Australia’s wine industry is preparing for a change to how wineries buy grapes. A new mandatory Winegrape Purchases Code of Conduct is expected to take effect on 1 January 2027, with the aim of making dealings between grape growers and larger winemakers fairer, clearer and more transparent.
The change comes at a difficult time for the industry. Oversupply, weaker demand and pressure on grape prices have made it harder for many businesses to plan with confidence. For growers, uncertainty around prices and contract terms can make it difficult to decide how much to invest in a vineyard. For wineries, purchasing fruit means making financial commitments before knowing exactly how much finished wine they will sell.
The new code is intended to improve the way those decisions are negotiated. But while clearer rules may benefit both sides, wineries will also need to consider how purchasing commitments fit into their production plans, inventory and cash flow.
Why Is a New Code Being Introduced?
The code follows a review led by Dr Craig Emerson, which examined trading practices and competition in Australia’s wine and grape sector. The review found that some growers had limited bargaining power when negotiating with wineries and that the existing voluntary code did not provide sufficiently enforceable protections. The government agreed that a mandatory code was needed.
These concerns have developed alongside broader market pressures. When demand for wine falls or supply exceeds what the market can absorb, wineries may become more cautious about buying grapes. Growers, meanwhile, need enough certainty about prices and purchasing arrangements to decide whether continuing to grow particular varieties is financially viable.
That creates a difficult relationship. Wineries need flexibility to respond to changing sales and stock levels, while growers need clear terms and confidence that agreements will be honoured.
The proposed code aims to establish more consistent expectations for how buyers and growers negotiate, document agreements and resolve disputes. It is not designed to guarantee higher grape prices or eliminate oversupply, but to improve the fairness and transparency of the purchasing process.
What Could Change for Wineries?
The final code is still being developed following industry consultation, which closed on 9 October 2026. However, the government’s response to the earlier review provides a clear indication of the changes being considered. The code is expected to be enforced by the Australian Competition and Consumer Commission (ACCC).
Pricing and timing
One proposed change is earlier, binding price offers for grape varieties that covered wineries seek under contract from the Riverland, Riverina, Murray–Darling and Swan Hill regions. The government has supported making these prices public.
For wineries, this could mean making purchasing decisions earlier, with less opportunity to wait for further information about demand, inventory or market conditions before setting prices for those contracts.
Clearer contracts and quality standards
The government has supported specifying objective grape-quality standards in contracts, including parameters such as maturity, purity and condition. It has also supported requiring deductions or decisions to reject grapes to be clearly communicated to growers before the decision is made.
This could encourage more consistent assessment procedures and better records of why a load was accepted, rejected or paid for at a reduced price.
More transparent payment terms
Covered wineries are expected to publish their payment terms. The government has not, however, committed to introducing a universal payment deadline immediately. It intends to monitor payment practices and consider whether further changes are needed after the code has operated.
Better industry information and dispute resolution
The government has supported mandatory participation by covered wineries in industry surveys relating to vintage, production, sales and inventory. It has also supported stronger dispute-resolution processes, including appropriate avenues for mediation and arbitration.
Together, these measures are intended to make purchasing arrangements more transparent and give growers better information when making business decisions.
The Positives: What Could Improve?
For wineries that already use clear contracts and consistent purchasing practices, the code may formalise processes they already follow. For others, it could encourage improvements that benefit both sides.
Clearer expectations around price, quality and payment can reduce misunderstandings. When a grower knows how grapes will be assessed and a winery has documented criteria for accepting or rejecting fruit, there is less room for disagreements based on differing assumptions.
Earlier price information could also help businesses plan. Growers may have a clearer basis for deciding which varieties to grow and how much to invest, while wineries can use purchasing information to compare suppliers and assess the likely cost of their grape requirements.
More consistent industry data may help wineries understand production and inventory trends across the sector. Better information does not remove market uncertainty, but it can give businesses a stronger basis for making decisions.
There may also be benefits for wineries that already negotiate in good faith. A consistent set of expectations could make responsible purchasing practices more standard across the industry, rather than leaving individual growers to negotiate different arrangements with different buyers.
The extent of these benefits will depend on the final requirements and how they work in practice.
The Challenges: What Wineries Need to Watch
The code may improve transparency, but it will not necessarily make grape purchasing simpler or more flexible.
For some covered contracts, earlier binding price offers could require wineries to commit before they have a complete picture of future demand. A winery may have a clearer idea of what a particular variety will cost, but still face uncertainty about how much wine it will sell or how much existing stock it needs to move.
There may also be additional administrative work. Businesses could need to review contracts, formalise quality-assessment procedures, maintain better purchasing records and meet survey or reporting requirements. The scale of that work will depend on the final code and the winery’s existing processes.
Cash flow is another consideration. A winery may need to commit funds to grapes, production, storage and packaging well before it receives revenue from the finished wine. Greater clarity around purchasing terms does not automatically make those commitments easier to finance.
Most importantly, the code will not resolve the industry’s underlying supply-and-demand problems. It cannot guarantee that a winery will sell the wine it produces, that a grower will find a buyer for every tonne of grapes, or that grape prices will reach a level that makes every business viable.
Fairer trading arrangements may help businesses manage their relationships, but commercial decisions will still need to reflect what the market is likely to buy.
What This Means for Production Planning and Cash Flow
For winery owners and production managers, grape purchasing is not an isolated decision. It affects production schedules, tank capacity, storage requirements, inventory levels and the amount of cash tied up in the business.
The new code provides a reason to review how these decisions connect.
Start with expected demand. Before committing to grape volumes, compare sales forecasts with existing finished-wine inventory. If the winery already has substantial stock of a particular variety, buying more fruit may increase the amount of capital tied up in inventory without creating a corresponding increase in sales.
Understand the full cost of production. The grape price is only one part of the cost of making wine. Fermentation, labour, additives, electricity, storage, maturation, packaging and other overheads all contribute to the final cost. A purchase that looks affordable at the vineyard gate may be less attractive once the full production cost is considered.
Check capacity before committing. Grape volumes need to fit the winery’s practical capacity, including available tanks, equipment, labour and storage. If a large purchase creates bottlenecks, the business may face additional handling costs, delays or pressure to use capacity that would be better allocated elsewhere.
Plan for the cash-flow gap. The business needs to account for when grape payments and production costs fall due, and how long it may take to receive revenue from the resulting wine. This is especially important for wines that require extended maturation or are expected to sell over several years.
Consider a winery that is deciding whether to purchase additional grapes for a variety it already has in stock. The quoted grape price might be attractive, but if sales are slow and storage is limited, the additional purchase could tie up cash for longer than expected. That money may then be unavailable for other production needs or more promising sales opportunities.
The important question is not simply whether the winery can afford to buy the grapes. It is whether the purchase makes sense in the context of expected demand, available capacity and the likely return from the finished wine.
What Wineries Can Do Before the Next Vintage
With the code expected to commence on 1 January 2027, wineries can use the lead-up to the next vintage to review their purchasing processes.
A few practical steps are worth taking:
- Review grape supply contracts. Check how pricing, volumes, quality standards, payment terms and changes to agreements are documented.
- Standardise grape assessments. Make sure staff understand the quality criteria being applied and that assessment results can be recorded consistently.
- Connect purchasing with inventory. Review current stock and sales forecasts before deciding how much fruit the business needs.
- Revisit production costing. Include the costs beyond the grape purchase price to understand the likely margin on the resulting wine.
- Review cash-flow forecasts. Map expected grape payments and production costs against the timing of anticipated sales revenue.
- Monitor the final code. Confirm the final requirements and whether the winery falls within its scope before making assumptions about specific obligations.
The government has previously supported a scope based on winemakers purchasing more than a three-year moving average of 2,000 tonnes of grapes annually. However, the final scope and application are being determined through consultation, so wineries should verify the final rules rather than assume this threshold alone settles whether they are covered.
Fairer Terms Still Require Sound Decisions
Australia’s new Winegrape Purchases Code is intended to establish clearer expectations for how growers and larger wineries do business. Better transparency, more consistent contracts and stronger dispute-resolution processes could improve purchasing relationships across the industry.
For wineries, though, fairer purchasing arrangements are only one part of running a sustainable business. The challenge remains to buy the right grapes, at a price the business can support, in volumes that match its production capacity and realistic sales expectations.
As the code moves towards implementation, wineries have an opportunity to review not just their contracts, but the decisions behind them. Understanding grape costs, inventory, production requirements and cash flow can help businesses make more informed commitments before the next vintage.
Further information: The Australian Government’s Mandatory Code of Conduct for Winegrape Purchases page provides updates on the final code and its expected commencement.
