Williams said the event saw a strong attendance and while there may be some disagreements as to how to progress forward with the implementation of the recommendations, the region appears willing to adapt.
"Clearly the industry is having a think about what the ACCC has looked at," Mr Williams said.
"It's a timely position in the market so very pleased to have the discussion and group of people together.
"I certainly think the views differed in the room about some of the specifics, but I think the consensus was there, that to the extent the industry is not already at that point here, there are steps that should be taken and might be overdue to modernise some of those commercial relationships [in the region]."
Chief Financial Officer at Nugan Estate Kingsley Massey said while he agreed with some of the recommendations handed down by the ACCC, other recommendations could cause tough conditions for wineries to operate under.
"I think there are a lot of good things they have put in there," Mr Massey said.
"If you have a look at the transparency and fairness [recommendations], that's really good, whereas I think there has been a sort of lack of understanding about the financial dynamics of the industry.
"The whole thing with the payment terms are going to be quite onerous on a number of winemakers and you've got to match up your cash flows and I don't think they've [the ACCC] taken adequate notice of that."
Recommendations from the ACCC Report
- The AWRI should work with the National Measurement Institute and the industry to develop uniform national standards for testing and measuring grape sugar levels and colour.
- Winemakers should use well-documented and objective testing and sampling methods for quality assessments in the vineyard and at the winery.
- The AWRI, 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.
- Supply agreements should clearly outline the testing and sampling methods that winemakers will use to assess grape quality.
- Warm climate grape grower representative organisations should deliver accessible, relevant and timely analysis of market trends to warm climate growers.
- 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.
- Long term payment periods should be phased out of standard form contracts.
- 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.
- 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.
- Winemakers should review their standard form contracts and remove any "unfair contract terms".
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