Industry giant offers up ‘solution’ to Riverland red wine glut

The owner of Hardy’s, Banrock Station and more has offered to buy up to 1000 hectares of red varietal grapes from Riverland growers as part of a plan it hopes will create a “sustainable Riverland wine industry”.

Apr 16, 2024, updated Apr 16, 2024
Photo: Riverland Wine.

Photo: Riverland Wine.

Accolade Wines has put a voluntary buyout package to CCW Co-operative Limited grape growers as part of its “solution” to the red wine glut being faced by farmers in the Riverland wine region.

According to its website, CCW is Australia’s largest member-owned wine grape co-operative with approximately 530 grower members who produce approximately 200,000 tonnes of wine grapes annually.

Accolade Wines, which owns a portfolio of some of Australia’s most prominent wine brands including Hardy’s, Banrock Station, Petaluma, St Hallett and more has offered to buy out a portion of CCW contracts at $4000 per hectare for growers wishing to exit the troubled red varietal space.

Other terms of the package will see Accolade buy out the “direct contract” bulk wine deal CCW has for export, which the industry giant said was worth $11 per tonne.

At most, Accolade will buy 1000 hectares of grapes – predominately red varietals.

If growers participate in the buyout, Accolade said vines could be left in the ground to continue producing red grapes or CCW members could simply tear them out to focus on different agricultural or wine products.

As reported by InDaily in 2022, South Australian wineries have so much red wine in their tanks that bunches were being left to simply wither on the vine.

Last year, InDaily revealed a blueprint was created to guide the Riverland through the crippling red wine glut which is ongoing despite an Australian Wine report which found the record lowest annual production of wine in 15 years was not enough to reduce pressure on inventory levels.

The Accolade offer requires growers to vote in favour of the proposed deal which would also see Accolade’s total contracted volumes with CCW reduced to 150,000 tonnes. Accolade said this would address “the structural challenge” and would provide “certainty for all”.

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Accolade – which is now owned by a consortium of investment firms – said the Australian wine industry was facing “an unprecedented combination of external challenges – the biggest challenge to our industry in decades”.

It said it would take some time for brands to regain footing in China post-tariffs, and energy costs made producing wine more expensive. Increased road freight costs, soft consumer demand, and a move to “premiumisation” were also weighing heavily on the industry, according to Accolade.

“There is a significant structural mismatch between supply and demand, particularly for red wine,” Accolade said, noting consumption of wine was down by 10 per cent over the past 15 years.

It noted the current stock-to-sales ratio for red wine was 2.57, which it said was about 50 per cent above the 10-year average. Further, inventory levels of red wine are higher now than at any time in the past 15 years, with 2.2 billion litres of wine already in storage in Australia.

“As a result, the market value of grapes, particularly red grapes, is now unsustainable and below productions costs,” Accolade said.

Accolade chief supply chain officer Joe Russo said the company wanted to take a “constructive approach” to the red wine glut issue.

“As an industry, for us to continue as if no response is required simply isn’t sustainable,” Russo said.

“We have a shared responsibility to face into this challenge.

“We’re wanting to take a constructive approach to the biggest industry challenge in many years. We’re working closely with CCW and have listened and adapted in developing this package.”

CCW was approached for a response to Accolade’s offer but the co-operative declined to comment.

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