MGP Ingredients sees sales slip during Q3

Third-party spirits producer MGP Ingredients has reported a decline in sales during its 2019 third quarter compared to the previous year.

Consolidated sales fell by 4.6% to US$90.7 million during the three months to 30 September 2019, due to a drop in the Distillery Products segment, which was partially offset by sales growth in the Ingredient Solutions segment.

Consolidated gross profit for the group declined by 4.1% to US$18.8m, while consolidated operating income decreased by 3.4% to US$11.6m.

Gus Griffin, president and CEO of MGP Ingredients, said: “While the overall American whiskey market remains robust, and our position within that market is still very strong, timing and volatility of customers’ orders continues to be a challenge this year.

“As in previous quarters this year, we saw forecasted orders delayed due to customer funding issues and their desire to delay purchasing as long as possible.

“These issues affected sales of both new distillate and aged whiskey inventory. Despite this, we did have a very strong quarter for sales of aged whiskey, selling more whiskey and older whiskey, as customers continue to need our inventory to launch new brands, fill holes in their inventory and support brand acquisitions.

“We believe these customer needs will be ongoing. While we are certainly behind where we would like to be at this point in the year, we are off to a strong start to the fourth quarter, and we are confident in our line of sight to the sales required to deliver against our full year guidance.”

Sales for MGP’s Distillery Products segment fell by 6.4% to US$73.3 million during the third quarter compared to the same period in 2018.

This was attributed to a decline of new distillate sales, which was partially offset by an increase in sales of aged whiskey.

Gross profit within the segment dropped “slightly” to US$15.9m compared to US$16.3m last year.

Griffin said: “We saw a decline in our new distillate business this quarter as some of our customers work through temporary inventory situations.

“While that was a drag on our overall whiskey sales, we continue to strengthen our position in the market and position ourselves for the long term.

“We are doing an outstanding job recruiting new customers for our new distillate and aged whiskey offerings, and we have added a second sales manager to support our international efforts.

“We also signed a new multi-year new distillate supply agreement with one of our largest existing customers. We continue to realise pricing in line with our expectations for our brown goods. The white goods and industrial alcohol oversupply situation continued this quarter with margins for white goods holding about even with prior year, and industrial margins compressing slightly.”