Accolade Wines is offering members of the CCW Co-operative in the Riverland $4,000 per hectare to exit their contracts. The offer applies only to red winegrapes.
If accepted by growers, it would cut the volume of grapes Accolade is compelled to buy from CCW by about 20 percent to 150,000 tonnes.
Accolade chief supply chain officer Joe Russo told WBM: “As an industry, for us to continue as if no response is required simply isn’t sustainable.
“We have a shared responsibility to face into this challenge and respond.
“We’re wanting to take a constructive approach to the biggest industry challenge in many years.
“We’re offering a voluntary and flexible solution that offers to buy out the contracts of growers who wish to exit the industry given the current challenges.”
Russo says the package provides all growers with “greater certainty and clarity”.
“It allows us all to manage a difficult transition more smoothly, it allows those who wish to exit to do so with dignity and those who want to continue to do so with greater confidence,” he says.
“It also ensures that Accolade can operate sustainably and that there is an ongoing source of demand for grapes in the Riverland.”
Accolade dropped the news on growers at meetings in Berri on Monday and Tuesday, pitching a six-point plan as “the only option that allows CCW’s growers and Accolade to remain viable”.
“It doesn’t mean you have to rip out your vines necessarily,” an Accolade spokesperson told the Murray Pioneer.
“You could keep them in and sell them to other buyers, or you could exit.
“It’s up to the individual grower.”
Accolade chief executive Robert Foye told the Financial Review the company wanted to “take a constructive approach” and the buyout for contracts was voluntary.
“This package provides all growers with greater certainty and clarity.
“It allows us all to manage transition more smoothly.”
Accolade says it will also buy out the ‘Direct Contract’ bulk wine deal CCW has for export – relief worth $11 per tonne.
CCW growers will vote on the offer next month. Accolade says if the proposal is not approved by a two-thirds majority of CCW members, then “it will lapse”.
“This would present the industry with an unacceptably high risk of losing control of the significant structural adjustment that needs to be made,” Accolade says.
“This means a significantly high risk of a large number of business failures and further significant, unnecessary pain being felt right around the industry.”
Peter Szabo, general manager of CCW which represents 540 growers, declined to comment when contacted by WBM.
The Riverland is one of the hardest-hit regions from the fallout of the China tariffs, which have now been dropped.
The Riverland produces 31 percent of Australia’s grapes and 14 percent of Australia’s crush by value, according to the Riverland Wine Industry Blueprint.
Seventy-seven percent of the grapes grown in the Riverland are converted into wine within the region, with 23 percent processed elsewhere.
Accolade has set up a website called Sustainable Riverland Wine explaining the buy-out.
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