Mislabelled Wine Costs Exporter its Licence

An exporter of Australian wine labelled as pinot grigio that was in fact three other grape varieties, has been stripped of its export licence by the Australian Grape and Wine Authority (AGWA).

Dal Broi Wines (DBW), parent company of Griffith-based Southern Estate Wines, failed to win a stay application against the licence cancellation, which the company said had already cost it a contract with US drinks giant Constellation Brands.

Dal Broi had exported two parcels of wine, one to Canada in mid to late March 2015 and one to the USA in October 2014, which it described as 2014 pinot grigio.

Label integrity program (LIP) records subsequently provided to AGWA indicated that the parcels were in fact comprised predominantly of semillon, chardonnay and colombard.

After giving Dal Broi Wines the opportunity to respond, AGWA in August notified the company that its export licence would be cancelled, effective immediately.

Dal Broi Wines applied to the Administrative Appeals Tribunal of Australia for a review of the decision, as well as lodging an application requesting a stay order.

Director Andrew Dal Broi acknowledged the error in his witness statement to the tribunal, but argued it was not the result of a deliberate scheme to defraud customers.

“The issue has been addressed by putting in place procedures to audit and ensure that an error of this nature does not happen in the future,” Dal Broi said.

He said about 70 per cent of the company’s business was for the Australian export market and that if a stay were not granted, there was a serious possibility that the company would fail.

“DBW’s contract to provide wine to Constellation is an example of a contract that was on foot for past and future wine sales,” he said.

“That contract is now lost and the relationship with Constellation tarnished because of the immediate cancellation of DBW’s export licence.”

In January, Andrew Dal Broi declared the company’s intention to ramp up production for overseas clients, having acquired a Griffith winery with 22,000 tonnes of crushing capacity.

A complex transaction

Tribunal Senior Member Egon Fice said the transaction that led to the shipment of the offending wine was “relatively complex”.

Fice heard evidence from Dal Broi’s solicitor that Griffith’s Wickham Hill Winery was the source of the wine which was blended in conjunction with Warburn Estate.

“Wickham Hill Winery onsold the blended wine to Cheviot Wines, which in turn entered into an agreement to sell the wine to Wyadra Wines which then supplied the wine to Dal Broi Wines,” said Fice.

Dal Broi Wines did not have a documentary trail proving the movements of the wine consignments, its newly appointed Chief of Finance & Operations Gavan Dowden admitted.

He said the company “may have been a little remiss in the appropriate record keeping in recent times”.

“I have now implemented a strict process of record keeping per wine consignment purchased which required the purchase of an inventory system to do so,” he said.

But this evidence was not persuasive for Senior Member Fice, who declined the stay application on October 30.

“While it is yet to be proved where precisely in the chain of production the error arose, that does not seem to be the point,” he said.

“Dal Broi Wines, as the exporter of wine goods, must comply with the LIP.

“Its failure to keep proper records, on its own admission, caused wine to be exported to Canada and the USA which was mislabelled.”

He accepted that Dal Broi faced hardship without the stay being granted, but said the damage would at least be minimised if the company’s application for review was brought on for hearing in the near future.

Andrew Dal Broi told drinks bulletin he is considering his options and it would not be appropriate to comment further at this time.

AGWA could not be contacted for comment.

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