Constellation Brands' Hardy Wine Company is expecting the poor Australian weather to reduce output this year by around 20%.

Australia's largest wine producer said the country's drought and frosts will cut its production in 2007 by almost a fifth on last year, according to local reports.

Hardy hopes the dip will help Hardy get into "a balanced supply and demand situation", the company's managing director, David Woods, told The Advertiser.

"We carry our share (of oversupply) like the rest of the industry so it will help us to balance our existing stock levels," Woods told the paper. "Even if this year's (Australian) vintage is 200,000 tonnes less, that still would go a significant way to reducing the excess. We probably need a couple of vintages to get it back in hand."

Last week, Hardy's parent company, Constellation, warned that revenue and margin pressures in the UK, brought on by the availability of low-cost bulk Australian wine in the country, would hit its full-year performance.

Constellation subsequently lowered its full-year earnings per share forecast to between US$1.65 and $1.70, a reduction on the earlier forecast of $1.72 to $1.76.