MGP Brown Spirits Sales Dip 47% as Whiskey Oversupply Weighs on Business

MGP Ingredients reported a 47% decline in brown spirits sales during the third quarter as elevated whiskey inventories across the industry continued to pressure its distilling business, according to numbers cited by The Spirits Business.

The third-party spirits producer and brand owner said its Distilling Solutions division generated $29 million in sales, down 29% from the same period last year. The division recorded the steepest decline among MGP’s three business segments.

MGP attributed the drop in brown spirits to what it described as “expected, elevated industry-wide barrel inventories.” The decline was slightly less severe than in the second quarter, when brown spirits sales fell 57%.

White spirits and other co-products provided a counterpoint, with sales in that category increasing 32% during the quarter.

The company said it plans to rebuild its aged whiskey inventory pipeline, expand its premium white spirits portfolio and grow its ready-to-drink and private-label programs.

MGP’s Branded Spirits division also reported lower sales, falling 4% to $58.2 million. Sales of premium-plus products declined 1%, although Penelope Bourbon grew 12%. Its mid-priced portfolio increased 6%, supported by Ezra Brooks 90 Proof, Exotico Tequila and Juarez Tequila. Combined sales of brands in the mid-priced and value tiers rose 1% to $23.3 million.

MGP said it would focus on its best-performing brands as it moves forward. Its Ingredient Solutions division, which does not include alcohol, recorded a 5% decline to $29.3 million.

Overall, MGP reported third-quarter revenue of $117.9 million, down 10% year over year. Adjusted EBITDA fell to $21.5 million from $32.3 million in the prior-year quarter. The company also reduced total debt by $28.4 million.

CEO and President Julie Francis said operating cash flow reached $32 million during the quarter and that adjusted EBITDA, adjusted basic earnings per share and ending net leverage all came in better than management expected.

MGP reaffirmed its full-year revenue guidance of $480 million to $500 million.

The company is also preparing to rebrand as Sempreon on Monday. The rebrand will take effect as MGP continues executing its strategy across its three business divisions.