Malolactic fermentation is an important process in the formation of wine, and so it has been well studied.
malolactic fermentation

In answer to your question, malolactic fermentation occurs in bacteria, which are prokaryotes . Malolactic fermentation is a form of cellular respiration. That is, some bacteria use malolactic fermentation to gain energy . Respiration involves the Krebs Cycle and the electron transport chain. Prokaryotes have very simple cells, with few organelles or organized structures inside of them.

In prokaryotes, respiration can occur in the cytoplasm (the fluid-like matrix inside of cells) or via enzymes embedded in the cell wall. Eukaryotes do not use malolactic fermentation as a form of respiration, but they do use other types of fermentation -- lactic acid fermentation, for example. In eukaryotes, the Krebs Cycle and the electron transport chain occur within membrane-bound bodies located in the cytoplasm called mitochondria .

Hence, in eukaryotic cells the organic molecules used to fuel fermentation must be transported inside the mitochondria, which takes energy in the form of ATP. Energy must be used to generate energy. This means that in eukaryotic cells, fermentation is a less efficient form of respiration than in prokaryotic cells. It is an important source of energy in the absence of oxygen, however.

Malolactic fermentation refers to the conversion of malate to lactate. Both malate and lactate are naturally-occuring organic acids. Malolactic fermentation occurs during the conversion of grape juice to wine. The bacteria that do this can produce one of three end products: lactate, acetate or ethanol. The major step in malolactic fermentation is:

COOHCH₂CHOHCOOH to CH₃CHOHCOOH

You can see that a COOH group is lost in the process. Where does it go? One H atom is transferred to the CH₂ group to form CH₃ and the COO is released as CO₂, or carbon dioxide gas. This is called decarboxylation.