Accolade Wines has urged red-grape growers in the Riverland region of Australia to accept a buyout package as the company attempts to stem historic wine oversupplies.
The Banrock Station brand owner has purchased all grapes grown by members of the CCW co-operative for around 25 years but today (15 April) made an offer to reduce volume requirements.
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It follows a restructuring announcement in February to salvage Accolade’s “unsustainable balance sheet”, which saw investor consortium Australian Wine Holdco take equity ownership.
Today, the group told growers its proposed deal was the “only option that allows CCW’s growers and Accolade to remain viable”.
Accolade Wines CEO Robert Foye said: “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.”
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“We’re wanting to take a constructive approach to the biggest industry challenge in many years.”
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By GlobalDataThe CCW’s approximately 530 grower members will now vote on the deal, which needs a two-thirds majority to pass, Accolade told Just Drinks.
If they agree to the deal, growers face trying to find another buyer for their grapes, moving to white-wine production or pulling up vines and either planting other crops or exiting farming.
Accolade has offered growers A$4,000 ($2,594) per hectare to buy out its commercial agreement and reduce its contract to 150,000 tonnes a year.
The company would not comment on what volume it buys but the CCW website states its growers produce around 200,000 tonnes of grapes a year. Estimates have also put the value of grapes, at their peak, at double the A$4,000-per-hectare offer.
Proposed changes would also mean Accolade’s contract would move from an evergreen to a ten-year rolling deal. Prices would then be set according to the ‘weighted district average’, it said.
The agreement is focused on red grapes, which are most impacted by oversupplies.
Accolade has also offered to buy out the CCW’s ‘direct contract’ bulk-wine deal for
export for A$11 per tonne.
“This package provides all growers with greater certainty and clarity,” Foye added. “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.
“It also ensures that Accolade can operate sustainably and that there is an ongoing source of demand for grapes in the Riverland.”
The move comes amid country-wide oversupplies of approximately 2.2bn litres as China’s hefty wine tariffs, inflated logistics, energy and shipping costs and declining alcohol consumption have devastated Australia’s red-wine industry.
Despite renewal of trade with China last month, Accolade said growth there would be too slow to salvage the “unsustainable” market value of grapes resulting from the above headwinds.
