Australian Vintage chief executive Neil McGuigan said it crushed 20% fewer grapes for the 2014 vintage than the previous year, and that he expected the whole industry will suffer a decline.
"Whilst this will help the industry's supply and demand position it is likely to lead to higher priced wine due to lower utilisation of the industry's processing assets," he said.
"It is quite clear that the industry still has an issue with an overcapacity of processing capability."
Australian Vintage, which supplies the McGuigan range, crushed 124,214 tonnes of grapes from the 2014 harvest, compared to 153,000 tonnes last year.
The worst affected regions were New South Wales and Victoria. Its two vineyards in these areas produced 16,000 fewer tonnes of grapes than in 2013.
But Australian Vintage said it expects net profit in 2014 to be “significantly better” than the previous year, despite selling less volume.
It pointed to premiumisation and said it sold less bulk wine and benefited from exchange rates, but added that demand for lower prices among UK consumers will hamper profits slightly.