More than 500 growers who are part of the CCW Co-operative based in South Australia’s Riverland region have rejected a buyout offer from Accolade Wines.

Accolade Wines announced a buyout package for Riverland grape growers last month, which it said was aimed at addressing the Australian grape glut. The Riverland region produces about 10 per cent of Australia’s wine. 

Under the current terms of its contract, the CCW must “sell to Accolade all grapes supplied to CCW by its members under existing contracts’’ and Accolade has to buy all of those grapes.

The new offer would have meant it only has to buy around 80% of the current volume, or around 150,000 tonnes of grapes.

A new 10-year proposal would have seen Accolade buy-out CCW red wine contracts for $4000 per hectare. Prior to the grape glut growers were making up to $8000 a hectare, depending on the grape variety.

Accolade also offered to buy out a separate bulk wine contract the CCW has in place for export to the China market, with that part of the proposal worth $11 per tonne.

But at the group’s annual meeting last week, 95% of growers voted against the proposal.

Co-op general manager Peter Szabo said the vote was overwhelmingly against the Accolade proposal.

“Their proposal offered less security,” he Szabo said.

Grower Paramjit Singh Bagri told ABC News the offer was too low. 

“$4,000 is nothing these days. It wouldn’t even cover the post removal,” he said. “We need $50,000 per hectare. If they gave us that much money we could leave tomorrow.”

A statement from the Accolade board said the company was “disappointed by this decision on a number of counts”.

“It is not realistic to expect that the industry can keep operating as if global operating conditions and demand led influences have no impact on our respective domestic interests,” it said.

“If there is no change, grower and winery businesses will continue to suffer.”

Australia battles grape glut

Last year Rabobank reported Australia’s oversupply had reached two billion litres of wine or over 2.8 billion bottles of wine. That’s the equivalent of 859 Olympic swimming pools worth of wine in storage due to the glut.

In regions such as Griffith, grape prices fell to an average of $304 ($200) a ton last year, the lowest in decades and down from $659 in 2020, according to data from Wine Australia.

Riverland wine growers called for a moratorium last month on planting vines in a bid to solve the crisis, with experts predicting millions of vines will need to be destroyed.

Accolade said it was actively working with the local grape growing cooperative CCW – which has 540 members – to develop a package to address the oversupply issue currently facing the wine industry. The package is being introduced to grower members of CCW through a series of meetings this week.

Accolade Wines CEO Robert Foye told the Australian Financial Review there was a significant structural mismatch between supply and demand in the wine industry, and it needed to be fixed.

“As an industry, for us to continue as if no response is required simply isn’t sustainable,” Foye said.

Traditionally, CCW supplied grapes for Accolade’s cheaper commercial wine brands, such as such as Banrock Station, Berri Estate and Hardys. The company is seeking to put more focus on its premium brands, such as Petaluma, Grant Burge and St Hallett.