Australia’s wine industry needs increased competition among grape buyers to boost its growth prospects, the competition watchdog says.
Some growers are waiting up to nine months to be paid for grapes amid low levels of competition between winemakers, which is also leading to inefficient production and a lack of innovation and investment in the industry, the ACCC’s deputy chair said on Monday.
Reiterating the interim findings of the Australian Competition and Consumer Commission’s study of the wine grape industry, Mick Keogh said bargaining power is weighted toward a small number of major buyers and against a much larger number of small-scale sellers.
“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,” Mr Keogh said in a speech to the Australian Wine Industry Technical Conference in Adelaide.
“The ACCC’s wine grape market study interim report found these significant issues represent a very real threat to the growth of the wine grape industry, especially in an era of scarce resources such as water.”
The ACCC is currently seeking feedback on its interim report, which was published last month.
The report identified issues including an inability of growers to negotiate prices, a lack of transparency over pricing, lengthy supply contracts, and the loading of risk onto growers rather than large winemakers.
“We are conducting the market study because of the significant number of confidential complaints received from growers about how their market works,” Mr Keogh said.
“Many growers have told us that they were reluctant to raise concerns with their winemakers due to fear of retribution.”