The results of Dr Craig Emerson’s Review of Regulatory Options for the Wine and Grape Sector have been released, with the report making recommendations to address power imbalances and improve commercial practices.

The report, released by Wine Australia, examines fair trading, competitive relationships, contracting practices and risk allocation between grape growers, winemakers and retailers.

Dr Emerson engaged in extensive consultation with the sector, meeting with more than 20 different key stakeholder groups including grape growers, wine makers, liquor retailers, and industry representative organisations across Australia.

The imbalance in bargaining power between large businesses and their small suppliers was a major focus in Dr Emerson’s report, noting that the long-term sustainability of the sector depends on fair conditions for the primary producers responsible for our world-class wine.

Chief Executive of Australian Grape & Wine Lee McLean said the organisation would work through the recommendations in detail, in consultation with members and stakeholders across the sector.

“This is a substantial report tackling complex issues, and we acknowledge the significant work undertaken by Dr Emerson and his team,” McLean said.

“We recognise the need for change and reform in some areas of our sector and will work constructively with the Australian Government as it considers its response. It is essential that industry has a strong voice in the next phase to ensure any measures brought forward are fit for purpose, deliver real benefits for both grape growers and winemakers, and avoid any unintended consequences.”

McLean noted that the review process had brought forward a wide variety of views from across the industry, reflecting the diversity of business models and regional contexts that make up the Australian grape and wine sector.

“Striking the right balance will be critical. What works in one region or business model may not be appropriate in another, and Dr Emerson has clearly acknowledged that in the consultation process,” he said.

Australian Grape & Wine said it supports the recommendation to establish a working group to guide the design and implementation of reforms that may be adopted by the government, but industry needed a seat at the table in this process.

“This is an opportunity to create a more transparent, fair and resilient sector. With meaningful industry involvement, we can get the settings right for long-term success,” McLean said.

Report calls out big box retailers and own-brand wines

Dr Emerson’s review noted a number of general points, which informed his recommendations. They included;

• Winegrape growers with weak bargaining power, particularly in the warm inland grape growing regions of Australia – the Riverland, the Murray Darling and Swan Hill regions and the Riverina. Uneven bargaining power is less prevalent in the cooler regions, but harmful commercial conduct by winemakers in these regions, such as protracted payment terms for their grape suppliers, can similarly shift risk inordinately from winemakers onto their grape suppliers.
• Power imbalances between many independent wine makers and oligopolistic liquor retailer. Endeavour Group, Coles Group, Metcash Limited and ALDI comprise around 80% of the domestic retail market, with Endeavour Group and Coles Group having a combined market share of around 60%.
• The current industry-led voluntary Code of Conduct is unenforceable, with a mandatory Code the only viable option. Emerson said it should be enforceable by the ACCC and apply to large and medium-sized wineries buying winegrapes from external providers.
• Informed choice for wine consumers – it should be clear to wine consumers if they are purchasing own-brand wines or not.
• Data to support winemaker innovation – small, independent winemakers should have timely access to sales data for their wine sales through vertically integrated, oligopolistic liquor retailers, and larger winemakers should have access to the market data at the same level of granularity as that for retailers’ own-brand wine labels.
• Wine Equalisation Tax (WET) and vertical integration – the WET should be reviewed by the relevant Australian government agencies to ensure it is still meeting its policy objectives without unintentionally providing advantages for vertically integrated winegrape production, winemaking and wine retailing businesses.
• Application of general competition and consumer laws – a range of strengthened competition and consumer law amendments that have already been enacted, together with announced and foreshadowed reforms, should be applied to deal with anti-competitive behaviour and unfair practices in the grape and wine sector.

Endeavour Group responds to report

Endeavour Group released a statement saying it welcomed the release of Dr Emerson’s review and looks forward to working with the Australian Government as it considers the recommendations made within the final report.

“As the report outlines, Endeavour Group has already agreed to collaborate on a range of initiatives put forward by Dr Emerson, including in relation to labelling and the provision of industry insights,” the company said.

“Endeavour Group is deeply committed to the Australian wine industry, and supports the Government’s efforts to strengthen relationships and ways of working across the value chain.”

Australian Government responds to report

Dr Emerson’s analysis contains 14 key recommendations, which the Australian Government said it will consider closely, working with industry and stakeholders to establish the best way forward.

Dr Emerson’s analysis forms part of the Australian Government’s Grape and Wine Sector Long-term Viability Support Package to support the long-term viability of the grape and wine industry.

Minister for Agriculture, Fisheries and Forestry Julie Collins said: “The Albanese Labor Government is committed to supporting the profitability, productivity, and resilience of the Australian grape and wine sector.

“I would like to thank Dr Emerson for his comprehensive and considered report. This is an important piece of work on an industry all Australians should be very proud of.

“Our Government is committed to ensuring that our grape and wine sector receives the support it needs to flourish and prosper in the years to come.”

The Australian Government said it was supporting Australia’s grape and wine industry through:

• The continuation of the Wine Tourism and Cellar Door Grant Program, providing $10 million each financial year to attract visitors to Australian wine regions and promote agri-tourism;
• Additional $1.1 million to extend the $3.5 million Grape and Wine Sector Long-term Viability Support Package which will support additional international market access and trade diversification activities, and research for new and innovative technologies and tools to control plant pests;
• $550,000 to expand the scale and reach of the Australian Wine Industry Technical Conference in 2025 and 2028;
• Over $1.8 million for the South Australia Wine Recovery Program to boost demand for Australian wine and improve industry capability; and
• Matched funding to Wine Australia for research and development each financial year.

The review is available here: https://www.wineaustralia.com/research_and_innovation/projects/review-of-regulatory-options-for-the-wine-and-grape-sector