American Whiskey Giant MGP to Scale Down Production Amid ‘Softening’ Demand

(Photos: MGP Ingredients)

Following a downbeat earnings report released at the end of October, Indiana’s MGP Ingredients announced that it will scale down whiskey production in favor of a smaller roster of core brands.

The liquor industry giant is responsible for dozens of in-house imprints including George Remus, Penelope and Rossville Union. The company also owns a Distilling Solutions arm that helps produce spirits for myriad brands across the U.S. MGP President David Bratcher did not say which of the two segments will reduce output; however, a stated focus on “branded spirits” indicates that the company may pivot away from contract distilling.

“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 remarked.

The most notable takeaway from the earning reports was a 24% drop in consolidated sales. The company’s branded spirits division posted a 6% decrease while its Distilling Solutions segment plummeted 36%. Premium-plus sales — a vaguely defined category that likely translates to $100 and up bottles — rose by a modest 1%.

Though MGP is closely associated with its Ross & Squibb Distillery in Lawrenceburg, Indiana, its branded portfolio spans producers from Ireland to Mexico. In 2021, the company acquired Lux Row Distillers, the Kentucky-based heavy hitter behind Ezra Brooks, Rebel and David Nicholson. Lux Row subsidiary Destiladora Gonzalez heads up tequila brands like El Mayor and Dos Primos.

MGP is also responsible for neutral grain spirits used in the production of Pernod Ricard’s Seagram Gin and Vodka.

Bottles in the MGP family.

MGP is not the only spirits company struggling against industry headwinds. Conglomerates including Diageo, Moët & Hennesy and Remy Cointreau have all posted similarly gloomy earning reports over the past year. Depending on who you ask, the slump can either be attributed to trade tensions, inflation or a decrease in post-COVID spending. In all likelihood, it’s a combination of all three.

MGP is also not the only spirits company to take a “less is more” approach. Diageo has responded to dire market conditions with a string of sell-offs and a renewed focus on core offerings like Guinness beer and Don Julio tequila. Pernod Ricard has done much the same, trimming a large swath of its wine portfolio in July.

“We are pleased with our progress towards becoming a premier branded spirits company,” Bratcher continued. “Though further inventory tightening is a headwind in the near term, we expect our continued investments behind our brands portfolio to deliver attractive organic growth. In addition, we expect our Ingredient Solutions segment to have a stronger 2025 despite current transitory headwinds.”