MGP is one of the greatest whiskey producers of the country. The Lawrenceburg, Indiana distillery produces enormous quantities of bourbon and rye whiskey for other brands, as well as releasing its own labels under the Ross & Squibb name which it rebranded under after acquiring spirits company Luxco in 2021. But the management team has just announced that it will slow whiskey production due to a slowing market, which may not come as a complete shock to those following the recent trajectory of American whiskey.
According to a recent article on the site Just drinksCEO David Bratcher said that MGP will “further reduce our net reserves of aging whisky” and “reduce our whiskey production” from next year. This follows “slowing trends in the American whiskey category and increasing barrel inventories industry-wide…In 2025, we plan to further reduce our net reserves of aging whiskey, reduce our whiskey production and optimize our cost structure to mitigate the decline in production volumes. » In other words, there is less demand for American whiskey and a massive amount of whiskey is already aging in warehouses, particularly in states like Kentucky, Tennessee and Indiana. This follows a profit warning issued by the company last month, which forecast a drop in annual sales of around $750 million to $700 million, as well as a share price decline of nearly $700 million. a dollar.
This news comes at a difficult time for American whiskey. Last year, agave spirits exceeds sales of our local brown spirit for the first time. In recent years, producers have been hit hard by prices imposed by the EU on American whiskey in response to the Trump administration’s tariffs on steel and aluminum. Now that Trump is back in office, there’s a good chance these tariffs could reach a staggering 50% next year, which would be devastating for the cottage industry and a real hardship for traditional distillers – and , in turn, for consumers. There are also many more options for brands looking to source or contract distilled whiskey now:MGP It was the only game in town, but Bardstown Bourbon Company has been a source of many new whiskey brands, as well as a few other small operations.
It’s also possible that there is simply a glut of brands on the market that source their whiskey instead of operating their own distilleries. There’s nothing wrong with this practice, which has been around practically since the beginning of the American whiskey industry, but perhaps the market has a ceiling. 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 appears to be that reducing production and focusing on its own branded spirits will stabilize the company’s finances and allow it to continue to be profitable, but that remains to be seen.
