What farmers in the Riverland can tell us about the state of the World

What farmers in the Riverland can tell us about the state of the World

I may be overstretching things here, but what is happening in the Australian wine industry right now represents an interesting microcosm of global affairs. Involving US private equity groups, Chinese trade barriers, farmer protests and Houthi rebels it can all get a bit much: so let’s work through this together with a couple of neat anecdotes.

Last Wednesday, the quiet town of Renmark in South Australia’s Riverland was overcome with tractors, trucks, and harvesters. Taking a leaf right out of the French farmers’ playbook, the grape growing community were protesting the prices being offered for this year’s vintage. With farmers fearing that this vintage could be their last, they were demanding a more sustainable approach for their industry based on collective action. Accolade Wines, the largest purchaser of grapes from the Riverina commented that they were still ‘in negotiations’ with growers for grape pricing for the 2024 Vintage. 

However when taking a broader look at Accolade Wines, the plot quickly thickens. Last Friday it was reported that US private equity firm The Carlyle Group was selling Accolade Wines to another US private equity company, Bain & Co. After purchasing Accolade Wines in 2018, problems mounted quickly for Carlyle in 2020 due to the punitive tariffs imposed by the Chinese Government following a row with then Prime Minister Scott Morrison about the origins of Covid-19. This caused a significant drop in Australian grape prices, a general loss of profitability for Accolade, and ultimately an exit by Carlyle out the back door. In an unnerving sign for our Australian grape growers, Accolade Wines is now looking to renegotiate its grape supply contracts. 

Whack on top of this the current issues in the Red Sea as a result of Houthi attacks on shipping lanes and the problem gets worse. In an attempt to make up for the loss of the China market, Australian winemakers have been looking for new markets and to increase establishes ones; in particular the EU and UK. Once again Covid-19 did a number on shipping times that were just recently coming back to a level of normalcy. Now the Houthi attacks have increased both shipping times and costs leaving wine alternatives from Italy, Spain and Chile much more appealing. 

So where does this leave things? There are talks of the Chinese tariffs being lifted towards the end of this year and the US and UK is doing what it can to ‘degrade and destroy’ the Houthi attacks. However, Chinese trends have been towards spirits and other countries have swooped in on the wine shelf space, while the war in Gaza, the apparent cause for the Houthi attacks, shows no signs of abating. 

For our farmers in the Riverina, people who live in a far and largely isolated corner of the world making one of the oldest products known to humanity, the world has brazenly come a-knocking. Looking into my crystal ball for the year 2024 and searching for the one thing that can be done to help our farmer friends, it’s to drink more Aussie wine ;)