Australia: From grape to glass: the Australian wine industry

Last Updated: 23 June 2017
Article by Kenneth Stanton

Buying a vineyard where you can sit back and enjoy the fruits of your labour sounds like paradise, but it may not be quite as idyllic as you imagine. Kenneth Stanton, one of Australia's leading wine lawyers, examines the maze of regulations that winemakers need to navigate in order to get their product off the vine and into the consumer's glass.

I've always viewed winemaking as a poetic – even a magical – process, and it seems that quite a few celebrities have also been bewitched. The film director Francis Ford Coppola, and musician and singer Cliff Richard, both own vineyards. Gérard Depardieu is such an enthusiast, he owns vineyards in several countries. Allegedly, his passport lists his profession as vigneron rather than actor.

However, the reality is that viticulture is a tough, and even fickle, business. Ideally, you need to be a shrewd businessperson because you're at the mercy not just of local economic developments but of the global economy.

In addition, winemaking is an extremely competitive industry.

The many challenges wine producers face is something I see every day working with clients operating in the industry.

Interestingly, it isn't just the economics of viticulture that tests. Most aspiring vintners don't realise that the way in which the industry is regulated will also pose challenges. They aren't simply facing regulation at a local and national level; there is a web of international institutions and agreements that will affect everything they do.

In my view, being aware of what is involved, including the potential pitfalls, is (to use another agricultural metaphor) what separates the sheep from the goats in the wine industry.

Have you ever been tempted to escape your corporate job and buy a vineyard? Would it be as idyllic as you imagine?

Growing grapes is a very labour-intensive process, involving activities such as pruning, leaf plucking and shoot thinning. You may need to spend time and money netting hectares of vines to protect your crop from birds. In addition, grapes are very dependent on the weather. Your vineyard could be hit by a storm and all your grapes split by hail. A year's work could be lost in minutes.

The reality is that you're not just facing a lot of hard work and the unpredictable forces of nature. Your activities are strictly controlled, because the regulatory bodies operating in this area are tasked with protecting the reputation of Australian wines while boosting sales in overseas markets.

Growers must comply with the Australian Label Integrity Program (LIP), which requires everyone in the wine supply chain to keep an auditable trail of documents indicating the vintage, grape variety and geographical indication of the grape products they grow, manufacture, supply or receive.

The penalties for failing to keep a record, keeping a false or misleading record, making a label claim not supported by your records or failing to provide a copy of the record when supplying wine goods can be severe and, in extreme cases, may lead to imprisonment.

It is likely that you'll have to use chemicals to protect your crop from a variety of pests. The Australian Pesticides and Veterinary Medicines Authority (APVMA) sets the maximum residue limits permitted. However, the regulator of residues of chemicals in food (and wine) is Food Safety Australia and New Zealand (FSANZ), which adopts the maximum residue limits set by the APVMA. You're required by law to keep a record not only of what chemicals you use, but how much of them you use.

However, the regulations don't stop there when it comes to grape growing.

If you're keen to export your wine overseas, you need to be aware that the maximum residue limits are much lower in the European Union than in Australia.

In addition, there are a large number of bilateral trade agreements that affect the international wine trade. Australia, along with Canada, Chile, South Africa and the United States, has made concessions regarding geographic indications in return for improved access to the European Union market. So, don't even think about calling your beautiful sparkling wine 'champagne' or your red wine 'Burgundy' (even if your vines were imported from that French region back in the 19th century). In addition, you can't state that your wine is from McLaren Vale unless it was actually sourced from that region.

What about making the wine? How much red tape is involved?

This is where the regulations become even more heavy-handed.

Decisions made by intergovernmental and international non-government organisations such as the International Office of Vine and Wine (OIV), the World Trade Organization, Codex Alimentarius, the World Wine Trade Group and the Fédération International des Vins et Spiriteux determine what you can call your wine, the additives you can use and the labels you can affix to the bottle, as well as where you can export your wine.

It is at this point that you might wonder whether you should have kept things simple and stuck to growing grapes, letting someone else handle the winemaking.

As a winemaker, you must keep records documenting any changes to the wine goods. The blending rules for wine are far from straightforward and affect vintage, variety and geographical indication. For example, if the wine is blended from different vintages or geographical indications, your records must show what proportions of the blend are represented by each blended wine, and the vintage, variety and geographical indication of each such wine.

You will soon discover that, when it comes to labelling your wine, you can only refer to grape varieties recognised by the OIV, the International Union for the Protection of New Varieties of Plants (UPOV) and the International Plant Genetic Resources Institute. In addition, as mentioned above, you must only use the geographical indications that have been agreed upon for Australia.

But the regulations don't stop with blending.

Wine production in Australia is governed by Standard 4.5.1 of the Australian New Zealand Food Standards Code. The Code contains definitions for wine, sparkling wine, fortified wine, grape spirit and brandy.

The Code also regulates food additives and specifies those approved for the production of wine, sparkling wine and fortified wine (such as ascorbic acid, citric acid, dimethyl dicarbonate, erythorbic acid, lactic acid, etc.). It also lists the approved processing aids for the production of wine, sparkling wine and fortified wine (such as activated carbon, agar, alginates, calcium and potassium salts, ammonium phosphates, argon, etc.).

If you are planning to export your wine, you need to retain at least two samples of each product selected for export for at least six months after bottling, or for three months after the stock is exhausted, whichever is earliest.

By this point, you may be close to tearing your hair out. However, you're only twothirds of the way through the Australian wine regulation maze.

What about packaging the wine? Surely, that's fairly straightforward?

Not exactly.

Wine labelling in Australia is governed by a range of federal and state laws. As touched on above, the brand name must not mislead as to the origin, age or identity of the wine.

In addition, the legislation specifies how the vintage, region, variety, volume, designation, country of origin, alcohol content, allergens, name and address, lot number and number of standard drinks are specified.

You also need to comply with the regulations relating to labelling item position, language, brand name, bar codes, 'best before' date and carton labelling.

You need to be aware that:

  • vintage claims are optional but must be 85%
  • region (GI) claims are optional but must be 85%
  • variety claims are optional but must be 85%.

What about if you're keen to export your wine and tap into some of those lucrative overseas markets?

Under the Australian Grape and Wine Authority Regulations, all wine shipments over 100 litres require export approval. The idea behind this is to protect the reputation of Australian wine by assisting wine producers to comply with international regulatory requirements, monitor compliance with Australian law, and investigate breaches when detected.

You will need to go through the following approval process:

  1. Obtain a licence to export.
  2. Register the product.
  3. Issue an export permit for each consignment of wine leaving Australia that is
  4. in excess of 100 litres.

If you want to export your wine to the European Union, you will need to obtain a VI1 Certificate of Analysis after you've obtained an Export Permit. This can be obtained from any National Authority of Testing Authorities-accredited laboratory.

In addition, if you're dealing with a bulk wine shipment, you need to ensure that you're complying with loading and transportation specifications. Failure to do so may result in your licence for future bulk wine shipments being suspended.

It's also worth noting that wine exports are subject to a levy (the Wine Export Charge), which is calculated as a percentage of the sales value.

Finally, you need to be aware that the requirements for wine labels differ for each country, and that some country authorities or importers require additional certification.

The good news is that once you've checked out those requirements, you are on your way to international success and can pour yourself a stiff drink to celebrate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Kenneth Stanton
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