MGP Ingredients to Scale Back Whisky Production
US producer MGP Ingredients plans to scale back its whiskey production and focus on its branded spirits business next year after sales plunged by double digits in the third quarter (Q3).
In its financial results for Q3 2024, MGP confirmed its earlier forecast of a 24% decline in consolidated sales compared to last year. CEO David Bratcher said the company plans to decrease production and shift its focus to branded spirits.
“In response to the softening American whiskey category trends and elevated industry-wide barrel inventories, in 2025 we plan to further lower our net aging whiskey put away, scale down our whiskey production, and optimize our cost structure to mitigate lower production volumes,” Bratcher said.
MGP Ingredients to Scale Back Whisky Production
Within the branded spirits division, premium-plus sales increased by 1% as the company focused on American whiskey and Tequila. During Q3, the brand spirits division posted a 6% decline to US$62.6 million.
According to Bratcher, current market conditions will have an even greater impact on the brand’s ‘Distilling Solutions’ segment, which declined by 36% to US$71.9m during Q3, but is optimistic for 2025.
“We believe that these actions will strengthen the long-term competitive positioning of our brown goods business. Over the longer term, we remain confident in our Distilling Solutions business as our whiskey inventories remain an important part of the still-expanding American whiskey category.”
Since MGP Ingredients has long been able to contract, distill, or sell barrels to upstart labels, it has acquired several brands, such as Luxco in 2021.
“We are pleased with our progress towards becoming a premier branded spirits company,” Bratcher said. “Though further inventory tightening is a headwind in the near term, we expect our continued investments behind our brand’s portfolio to deliver attractive organic growth. In addition, we expect our Ingredient Solutions segment to have a stronger 2025 despite current transitory headwinds.”
In May 2023, MGP acquired Penelope Bourbon. These acquisitions, recent sales reports, and corresponding changes indicate what’s to come from one of the country’s largest spirits producers.
