MGP halts production at Kentucky distilleries
Why does this matter?
Signals broader American whiskey oversupply challenges affecting major producers like MGP and Diageo, revealing important market dynamics BevTech founders should understand when planning production, inventory, and go-to-market strategies in the spirits sector.
Highlights
US firm MGP Ingredients will pause operations at Kentucky distilleries Limestone Branch and Lux Row Distillers as whiskey demand drops, impacting 33 jobs. MGP plans to temporarily halt operations at Limestone Branch Distillery in Lebanon, Kentucky, and Lux Row Distillers in Bardstown from 1 May as it aims to adjust production in line with current inventory levels. MGP said it could resume production at these sites ‘as early as 12 months after that date’, when its inventory levels support the need for additional distilling. The third-party producer confirmed that this move would affect 33 employees across the two sites and is working to support them. Other operations, including warehousing, bottling and barrel programmes, will continue. The visitor centres at both distilleries will also remain open and continue to offer their full schedule of experiences, which includes tours, tastings and retail offerings. “The American whiskey market continues to be structurally oversupplied, with excess capacity and elevated inventory,” said Julie Francis, president and CEO of MGP Ingredients. “Like many companies across the industry, we are navigating a challenging environment and taking steps to better align our operations with current inventory levels while supporting our efficiency and productivity goals. “As a result, we have made the difficult decision to temporarily idle distilling operations at these two facilities. This decision was not made lightly. “We are grateful for the contributions of our teams, committed to supporting those impacted, and remain confident these distilleries will continue to play an important role in our business in the future.” The production pause follows major revenue losses for MGP, which saw sales drop by nearly a quarter last year as demand for its whiskey plunged. Other companies have already taken similar measures, including Suntory-owned Jim Beam, which has stopped production for one year at its James B Beam campus. Last year, Diageo ceased whiskey production at its Balcones and George Dickel distilleries, as well as its distillery in Lebanon. Limestone Branch and Lux Row Distillers joined MGP's portfolio following its US$475 million acquisition of Luxco in 2021. MGP has invested millions of dollars into expanding Lux Row Distillers, including US$12m on its barrel warehouse and US$4m on boosting its production capacity. Lux Row Distillers produces Bourbon brands Rebel, Ezra Brooks and Daviess County. Limestone Branch is known for making Yellowstone Bourbon, Minor Case whiskey, and Bowling & Burch Gin. Production continues at MGP's Indiana site MGP said it did not expect the temporary pause at the two distilleries to impact the availability of its products or services. MGP will continue distilling operations at Ross & Squibb Distillery, its largest facility, which is located in Lawrenceburg, Indiana. The site produces brands such as Penelope Bourbon, George Remus Straight Bourbon Whiskey, Remus Repeal Reserve, Rossville Union Rye Whiskey, Eight & Sand Blended Bourbon Whiskey, and Tanner’s Creek. MGP also owns a Tequila distillery, Destiladora Gonzalez Luz, located outside the city of Arandas in the highlands of Jalisco, Mexico. It makes the El Mayor, Exotico, and Dos Primos Tequila brands. A court recently dismissed a lawsuit brought against MGP by investors who claimed the company had misled them about the business’ health.
The Spirits Business
