MGP is one of the biggest whiskey producers in the country. The Lawrenceburg, Indiana distillery makes massive amounts of bourbon and rye whiskey for other brands, as well as releasing its own in-house labels under the Ross & Squibb name under which it rebranded after acquiring spirits company Luxco in 2021. But the management team just announced that it will slow down production of whiskey because of a softening market, which might not come as a total shock to those following the recent trajectory of American whiskey.
According to a recent article at the website Just Drinks, CEO David Bratcher said that MGP will “further lower our net aging whiskey put away” and “scale down our whiskey production” starting next year. This comes in response to “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.” In other words, there is less demand for American whiskey and there is already a massive amount of it aging in warehouses, particularly in states like Kentucky, Tennessee, and Indiana. This follows a profit warning issued by the company last month which forecast annual sales dropping from about $750 million to $700 million, and a decrease in share prices by nearly a dollar.
This news comes during a tough time for American whiskey. Last year, agave spirits overtook sales of our homegrown brown booze for the first time. Over the past few years, producers have been hit hard by tariffs imposed by the EU on American whiskey that were imposed in response to the Trump administration’s tariffs on steel and aluminum. Now that Trump is returning to office, there’s a good chance those tariffs could rise to a staggering 50 percent next year, which would be devastating to the craft industry and a real hardship on the legacy distillers—and, in turn, on consumers. There are also a lot more options for brands looking to source or contract distill whiskey now—MGP used to be the only game in town, but Bardstown Bourbon Company has been a source for many new whiskey brands, as well as a few other smaller operations.
It’s also possible that there is just a glut of brands on the market that are sourcing whiskey instead of operating their own distilleries. There is nothing at all wrong with that practice, which has been around virtually since the start of the American whiskey industry, but perhaps the market has a cap. MGP will continue to bottle and sell its own in-house brands like Remus Bourbon and Rossville Union Rye, in addition to Penelope Bourbon which it acquired last year and various other whiskey and tequila brands. The hope seems to be that scaling back production and focusing on its own branded spirits will stabilize the company’s finances and allow it to continue profitably, but this remains to be seen.
