Frequently asked questions
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We have listened to feedback from CCW growers and have worked hard to design a package that helps the industry make a difficult structural change, while being voluntary, providing compensation for those comfortable to reduce contracted volumes and flexibility for them to remain in the industry if they wish.
This package is the only offer on the table that enables us as an industry to work together to maintain control of our future.
It is very unlikely that any realistic alternative offers will emerge in time to allow all of us to make this transition in a controlled or orderly manner.
The challenging conditions faced by our industry were definitely increased by the extended trade barriers applied in the important Chinese market, however there are multiple other contributing factors that have led to the structural mismatch between supply and demand
The removal of the tariff is good news, but things cannot be expected to return to normal overnight. It will take some time for normal trade flows to resume – and the other challenges remain.
Continuing as if nothing has changed is simply not an option.
The current agreement is between Accolade Wines and CCW. It is evergreen and requires Accolade to accept every berry produced by CCW growers, regardless of market demand for those grapes.
Such an arrangement is no longer fit-for-purpose and is totally unsustainable in a highly competitive and challenging global environment. We need to move to a new agreement that will provide certainty for the longer term combined with the ability to respond to changes in consumer demand.
No, there would be no change to grape growers’ individual contracts with CCW. Accepting the offer simply means grapes produced from participating hectares would no longer be included in what Accolade purchases from CCW each year.
This was the figure proposed in the recent Riverland Wine Industry Blueprint for an exit package to support those growers wishing to exit the industry. Under Accolade’s proposal, growers would maintain full control and flexibility over what they choose to do with participating hectares: they could reallocate to a different crop; mothball or pull the vines; or even market or sell the grapes to a different purchaser.
The current contract between Accolade Wines and CCW is not only evergreen, it requires Accolade to take every berry produced by CCW growers, regardless of the varietal, or the market demand for that varietal. This arrangement is simply not sustainable and places Accolade Wine under unacceptable financial strain. Changing consumer tastes and the current global glut of red wine make this problem even worse.
The proposed changes to the Accolade-CCW contract provide both parties with certainty and the flexibility to respond to consumer tastes as they evolve.
The 150,000 tonnes is an absolute minimum amount Accolade would purchase from CCW each year. The floor is set at this level to allow supply and demand to rebalance. There is scope in the new contract for Accolade to “flex up” and purchase additional tonnes from CCW each year if the demand is there and growers want to sell those grapes to Accolade.
Prices are set by global demand and supply dynamics and Accolade – like other participants in the Australian wine industry – has no ability to set industry pricing, or to guarantee pricing. However, setting a new 150,000 tonne “floor” will help Riverland production realign with global demand and should, over time, lead to more sustainable pricing for everyone.
Of course consumer tastes will continue to evolve. The changes we are proposing to Accolade’s agreement with CCW will provide flexibility to smooth the transitions – Accolade will provide a rolling 3-year advance notice of the varietal mix required to enable certainty. If a new varietal is required, Accolade will provide 7 years’ advance certainty for that new varietal to enable sufficient time for transition and for vines to establish.
Prices are determined by global market dynamics. We provide as much advance notice as is commercially possible given the dynamic market and in accordance with the Code of Conduct. Grape growers who want earlier advice on pricing are encouraged to seek advice from an agronomist, CCW or other industry expert.
Absolutely not. Accolade’s contract is with CCW and we are engaging with CCW in good faith to refresh the contract so it reflects the current market realities and provides certainty for Accolade, for CCW and for CCW growers.
Under the proposal it would move to three equal payments in line with the Code of Conduct.
No, Accolade does not seek to divest small acreage growers. Accolade only contracts with CCW, and CCW has a contractual agreement with the growers.
Under our proposal, Accolade will buy out a portion of CCW contracts at $4,000/ha for those growers wishing to exit. Participation in the buy-out is voluntary and flexible for growers.
In the event that the Growers do not approve the proposal, the current agreement remains in place. Accordingly, and as outlined at the recent Grower meetings in Berri, Accolade’s view is that the current agreement is outdated and clearly not sustainable.
Continuing with no change, as if the challenges do not exist, is not a solution. In the event that the proposal is rejected, Accolade’s Board would have to consider the viability of the business in conjunction with its new stakeholders and its contractual obligations.
Accolade’s view is that potential alternative options carry far greater risk for all parties and that the proposal as presented is a fair and reasonable.
Our proposal is to replace the current PSA with a new supply agreement. The key terms of a new agreement will be voted on at the AGM. If the vote is successful, then CCW and Accolade will enter into a new supply agreement. The new agreement will be Code of Conduct compliant and based on industry standards, unlike the current PSA which is 25 years old, full of ambiguity and poorly suited to the current wine industry. An agreement that is industry standard and Code compliant will ensure there is a clearer understanding of the agreement and provide the basis for a more sustainable commercial relationship between Accolade and CCW moving forward.
No, this proposal is final. It is now time for growers to have their say and vote on it at the AGM.