Farmers in the three countries, which together produce over half the world’s wines, have been hit by extreme weather, including heavy hail and longer-lasting frost in the spring in Spain.
Meanwhile, unusually warm weather has meant that many grapes ripened early and are smaller than usual.
“We still foresee a dramatic decline in wine availability going into 2018,” said Stephen Rannekleiv, a global beverages strategist at Rabobank. “We expect the decline [in consumption] to be felt most tangibly in the lower-priced tiers.”
The European Commission says that this year’s regional harvest is expected to be the worst since 1982.
Europe is set to produce 14.5 billion liters of wine this year, a drop of 14% from 2016.
“It has not been uncommon for one of these three producers to have an off year, but rarely have we seen such poor harvests for all three simultaneously,” Rannekleiv said.
Vineyards that were spared in the spring were later damaged in devastating summer droughts. The problem is most severe on the Italian island of Sicily, where production was a third lower than last year.
Consumers are already feeling the effects, with the price of some wine varieties increasing this year by up to 10%.
“The rise in Italian and Spanish bulk wine prices is particularly noticeable and it started as early as May, when the first threats to production materialised,” Rannekleivn said.