Winegrape Market Matters

With 2021 behind us, it would be nice to think we could go into 2022 with some optimism, but the new year comes with a new set of challenges. Closure of the China market, freight shortages and a record 2.1million tonne 2021 vintage have converged to create a concerning supply demand imbalance. Many wine producers are approaching vintage with significantly higher than normal inventories and full tanks.   

It is essential that these troublesome market forces don’t impinge upon fair and equitable grape purchasing practices. Winegrape grower winemaker relationships should remain respectful, with consideration for the best interests of both parties. Winemakers should ensure that any obligations contained within their grape supply agreements are adhered to. There is also an onus upon growers to ensure they understand their contractual rights.  Winegrape quality assessments for the purpose of affecting price or rejecting fruit should be transparent and they must be conducted in accordance with any specifications contained within contracts. Risks associated with bottlenecks, labour shortages or shipping delays should be fairly allocated so as not to cause undue detriment to growers. Communication of any potential issues should be timely and open.  

The Australian Competition and Consumer Commission will be maintaining an active interest in the sector’s response to their 2019 winegrape market study this year, paying particular attention to potential breaches of the Competition and Consumer Act 2010 and any other behaviours that may be preventing the functioning of competitive markets. Practices that misuse market power carry very significant pecuniary penalties. Contractual terms that cause a significant imbalance in the parties’ rights and obligations and are not considered reasonably necessary may be found to be unfair. This could include lengthy payment terms and unilateral variation or termination of contracts. Under current legislation unfair terms found in standard form contracts may be voided.

We urge winemakers purchasing grapes to act with the best integrity and respect and to honour their contracts to growers.

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