Price bickering continues, First Choice top again

Round 2 or 22?

 

Is it round 2 or 22? Will there ever be an end to grape grower/wine producer bickering? Ask a grape grower and they will say they need to be paid a fair price for grapes. Ask a producer and they will say that to compete in a global market they need wine to meet certain price points, and grapes must be at the right price for them to meet the requirements.

There is the argument that we need to go upmarket, only selling premium wines at premium prices. Nice thought, but the industry would be reduced by 70 per cent, both producers and growers.

The bickering continues. In the latest attempt at settlement, the Australian Competition and Consumer Commission (ACCC), has released a report, Perspectives in Horticulture and Viticulture, that says further examination of contracting practices is required.

Murray Valley Winegrowers (MVW) executive officer Mike Stone has had meetings with ACCC senior managers and wine grape growers. The issues raised by MVW included:

  • Grape supply contracts being offered months before harvest without reference to price
  • Terms of payment being extended to up to eight months after harvest
  • Insufficient sign-up to the Australian Wine Industry Code of Conduct
  • Price provisions in the code that left growers ignorant of grape prices until the start of harvest or after

Stone’s gripe on pricing is:

“As signatories to the code, several of Australia’s largest wine companies release indicative prices in December. These companies are significant purchasers of fruit in the Murray-Darling and Swan Hill regions and other companies tend to follow their lead in setting prices. This means that the majority of growers don’t receive formal price advice until harvest arrives.”

Producers want oversupply, which means low prices, and bully growers into contracts not to the growers’ advantage. For many reasons growers are in a tight corner. They can’t sell all the grapes at a profit and can’t sell the farm for enough to re-establish themselves in the local town.

As well as poor prices, growers are blaming producers for stretching payments. A new law is being introduced on November 12 that is intended to provide small businesses with more protection against unfair contract terms, such as those that don’t allow negotiation and are one-sided.

The ACCC report identified seven key areas of concern:

The ineffectiveness of the Horticulture Code of Conduct – significant concerns were raised about the current code by a range of industry participants.

Timing of payments to growers – alleged delayed payments in horticulture and payment structures in viticulture were discussed with the ACCC.

Imbalances in bargaining power – imbalances in bargaining power exist in both industries [horticulture and viticulture] and are exacerbated in viticulture by the oversupply of wine grapes.

Contracting practices – the ACCC heard about varied and often informal contracting practices.

The influence of major retailers – industry participants spoke about the growing influence of major retailers in both industries.

The voluntary Australian Wine Industry Code of Conduct – concerns were raised about the lack of uptake of the voluntary code.

Fears about raising complaints – many growers are hesitant to make complaints due to a fear of being blacklisted or put on a trading holiday.

Dan’s not customers’ first choice

The folk at Dan’s will not be happy that rival First Choice Liquor has come first in the liquor store category of Roy Morgan’s Customer Satisfaction Awards for the third consecutive month.

5-roy-morgan-august-16

Source: Roy Morgan Single Source (Australia), September 2015-August 2016, n=6200.

It’s not an original statement when Roy Morgan says: “People who usually shop at First Choice and Cellarbrations may be happy for different reasons.”

Roy Morgan gives the following explanation:

“For example, being ‘located where I do other shopping’ is important to a substantially higher proportion of Cellarbrations customers (48 per cent) than First Choice customers (28 per cent); while ‘good value’ matters much more to First Choice customers (81 per cent) than those who shop at Cellarbrations (61 per cent).”

Dan’s customers want good value (84 per cent) and a good range (55 per cent).

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