The ACCC is calling on reforms to improve competition for wine grape growers and increase growers’ bargaining power, which aims to further boost competition among winemakers when buying grapes.
At the Australian Wine Industry Technical Conference in Adelaide on Monday, ACCC deputy chair Mick Keogh said there will be inefficient outcomes in production and pricing if the current low level competition among winemakers buying grapes continues.
This follows the ACCC wine grape study interim report, which started in September 2018, to allow wine grape growers to share their experiences around competition between purchasers of wine grapes, issues around price transparency and quality assessment, as well as bargaining power and risk allocation in the supply chain
“The imbalance in bargaining power results in growers accepting contracts with sub-optimal terms, with limited ability to resolve disputes, and having to wait sometimes up to nine months for payment for their grapes,” Keogh told the conference.
“The wine grape industry will need capital investment by growers to improve irrigation efficiency and to plant improved grape varieties. Only when the growers have greater confidence and certainty in the market will they be prepared to undertake this investment.”
“Increased pricing transparency will provide better price certainty to the market, and not only improve growers’ bargaining power but also boost competition between winemakers."
Keogh said the wine grape study interim report found these issues represented a threat to the growth of the wine grape industry, particularly due to the current state as scarce resources, such as water.
“We are conducting the market study because of the significant number of confidential complaints received from growers about how their market works,” he said.
“Many growers have told us that they were reluctant to raise concerns with their winemakers due to fear of retribution.”
The ACCC is currently seeking feedback from the industry on its interim report.
