American Whiskey Giant MGP’s Distilling Sales Drop 40% in Q1

(Sipa via AP Images)

American whiskey distilling giant MGP Ingredients reported a sharp decline in its core distilling business in the first quarter of 2026, with sales in the segment falling 40% year over year to $28 million as demand for whiskey continues to cool, The Spirits Business reported.

Gross profit for the Distilling Solutions division dropped 54% to $8.6 million, reflecting both lower volumes and margin pressure. The company pointed specifically to weakening demand for aged whiskey stocks and new distillate, a trend that has been building across the broader American whiskey sector.

Brown goods, which include whiskeys, were the primary driver of the decline, plunging 56% to $14.9 million. The reduced volumes weighed heavily on profitability, contributing to a 22% drop in total gross profit and a 400-basis-point decline in margin to 31.6%.

Other parts of the distilling segment were more stable. White goods (non-aged spirits) and co-products slipped 8% to $4.8 million, while warehouse services — tied to barrel storage — rose 3% to $8.3 million.

The results follow MGP’s recent decision to pause operations at its Limestone Branch Distillery and Lux Row Distillers facilities beginning May 1, citing reduced demand. Production continues at its larger Ross & Squibb Distillery in Lawrenceburg, Indiana.

At the consolidated level, MGP reported total first-quarter sales of $106.4 million, down 13%, with gross profit at $33.6 million.

The company’s Branded Spirits segment — which includes labels such as Ezra Brooks, Remus Bourbon and El Mayor Tequila — declined 8% to $44.2 million. Mid- and value-tier products fell 3.1% to $19.7 million, while premium-plus offerings posted modest growth of 1.5% to $22.7 million, led by a 10% increase for Penelope Bourbon.

MGP also recorded $179.5 million in non-cash adjustments within its branded division, attributing the move to macroeconomic pressures including higher discount rates and lower valuation multiples.

One bright spot came from Ingredient Solutions, which grew 29% to $34.2 million.

President and CEO Julie Francis said results were in line with expectations as the company navigates what she described as a “challenging industry backdrop,” adding that MGP will continue focusing on key growth initiatives while managing costs and prioritizing higher-performing segments.

The company reaffirmed its full-year 2026 guidance, projecting total sales between $480 million and $500 million.

The downturn underscores a broader shift in the American whiskey market, where years of rapid expansion — particularly in contract distilling and bulk whiskey supply — are now giving way to softer demand and inventory adjustments across the industry.