Market saturation pushes MGP Ingredients into closing US distillery
USA – MGP Ingredients, an ingredients and distillery products firm, has announced plans to close its grain-neutral spirits and industrial alcohol distillery in Atchison, Kansas in line with the company’s plan to address profitability headwinds.
According to a statement from the company, the headwinds were associated with its grain-neutral spirits and industrial alcohol products within its distilling solutions segment.
David Colo, president and CEO of MGP Ingredients, said: “After careful deliberation, we have concluded that the closure of our Atchison distillery is a necessary step to further align the product categories we participate in and their supporting operations, consistent with our long-term strategic objectives”.
He noted that the additional supply of grain-neutral spirits and industrial alcohol that has entered the market during the past few years has had a meaningful and structural impact on the market.
“Combining these market factors with the increase in local corn basis costs during this same time frame has resulted in these product lines no longer being economically viable for the company,” he explained.
Colo, however, expressed gratitude for the unwavering support and contributions of our distillery employees, customers, suppliers and the people of Atchison.
“We are committed to ensuring a smooth transition as we wind down operations at the distillery between now and the end of the year, and we look forward to continuing to support the Atchison community,” he said.
However, the company said that it will continue to operate and invest in its ingredient solutions business in Atchison, including the previously planned US$16.5 million texturized protein facility.
The facility is scheduled to be completed by the end of this year, and its distillery operations in Lawrenceburg, Indiana.
MGP adds premium whiskey brand
Earlier in May, MGP Ingredients, Inc., announced that its Luxco, Inc. subsidiary had reached a definitive agreement to acquire 100% of the equity of Penelope Bourbon LLC (“Penelope Bourbon” or “Penelope”) and its related assets.
Founded in 2018, Penelope Bourbon is a family and founder-owned and operated American Whiskey company with a diverse portfolio of high-quality whiskeys in the premium-plus price tiers.
The acquisition included all intellectual property and inventory of bottled product, as well as Penelope’s aging whiskey inventory on a debt-and-cash-free basis.
The upfront consideration is US$105.0 million in cash to be paid at closing, with further potential earn-out contingent consideration of up to a maximum cash payout of US$110.8 million measured through December 31, 2025 if certain performance conditions are met.
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