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World Wine Output Fell 6% on Plunge in France, Spain, Argentina

March 21 (Bloomberg) -- World wine production dropped 6 percent in 2012 to the lowest level in at least 37 years on smaller grape crops in France, Spain and Argentina, according to the International Organisation of Vine and Wine, or OIV.

Output fell to 250.9 million hectoliters (6.63 billion gallons) from 266.8 million hectoliters in 2011, the OIV wrote in documents handed out to reporters in Paris today. That beat an October outlook for production of 248.2 million hectoliters.

Bulk white-wine prices in France, the world’s largest producer, jumped 45 percent since the start of August, while those for bulk reds advanced 17 percent, data from crop office FranceAgriMer show.

“We’re starting to dip into stocks to meet the needs,” Federico Castellucci, the OIV’s director general, said at today’s meeting. “In a time of shortage there is less bulk available. It’s starting to create tension in the market.”

France, Spain, Italy and Argentina all suffered weather damage to their vineyards last year, including hail and drought. Last year’s production was the lowest in OIV records going to back to 1975.

French wine production fell 17 percent to 42.2 million hectoliters last year from 50.8 million hectoliters in 2011, according to the OIV. In Italy, output dropped 6.3 percent to 40.1 million hectoliters and in Spain the decline was 11 percent to 29.7 million hectoliters, the group’s data show.

Wine output in Argentina slumped 24 percent to 11.8 million hectoliters, based on OIV data. In the U.S., production increased 6.9 percent to 20.5 million hectoliters.

World wine consumption in 2012 was 245.2 million hectoliters, climbing from 243.8 million hectoliters in 2011, according to the OIV. The wine organization estimates an additional 28 million to 30 million hectoliters of wine is used to make spirits, vermouth and vinegar.

The world faces a wine shortage of at least 10 million hectoliters, the equivalent of 1.3 billion bottles, Bertrand Girard, chief executive officer of Groupe Val d’Orbieu, France’s biggest wine cooperative, said in October.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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