Wine production in France, the biggest exporter, may slump 16 percent this year to a four-year low after frost, thunderstorms and an August heat wave harmed vines and grapes, the Agriculture Ministry said.
Output is forecast to slide to 42.9 million hectoliters (1.13 billion gallons) from 50.9 million hectoliters in 2011, the ministry wrote in a report on its website.
France exported 7.17 billion euros ($9 billion) of wine and champagne in 2011, or 13 percent of the country's farm and food exports. In the first half of this year, wine shipments rose 14 percent to 3.57 billion euros, government data show.
The harvest "could be one of the smallest of the past 10 years," the ministry wrote. "The heat wave that affected some regions in the south and several thundery episodes in the east have led to a downward revision of the production estimates."
Production in the Champagne region is expected to show the biggest decline after vines were damaged by frost, followed by "particularly virulent" attacks by mildew and other funguses, the ministry said.
LVMH Moet Hennessy Louis Vuitton SA is the world's largest maker of champagne with brands including Moet & Chandon and Dom Perignon. Vranken-Pommery Monopole SA is the second-largest, followed by Pernod-Ricard SA and Laurent-Perrier.
"This will be one of the smallest harvests of the past twenty years," trade group Comite Interprofessionnel du Vin de Champagne wrote. "Dry and sunny conditions since the beginning of August have created ideal conditions for the final ripening of the fruit. If the weather holds, there is every chance that this will be a harvest of the highest quality."
Champagne producers have aged reserves of wine available in case target yields are not met, the committee said.
France cut its outlook for this year's wine production for the second time in as many months, from an initial prediction for output of 46.7 million hectoliters in July.
A heat wave in August caused water stress to vines in the southeast, resulting in smaller and lighter grapes, according to the ministry. Several hailstorms, particularly in Burgundy and Beaujolais, damaged vines and created favorable conditions for disease, the report showed.
The crop would be the smallest since 2008, when France produced 42.7 million hectoliters of wine, based on ministry data. That year's harvest was the smallest in 17 years.
"All the wine categories will see their production decline compared to 2011," the ministry wrote. "The estimates could still evolve based on weather conditions in coming days."
Production of wines with a protected designation of origin, known by their French abbreviation AOP, may drop 11 percent to 20.3 million hectoliters, the ministry said.
The volume of Champagne region AOP wines will slump 26 percent to 2.02 million hectoliters, while Burgundy and Beaujolais appellation wines are forecast to plunge 23 percent to 1.91 million hectoliters, the ministry said.
Bordeaux-region AOP wine volumes will slip 1.8 percent to 5.38 million hectoliters, according to the report. The region is France's biggest producer of designated-origin wines.