ACCC, wine industry unite to improve commercial arrangements

Monday, 29 June, 2020

ACCC, wine industry unite to improve commercial arrangements

Australian Grape & Wine has welcomed news of the Australian Competition and Consumer Commission’s (ACCC) efforts to improve commercial arrangements between wine grape growers and winemakers. Following its 2019 Wine grape market study, the ACCC has worked with a number of winemakers, grower groups and Australian Grape & Wine to further implement improvements in standard form contracts, particularly in relation to wine grape quality assessments and how contractual disputes are managed.

Alongside this process, Australian Grape & Wine has been working to modernise and improve the voluntary Australian Wine Industry Code of Conduct, which will deliver greater transparency and certainty in commercial dealings. The company has also been working with the Australian Wine Research Institute (AWRI) to develop improved grape sampling and assessment protocols, and with Wine Australia to improve the delivery of better and timelier market information to wine grape growers.

Tony Battaglene, Chief Executive of Australian Grape & Wine, expressed his pleasure at the code’s progress, and the technical work underway. “Better information on market trends will help growers negotiate with wine companies on price. The work we are undertaking with AWRI will also lead to more transparent wine grape assessments, removing one of the key areas of contention between growers and winemakers,” Battaglene said.

The ACCC has raised concerns about lengthy payment periods specified in grape supply agreements, noting the majority of payment periods continue to extend beyond the ACCC’s recommended 30-day standard for winemakers.

“We recognise there are various points of view in relation to payment terms, including the ACCC’s target for 30-day terms. We know many growers agree with the ACCC’s position, while others would prefer the tiered payment system, as it may provide higher prices,” Battaglene said.

Battaglene encouraged all businesses to improve payment terms through negotiation and fair and transparent contractual agreements. While payment terms between grape growers and winemakers are a central focus for the ACCC, Battaglene states that the principles should apply along the supply chain.

Battaglene went on to add, “The code is a living document and is subject to ongoing review. We’re working hard to review and improve the code so that it is more effective in today’s commercial environment and flexible enough to encourage open and balanced negotiations. However, a code is not a silver bullet to better relationships. The onus is on all in the supply chain to create strong and harmonious commercial relationships.”

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