Uncovering third-party spirits operations

30th May, 2018 by Amy Hopkins

Distilling under contract is a mysterious, but vital, part of the spirits industry. The Spirits Business lifts the lid on the operations and strategies of leading third-party producers, and explains why many so-called craft brands wouldn’t be without them.

MGP Ingredients runs 'a significant operation'

MGP Ingredients runs ‘a significant operation’

The production stories behind hundreds – perhaps thousands – of small, independent spirit brands are often left untold. As the craft renaissance grips the industry, romantic narratives of heritage and provenance are positioned front and centre on spirit labels, while the large-­scale companies that actually distil or source the liquid in the bottle stay in the shadows.

Industry members and consumers are now becoming more aware of third-­party producers, but their emergence into the public consciousness hasn’t exactly been smooth. In recent years, some brands that use contract distillers have come under fire for what has been seen as a lack of transparency. The criticism has stretched from gin to American whiskey and beyond, but whiskey producers from the US have borne the brunt of the backlash.

“In a way it’s unfortunate that people didn’t really understand how widespread and invaluable sourced alcohol is to all categories, and that they really focused on the whiskey category,” says Gus Griffin, president and CEO of MGP Ingredients, a large third­-party distiller based in the US.

“But I think that as people have understood how universal and historic sourced alcohol is to the various categories, and as their knowledge has improved, negative perceptions have declined, and they now realise within the industry the different benefits that sourced alcohol provides. A lot of craft brands wouldn’t have been able to get to market, or get to market as fast as they did, without sourced alcohol.”

Undoubtedly, third­-party producers and suppliers enable fledgling spirits to hasten their launch date and dedicate valuable resources to their brand and market strategies. But it’s not only ‘craft’ brands that benefit from the service; international drinks groups will often purchase sourced spirits to increase and accelerate their production.

Third­-party production is even more pervasive when one considers that it also includes neutral grain spirit (NGS), which is used as the base for countless brand leaders in the white spirits world.

Vital they may be, but how exactly do third-­party producers operate, and what are their plans for the future?

Over the following pages we profile five leading third-party producers.

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