Uncooperative weather has damaged grapes worldwide, causing global wine production to shrivel 6.1% to its lowest point since 1975, according to a Paris-based trade group.
Between dwindling vineyard space and tough climate conditions that pummeled mega-producers France and Italy, wine output could tumble to 248.2 million hectoliters this year, or 6.6 billion gallons, according to the International Organization for Vine and Wine.
In 2011, the industry produced 264.2 million hectoliters of vino, according to the group, which is known as OIV. Growth rates are positive in the U.S. and the southern hemisphere in countries such as South Africa. Chile's production levels are projected to hit a record level of 10.6 million hectoliters.
But among the major producers in the European Union, only Portugal and Greece are expected to yield more wine than they did last year.
Production levels have been on a downward trend since 2004, when nearly 300 million hectoliters of wine were made. Despite some promising signs in 2010, when the decline in global consumption seemed to end and the global trading markets appeared to recuperate, the trade group said this year's weak production levels "cast doubt on the strength of the recovery."
Wine drinkers worldwide are expected to down 235.7 million to 249.4 million hectoliters of the stuff this year. Another 30 million hectoliters of wine go into spirits, vermouth and vinegar, according to the trade group.
A wine shortage equal to 1.3 billion bottles could hit the industry next year, according to a press conference earlier this month from Bertrand Girard, chief executive of French wine cooperative Groupe Val d'Orbieu.
An expected shortage of California grapes "that will last for some time domestically" could mean higher prices for wine, according to a report this spring from Silicon Valley Bank. Marketers who sold wine at deep discounts during the recession will face "increasing difficulty," according to the report.