The wine industry insists that its product is all about dusty cellars and wizened old men in picturesque vineyards. Yet anyone who has ever been confronted with a plastic cork on their bottle of plonk will know that modern mass winemaking has more to do with men in white coats than the black arts of the terroir. With demand increasing - Brits chug their way through more than £5bn worth of wine a year - the industry is desperate for new technologies to help wring more wine from the already over-farmed vineyards.

Enter genetic modification technology, whose fast-paced developments could mean that Frankenstein wines will soon fill your glass. Worryingly, it might happen without your knowledge.

The wine industry is understandably nervous about trying to sell wine made with genetically modified grapes to drinkers. It is wary of repeating the mistake of Moet et Chandon, which in 1999 faced a PR nightmare: just at the time "Monsanto" became a dirty word, it emerged that the company was taking part in experiments with GM root stock. Terrified about the effect this might have on its image, Moet et Chandon immediately burned the offending vines and has had nothing to do with GM since. Although the EU gave the go-ahead for GM vines in 2002, no producer will willingly have its name associated with them.

The industry, therefore, has changed its focus from GM crops to a more obscure application of GM technology: tinkering with the DNA of the yeast used to ferment wine. Yeast is responsible for a wine's flavours and aromas - and the yeast most commonly used in winemaking, Saccharomyces cerevisiae, is so well understood that scientists are now able to modify its DNA to promote desirable (and saleable) tastes, and reduce hangover-producing toxins and "off flavours".

Winemaking is subject to so many variables that any technology that can guarantee the quality of the product is gold dust to the bulk manufacturers. Don Hewitson, a wine writer and the owner of London's Cork & Bottle wine bar for more than 30 years, is convinced that the bulk producers need the technology. "The land in much of the New World is already over-farmed, and the only way they are going to squeeze any more product out of it is by using GM. The technology is simple and effective and there's no question that half of California and Australia is looking into it," he says.

Research into GM yeast is going on in France and Australia, but is probably furthest developed at the Wine Biotechnology Institute at Stellenbosch University in South Africa. The institute's website unblushingly declares that "the tailoring of wine yeast strains by expressing novel designer genes will help the wine industry meet the technical and consumer challenges of the third millennium".

Who is funding this work? The South African government provides about 50 per cent of the money; the rest comes from some of the big beasts that lurk in the undergrowth of the wine world. The donors include Lallemand, which sells yeast to 70 per cent of the world's wine producers. Lallemand has very close ties to Stellenbosch University: it recently launched a new non-GM yeast (the snappily named M2) that was "isolated" there. Another big donor is KWV, a co-operative that includes 95 per cent of South Africa's wine producers and whose products account for 50 per cent of the South African wine sold in the UK.

Sterik de Wet, chief winemaker for KWV, is confident that consumers will eventually be converted. "There has been a lot of progress in the past two years, and wine made with GM yeast will be a reality within ten," he says. "We know that at the moment there is a problem with the public perception of GM, and I cannot say when the day will come that a customer will walk into Tesco and pick a bottle of GM wine off the shelf, but it will happen. Just because people don't want it at the moment is no reason that the research should stop."

Worryingly, consumers may not know when they are sampling GM wine: current EU law states that yeast is classed as a production aid and that means the label on the bottle would not have to specify that its yeast was GM.

"At the moment, you might say this is a series of grey areas," says a spokeswoman for the Food Standards Agency. "The debate is ongoing."

Whatever the bureaucrats might decide about GM yeast, opposition among purists is mounting. A group of winemakers from the Burgundy region in France is worried that GM yeast will drive out the "wild" strains that give its various wines their distinctive flavours, and is campaigning to have it banned.

However noble such opposition may be, most experts are convinced that the market will prevail. "The reality is that people just want a wine that's as soft and compliant as possible, and GM yeast is the way to achieve that," says Don Hewitson. "As long as he gets his Chardonnay for three or four quid, Joe Public doesn't care. That's the bottom line."