I’m confident that, like me, many Smallville readers enjoy a glass of excellent Australian wine. Maybe two.
Consequently, I’m also confident that our readers won’t be happy about yet another threat to our wine supply.
But that’s exactly what is happening, and the reason is a familiar one. Extended payment terms.
WE WILL PAY YOU IN 9 MONTHS
This is a subject I have written about often, and in relation to many different industries. Now it seems that Australian wine grape growers are falling victim as well. So much so, in fact, that the Australian Competition and Consumer Commission (ACCC) is conducting an inquiry into the industry “to identify any market failures or issues that may be preventing the functioning of competitive markets and resulting in detriment to market participants.”
ACCC Chairman Mick Keogh likened the industry’s payment terms to paying for a bottle of wine in instalments:
- one-third when you select a bottle and leave the shop. (By the way, under this scheme, you get to decide how much you will pay for the wine as well).
- one-third six months later, and
- the balance when you get around to actually drinking the wine.
The ACCC found that some growers were waiting up to nine months for payment after their grapes were delivered.
AN INDUSTRY IMBALANCE
There are more than 6000 winegrowers in Australia, mostly small-scale operations that supply to a relatively small number of large wineries. The industry, therefore, has a large imbalance in power between the suppliers (the grape growers) and the buyers (large wineries). Read More