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Abstract
This paper examines wine grape supply contracts used in the main grape growing regions
of Australia. An empirical analysis provides insight into specific aspects of contract
design and implementation. Statistical analyses of sample data reveal differences between
regions in contract specifications. Lower quality grape growing regions place a greater
reliance on grape quality assessment to determine bonus/penalty payments compared
to higher quality regions. Contracts in higher quality regions place greater emphasis on
explicit winery involvement and direction in vineyard management.Results indicate that
longer duration contracts are more inclusive in terms of the number of clauses included.
Evidence of risk shifting (i.e., winery to grower) for high quality grapes is reported,where
the price received by growers is determined by the bottle price of the wine produced.