Australia’s largest wine cooperative CCW is considering legal action against Australia’s biggest wine producer Accolade Wines over payment dispute, according to ABC news.
CCW, representing approximately 600 winegrowers in Riverland and supplying around 200,000 tonnes of grapes to Accolade Wines annually, alleges that some growers have yet to receive payment for their delivered grapes.
Adding to the turmoil, CCW claims that the final price for Shiraz and Cabernet Sauvignon grapes remains undetermined after the harvest, placing significant stress on winegrowers. Jim Godden, CEO of CCW, has issued a final warning to Accolade Wines before resorting to legal action.
The situation has been exacerbated by the oversupply of red grapes caused by China’s tariffs, which effectively blocked Australian wine exports to its largest export market. Australia’s wine exports to China plunged from close to AU$1.3 billion to just AU$200 million after China imposed up to 218% tariffs in March 2021.
With exports to China plummeting, wine producers in Australia are left with a wine glut while struggling to find alternative markets.
In an attempt to alleviate the wine glut, previously Accolade Wines had offered Riverland winegrowers AU$1,250 per hectare to switch from red grapes to white, and AU$1,000 per hectare to mothball the vineyards. At the time, it’s estimated the Australian wine industry had about there was about 400 million litres of excess red wine.
CCW however complained the offered prices could not cover production costs, though it understands Accolade’s plight.
Even with the prices settled for the current vintage, winegrowers in the Riverland region are apprehensive about the future of the 2024 vintage. Public records indicate that the price per tonne for red grapes stands at AU$150, while production costs per hectare have already exceeded the market price, ranging from AU$300 to AU$400.
The looming question for winegrowers is how to finance the 2024 vintage given the disparity between production costs and market prices. The uncertainty surrounding this issue adds further concern to an already challenging situation.
“That is the difficult question we will be looking at going forward … ‘How do we fund vintage 2024?'” asks Godden.