National association, Australian Grape & Wine (AGW), and independent wine retailer, Naked Wines, are both highlighting the necessity of better conditions for Australian winemakers and consumers in response to the ACCC and Senate inquiries into supermarket pricing and competition.
Prime Minister Anthony Albanese initially announced a 12-month inquiry into pricing within the supermarket industry in late January, with the ACCC set up to examine supermarkets’ pricing practices and competition in the sector. The Senate also instigated a Select Committee on Supermarket Prices, which began hearings in March.
This investigation led to the ACCC taking Coles and Woolworths to court over its market power and entry barriers just before its interim report was released.
AGW was one of the organisations to make submissions to these investigations, raising concerns about market concentration in the wine sector leading to low pricing, market erosion, and rising vertical integration by major retailers.
The organisation stated there were over 2000 wine producers and 6000 grape growers in the country, with most falling under a $10 million turnover. It also highlighted how Endeavour Group, Coles, Metcash, and Aldi hold a liquor retail market share of almost 70 per cent, with Endeavour and Coles making up 55 per cent of that.
The ACCC and government have taken steps towards merger reform, aiming to address the continual acquisition of smaller producers by large retailers, with a bill introduced to Parliament last week.
Another key challenge is the growing vertical integration of wine retailers into the supply chain, owning vineyards as well as facilities for wine production, storage, and bottling. This makes it far easier for large retailers to produce own-brand products, which it can highlight through store layout, marketing, and information asymmetry with independent producers.
The submission stated industry estimates up to 35 per cent of the wine market by volume is made up of retailers’ own-brand products, compared to just five per cent in New Zealand.
AGW suggested the inclusion of wine under a strengthened Food and Grocery Code, with mandatory participation from retailers, could address these issues, and create a fairer environment.
The government announced in September that it is conducting an impact analysis on the oligopolistic nature of wine retailing in Australia on independent winemakers, and the issues a lack of transparency and regulation presents to both producers and consumers. The results are expected by 28 February, 2025.
AGW CEO, Lee McLean, told Food & Drink Business that the organisation wants to see a value-chain in which growers, winemakers and retailers are making a dollar in a fair and reasonable way.
“We are contributing to Dr Craig Emerson's Competition Impact Analysis to ensure the views of our members are well understood and we are looking forward to seeing a comprehensive and balanced assessment of the market,” he said.
Naked Wines’ fair market campaign
Naked Wines acts as a supporter and direct-to-consumer retailer for over independent wine producers across Australian and New Zealand, reaching over 90,000 members, or ‘Angels’.
Since its Australian launch in 2012, Naked Wines states that its Angels have put aside over $380 million to help winemakers do what they love without the usual industry pressures, whilst enjoying wines at prices averaging 30 per cent lower than the bottle shop shelf equivalent.
Due to its close collaboration with small producers, the company says it has seen the pressures businesses are under in competition with large retailers, and has launched a campaign to raise awareness for the issue and promote the AGW’s pricing inquiry submission.
The campaign has commissioned billboards to sit outside bottle shops owned by larger retailers, particularly Dan Murphy’s and BWS under Endeavour, and Liquorland, owned by Coles.
Naked Wines managing director, Paul Connell, said while the company was pleased to contribute insights and potential solutions to creating a fairer market, immediate action is needed, and the billboards sent a clear message to retailers: do the right thing.
“Right now, it's alleged that retail giants are misleading Australian consumers whilst short-changing winemakers, and it's not the first time this has been raised,” said Connell.
“Enough is enough. Nothing would leave a worse taste in the mouth than if you’ve paid too much for a wine that its maker was short-changed to produce. Now is the time for fairer conditions for all.”
“It’s not about squeezing the little guys dry. Aussie wine lovers deserve better, and they know it,” he said.
Naked Wines has just released its Ideal Conditions Wine Report, in collaboration with YouGov, revealing nearly two-thirds of Australian wine drinkers want more transparency and fairness in the industry.
Results from the report included:
- 65 per cent of Australians would buy more wine if they knew it supported independent winemakers;
- 63 per cent would buy more wine if they knew winemakers were compensated fairly – a clear signal to retailers to do the right thing; and
- 43 per cent consider unclear origin information a red flag when buying wine.
Connell said the company was highlighting what ideal conditions for winemakers really means and what Australian consumers want, and the data proves it’s time to remind major retailers that happy winemakers are the secret ingredient to great wine.
“When winemakers aren’t worried about survival, they can focus on making incredible wine, not just surviving,” he said.
“It’s simple – treat the makers right, and everyone wins. Drinkers get better wine in their glass, and winemakers get to do what they love and thrive. The more Aussies know about the unfair power play in wine retailing, the more they can make a real difference by choosing where to spend their money.”
From the other side of the issue, a spokesperson from Endeavour Group told Food & Drink Business that the company works closely with over 2000 trade suppliers across Dan Murphy’s, BWS, and ALH Hotels, aiming to ensure fair and sustainable practices that benefit both producers and customers.
“At Dan Murphy’s, we are deeply committed to supporting Australian winemakers, offering them a selection of platforms to showcase their incredible talent to a broad customer base,” they said.
“Our long-standing partnerships with winemakers, both locally and globally, are built on mutual respect, transparency, and shared values of quality craftsmanship. These partnerships are the cornerstone of our business, allowing us to consistently deliver exceptional wine and drinks to our customers while supporting the people behind the craft.”
Inputs from producers
Two Pairs Wines is a Victorian producer, which mainly sells through Naked Wines and local boutique outlets. Winemaker, Nina Stocker, said the Australian wine industry has been under a lot of pressure over the past few years, affecting businesses like hers.
“There’s a general trend towards less wine consumption, an oversupply issue exacerbated by a huge reduction in exports to China, although that is easing now the tariffs have been lifted, inflation pushing up all our costs, and of course many devastating environmental challenges,” said Stocker.
“It’s a very crowded market and consumers can access cheaper wines at supermarkets, which understandably they want to access because of the rising cost of living. The cost of production is also skyrocketing, with the cost of labour, production cost, materials, and freight charges rising.”
Stocker said Naked Wines is able to support Two Pairs by guaranteeing the volumes they will commit to prior to harvest, as well as supporting the cash flow for paying for grapes, barrels, processing charges, and bottling throughout the process.
“Ultimately, that means we can deliver our premium products at a lower price than through traditional channels,” she said.
Santolin Wines is another Naked Wines distributed wine producer, founded by husband and wife team, Adrian and Rebecca Santolin. They stated the retailer has allowed them to scale their business, with stable planning of production and finances.
Rebecca Santolin said Naked Wines is already in discussions for its 2025 vintage in March, which allows them to speak to the growers now and lock in prices, helping to manage rising costs of quality produce.
“At the moment, a single barrel can cost us up to $2750, so if we need to order a lot of them it quickly becomes a massive hit to our bottom line – and because the wine needs time to mature in those barrels, we can’t even begin to recoup those costs for at least 1-2 years,” she said.
“It’s the same with the fruit. When we bought our first two batches of pinot noir grapes back in 2012, they were about $2000 a tonne and it was a massive risk for us, but we ‘thought let's have a crack’, and we’re glad we did!
“Last vintage (2024) those same grapes were $5000/tonne and this coming vintage we're anticipating the price will rise again to around $5500 a tonne, but they’re the best quality grapes and a necessary investment.”
Endeavour Group has also been supportive of its small batch suppliers, helping Yarra Valley winery, Payten and Jones, through the unprecedented market challenges in 2020.
Co-founder Troy Jones, speaks highly of Endeavour’s transparent communication, streamlined supply chains, and fair payment terms, and said the company has continued to help Payton and Jones grow over the years.
“Being able to have direct access to individual store managers and support from the buyers new and old has been imperative for us to continually grow our brand through Dan Murphy's and BWS,” said Jones.
“The team streamlined processes for a producer of our size and we were able to deliver directly to stores and received payment within 14 days of the purchase order coming in. The ongoing support and genuine excitement for our brand from Endeavour staff is amazing.”
