Many of Australia’s largest winemakers have agreed to revise their supply agreements with grape growers in response to the concerns raised by the Australian Competition and Consumer Commission (ACCC) that such agreements were perceived as “unfair.”
This perception was highlighted in ACCC’s study on the wine grape market released last year. In the wake of the report, the ACCC began contacting large winemakers seeking a revision of the terms under which they contract with grape growers.
Righting an imbalance of power
“Our work showed that there was a significant bargaining power imbalance between large winemakers and wine grape growers, reflected in many wine grape supply agreements that forced growers to carry substantial risk,” ACCC Deputy Chair, Mick Keogh, said.
“At the time, we recommended winemakers review their grape supply agreements and remove any unfair contract terms. We have since been in discussions with several winemakers emphasising that supply agreements need to be fair to both parties, and balance their rights and obligations.”
Several winemakers have already agreed to revise contract terms with regards to contractual disputes with growers and wine grape quality assessments. In addition, some winemakers will also revise terms that allowed them before to unilaterally make changes to supply contracts, including one‑sided termination rights, and make them more equal and fair. The new terms will also allow growers from seeking legal or financial advice through confidentiality clauses in the contracts.
Payment times still a stumbling block
However, the ACCC remains concerned about the lengthy payment periods in grape supply agreements as many large winemakers still do not adhere to the ACCC’s recommended 30-day standard payment time period for large winemakers to pay their growers and other small suppliers.
“Winemakers have co-operated during this process, and we acknowledge that several have made significant changes,” Keogh said. “But many winemakers have not agreed to change their payment periods at all, which means growers do not receive their full payments for up to seven months after supplying the grapes.
“We understand that the industry is currently reviewing its voluntary code of conduct, including the code’s requirements about payment times,” Keogh added. “We will be watching this process, and may consider further action if a material improvement in payment terms does not occur.”
