USA – MGP Ingredients has announced plans to scale down its whiskey production next year in response to a slowdown in the American whiskey category and elevated barrel inventories across the industry.
The move aims to streamline the company’s product portfolio, focusing on core brands while optimizing its cost structure to offset anticipated lower production volumes.
CEO David Bratcher emphasized that the company will seek to “further lower our net aging whiskey put away” as part of this strategic shift.
This decision follows a recent profit warning in October, where MGP lowered its financial outlook for the year.
The company revised its annual sales projection to between US$695 million and US$705 million, down from a previous estimate of US$742 million to US$756 million.
Adjusted earnings per share were also revised to a range of US$5.55 to US$5.65, from a prior forecast of US$6.12 to US$6.23.
The company’s Q3 results reflected these challenges, with consolidated net sales decreasing by 24 percent to US$161.5 million and gross profit declining by 10 percent to US$65.8 million.
The branded spirits division, which houses Luxco, saw a 6 percent decrease to US$62.6 million for Q3.
The decline was primarily attributed to reduced sales in the mid- and value-priced product categories, though premium-plus offerings saw a marginal 1 percent increase as MGP focused on its American whiskey and tequila lines.
Luxco operates notable distilleries such as Lux Row Distillers and Limestone Branch in Kentucky and the Tequila producer Destiladora González Lux in Mexico.
Additionally, Ross & Squibb Distillery in Indiana, known for its Penelope Bourbon, is also part of the branded spirits segment.
Bratcher noted that the “Distilling Solutions” segment was particularly impacted by current market trends, showing a 36 percent drop in sales to US$71.9 million during Q3.
However, he expressed optimism about long-term prospects, highlighting the role of whiskey inventories in MGP’s competitive positioning.
“We believe that these actions will strengthen the long-term competitive positioning of our brown goods business,” Bratcher stated, adding that he remains confident in the future of the Distilling Solutions business despite recent setbacks.
MGP, traditionally recognized for its contract distillation and barrel sales, has expanded its branded spirits portfolio in recent years.
In 2021, the company acquired Luxco for US$475 million, followed by the addition of Penelope Bourbon in May 2023.
Bratcher described MGP’s transition toward a premier branded spirits entity as promising, noting that while inventory tightening poses a near-term challenge, the company’s brand investments are expected to yield significant growth.
Additionally, MGP anticipates a stronger performance from its Ingredient Solutions segment in 2025, even as it navigates through short-term headwinds.
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