In This Article:
MGP Ingredients intends to reduce whiskey production, a move that comes after the US distiller of El Mayor Tequila and Remus Bourbon cut its full-year sales outlook.
In a statement accompanying the group's third-quarter results to 30 September, CEO David Bratcher said the company is looking to "further lower our net aging whiskey put away" and "scale down our whiskey production" next year.
It said the measure is a "response to the softening American whiskey category trends and elevated industry-wide barrel inventories".
Bratcher added the company would also look to "optimise" its "cost structure to mitigate lower production volumes".
MGP Ingredients manufactures distilled spirits, branded spirits such as Daviess County Bourban, and food ingredients.
Its distilled spirits include Bourbon, rye whiskey, vodka and gin, which are sold to manufacturers of other branded spirits.
The decision to cut whiskey production in 2025 follows a profit warning issued by the company in October, when it announced a cut to its outlook for sales and underlying earnings.
MGP Ingredients said then it expects to see annual sales hitting $695m to $705m, down from its earlier forecast of $742m to $756m.
It also forecasted adjusted earnings per share of $5.55 to $5.65, down from $6.12 to $6.23.
In its Q3 results, the group saw consolidated net sales drop 24% to $161.5 million. Gross profit slumped 10% to $65.8m, a dip which had been predicted in its profit warning.
Comparative net income was up 83.8% at $23.9m, while operating income was up 64.6% at $32.6m.
Its Distilling Solutions division saw sales decrease 36% to $71.9 m, while its Branded Spirits unit booked a 6% decline to $62.6m.
Following the Q3 results, Bratcher added that "current market dynamics" were likely to "have an even greater impact on our Distilling Solutions segment sales and profitability in 2025", but added he was confident the group's proposed actions could "strengthen the long-term competitive positioning of our brown goods business".
He added that while "further inventory tightening is a "headwind in the near term", the company's regular investments in its branded spirits division would "deliver attractive organic growth".
"MGP Ingredients to cut back on whiskey production" was originally created and published by Just Drinks, a GlobalData owned brand.
The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.