Article by Richard Mackenzie

Grape Supply Agreements, Do you need one?
Over the past few years the quantity of premium quality grapes available for vintage wine has been reduced due to many factors including the “El Nino” effect.

This has caused a great deal of activity by the wineries to ensure that they are able to obtain a constant supply of premium quality grapes in most, if not all, major wine regions throughout Australia by negotiating Grape Supply Agreement with grape growers.

A well drafted Grape Supply Agreement should be a balanced document providing certainty for both the winery and the grape grower.

The advantages for the winery are as follows:
constant supply of premium quality grapes consultation as to the management of the vineyard familiarisation over time of particular characteristics and traits of the particular vineyard

The advantages for the grape grower are as follows:
a consistent source of income allows for the development of new vineyards with certainty of income for the future allows the grower to obtain “free” expert consultation with respect to vineyard management allows for an association to develop between the grower for the betterment of the industry When drafting a Grape Supply Agreement consideration should be given by the parties to the following aspects to ensure that the Agreement is a workable Agreement:

specifications of quality criteria to be achieved
terms for payment
estimated yield per tonne
harvesting time and techniques
term of Agreement
delivery
further option terms
termination of Agreement
notice provisions
assignment of Agreement
price fixing mechanism
With the increasing sale of premium quality wines from both in Australia and overseas and the forecast for greater things to come, it is important to both wineries and grape growers that equitable Grape Supply Agreements are entered into and honoured for the benefit and expansion of the wine industry.

Eales & Mackenzie has the knowledge and expertise to assist your business in order to protect your interest and to achieve your business goals.
Dick Mackenzie who is the Senior Partner with the firm of Eales & Mackenzie – Dick is a member of the International Wine Lawyers Association and has a particular interest in the wine industry having a vineyard himself. Dick can be contacted at Eales & Mackenzie