What is in this article?:
- There should be at least eight essential components in a wine grape purchase agreement, from the grower perspective including: identifying what is traded, agreement terms, method of price determination, payment terms, quality standards, inspection and adjustments, viticultue practices (farm plan), and harvest and delivery details.
Four – payment terms
Spell out exactly when and how the grower will be paid.
Many wineries prefer to stretch out the cash flow since it takes awhile before a bottle of wine appears on the retail shelf. Many smaller coastal wineries request extended payment timelines which can exceed one year after crushing.
Growers usually prefer to get paid within 30 days after delivery to the winery since they have invested one year’s worth of finances into growing the crop.
For some growers, the preferred payment period can be tied to taxes. Some growers’ tax years follow the January-December calendar. Others have different tax-year arrangements with government.
“For growers, there is no reason not to get paid 30 days after delivery unless a tax reason exists,” Bitter said.
Five – quality standards
Minimum and maximum brix (sugar) standards should be stated in the contract and whether the winery prefers brix in the mid range level. This is usually not stated and can lead to problems.
Another issue is grape quality near harvest or at delivery. Wineries may want to discount the price or reject the load due to a too high or too low brix level, rot, mildew, raisining, or excessive plant trash in the load.
Bitter says growers should be aware of the grape quality wording. While a grape load may pass a state inspection, the buyer may have more stringent standards in the agreement which are almost always graded subjectively.
Six – inspection and adjustments
If a grape-quality disagreement exists between the buyer and the seller, a third-party inspection is an option through a State of California contractor. These inspections are common in the San Joaquin Valley.
If one test of a load suggests a problem (brix level for example), Bitter says it is best to conduct a second test of the load to determine if a problem truly exists.
For example, it is not uncommon to see one or two loads out of a series of loads from the same vineyard fail to meet the minimum brix level required by the winery. If this is the case, the loads should be retested.
“From the grower standpoint, it is desirable to use the brix level for the entire field versus grading each load independently,” Bitter says. “After all, it usually goes into the same tank at the winery.”