Production is just the European states alone has dropped a full 10% in 2012! In 2012 the consumption of wine rose by 1% also. Imagine that, the supply of the necessary things that are needed to make wine are down, which makes the demand even greater.
The French are the top consumers of wine, followed my Americans, leaving the Chinese as the third largest consumers in the world. Wine has become very popular in China because if you could afford it you were considered to have a higher standard of living. China is trying to help solve the problem by beginning to produce their own wine.
America only produces about 8% of the worlds wine, yet consumes around 12% and consumption has risen by 2% in the last year alone. America is also trying to get the wine industry booming by creating "wine boutiques", but it still isn't enough to satisfy the rest of the worlds wants.