If the bubbly in your glass this Hogmanay comes from the 35,000-hectare region of France that's west of Lorraine, then count yourself lucky: huge demand for champagne is creating a run on supply.

In the 12 months to August, global demand for the world's most prestigious wine hit 333 million bottles. That's 11 million up on the previous year and three million more than the productive capacity of the Champagne region.

The British are champagne's most ardent fans and the single biggest import market for the wine. In 2006, half a bottle was drunk per inhabitant of the UK, a figure which is set to be surpassed this year.

Champagne - not to be confused with prosecco, cremant, spumante, cava, sekt or other mere "sparkling wines" - is the undisputed empress of wines and enjoys near-mythic status as a must-have for any elegant celebration. This has less to do with the delicious, inebriating effect of bubbles and alcohol - after all, any sparkling wine can claim that - than with the exclusivity of the product. Only wines produced in Champagne from pinot noir, chardonnay and pinot meunier vines may take the name. Keeping production strictly within these confines has tended to shore up champagne's status as a genuinely luxury product - even in the noughties, when "luxury" is constantly being redefined by the very wealthy to keep ahead of the growing buying power of the riff-raff.

But burgeoning demand for the product could change all that. Responding to the clamour for champers, an expansion of the official Champagne Appellation d'Origine Controlee is under serious consideration. Two months ago, experts appointed by the French government secretly identified 40 communes that might be added to the 319 already within the AOC and the list was then leaked by a newspaper in Reims. With many vineyards on the edges of Champagne already producing their own product in the hope they might one day be able to call it champagne, the list has led to much speculation over who would benefit and some anger among those who look set to be left out.

In any case, if the plan is green-lighted next year as expected, the first batch of new champagne will be ready by 2011, raising production by 100 million bottles. Some 30,000 households already make a living in Champagne working for the 100 large champagne houses and 12,000 smaller vignerons.

So how will this affect the market position and standing of France's most famous export? Tom Stevenson, a world authority on champagne, is in favour of the expansion, but believes it is crucial that it raises demonstrably the potential quality of the wine. He points out, too, that while demand is buoyant now, it is unlikely to remain so, as in the past it has been cyclical.

And there is always the competition to consider. Champagne is just one among a number of sparkling wines such as Cremant de Limoux, from Languedoc in south-west France, which the average wine drinker might struggle to tell apart from a glass of champers. In fact, the first commercial sparkling wine was produced not in Champagne but Limoux, in the early sixteenth century.

Champagne was known in the middle ages - the celebrations following the anointing of French kings at Reims generally involved drinking it - but at that time it was not sparkling. After the French monarchs started gifting the wine to other European royals, it was established as the beverage of celebration. Then, in 1700, the first sparkling champagne was made. It was developed by a monk called Dom Perignon, who pioneered the use of a wire fastening to stop the cork popping during fermentation.

He did not invent sparkling wine, though. That was a scientist named Christopher Merrett, who gave a paper to the Royal Society in 1662 in which he said sugar and molasses were being added to wines to make them sparkle. He was an Englishman.