A $260,000 support package will assist Riverland grape growers address the oversupply of red wine grapes, which has seen some viticulturists leave their crops to rot on the vine.

Announced today, the funding will be used by the Riverland’s CCW Co-Operative – Australia’s largest member-owned wine grape co-operative.

The co-op will use the grant to help farmers diversify their land with alternative crops, and improve access to information on alternative crops and revenue streams for SA grape growers.

It’s part of targeted support for the industry from the state government, following a $1.85 million China re-engagement package after tariffs eased earlier this year, a $3.5 million Grape and Wine Sector viability support package, the development of the Riverland Wine Industry Blueprint, and $4.4 million in the most recent state budget towards financial planning and counselling for producers.

The funding also follows the release of a new report commissioned by the Viticulture and Wine Sector Working Group, established in March to develop a national approach to addressing issues faced by the wine and viticulture sector.

The report – ‘The current wine crisis: Ways forward in Australia’s wine regions’ – was publicly released yesterday and was written by the University of Adelaide’s Professor Kym Anderson.

In the report, Anderson highlights the role industry has to play in leading the solutions to the oversupply situation.

“A crisis is often the best and sometimes the only time to bring about unpopular but necessary changes that in the past have been kicked down the road because it was perceived they would harm a significant subset of stakeholders,” Anderson writes.

“The industry itself needs to own the problems it faces, and step up its leadership in finding appropriate and workable solutions.”

Potential solutions considered by Anderson include increasing investments in upgrading vineyards for a “most positive vision for the industry” that Anderson said was “overdue”.

Other solutions included reforming grape and wine levy structures.

“The system of producer levies developed in Australia is the envy of rural producers in the US and other countries because it has successfully overcome the free-rider problem of collective action for generating public goods for the industry, but there is much scope to reform the current grape and wine levy structures,” Anderson said.

“Levies based on area or crush volume are not growing with the nominal prices of winegrapes, but that can be altered by simply basing them on the gross value rather than volume of winegrape production so that funds would grow over time as the industry premiumises.

“Combining current levies into a single comprehensive levy would lower the overall cost to producers and bureaucracies of levy collecting.”

Anderson acknowledged calls by some growers for the government to “pay them to drop red grapes to the ground, or to remove those varieties and replant them with white grape varieties”.

However, Anderson said this was tried in 1986, but results of the “vine-pull subsidy were not viewed favourably in retrospect, even within the industry”.

“The fact is there will always be excess investment in the wine industry both here and abroad, in the sense that long-run returns will be below the average of other investment opportunities,” he said.

“One reason is lifestyle appeal. Another is that both vineyards and wineries are very capital intensive, so a delay in selling them when returns are low is understandable.”

The Viticulture and Wine Sector Working Group is now reviewing the report and will develop its own recommendations to provide to state and federal agriculture ministers.

South Australian primary industries minister Clare Scriven said recovery measures needed to be implemented “at both a state and national level to assist us to return to a sustainable supply and demand level”.

“The diversification by some growers away from wine to other crops is a key element to this, especially in the Riverland, which is why we are making this investment now,” she said.

The minister said she looked forward to receiving the recommendations of the Viticulture and Wine Sector Working Group by the end of the month “to see how we can further collectively address this issue nationally”.

Peter Szabo, the general manager of CCW Co-operative whose members recently voted against a voluntary buyout package from Accolade Wines, said the new financial support would help members “explore new business opportunities and revenue streams”.

“Our goal is to create a more dynamic and robust agriculture sector, ensuring the long-term prosperity of our members and the wider Riverland community,” Szabo said.

In April, Accolade Wines, which acquired South Australian wine brand Jacob’s Creek this week, offered to buy out a portion of CCW contracts at $4000 per hectare for growers looking to exit the market.

The offer also included Accolade buying out CCW’s “direct contract” bulk wine deal for export, which the group said was worth $11 per tonne.

In a meeting in May, the deal was rejected by CCW members, with a reported 314 members voting against the offer and just 17 voted to accept it.

The news also follows a recent Wine Australia report, which found the Riverland recorded its lowest winegrape crush since 2014 in the last financial year.

Speaking to InDaily, Wine Australia market insights manager Peter Bailey said the decline in South Australia came from the Riverland and the Barossa Valley.

“Those regions accounted for over 80 per cent of the drop in the tonnes crushed in South Australia,” Bailey said.

“The Riverland is the biggest producing region in South Australia with a 63 per cent share of the state’s crush, however the Riverland crush declined for the third successive vintage and fell by a further 5 per cent in 2024 which is the lowest crush in the Riverland since 2014 and 15 per cent below its 10-year average.”

The report also found fewer reds are being produced in SA – down 11 per cent on last year and 25 per cent below the five-year average – as growers continue to grapple with an oversupply of the grape.