MGP invests $12m in barrel warehouse expansion

Third-party producer MGP Ingredients has started a US$12 million expansion of its barrel warehouse in Kentucky to meet consumer demand for American whiskey.

The construction of the new barrel warehouse facility recently began in Williamstown, Kentucky. The project is due to be completed by the end of 2022.

The warehouse is located approximately 50 miles south of the company’s 174-year-old Ross & Squibb Distillery in Lawrenceburg, Indiana, which was rebranded last year.

MGP said the warehouse development marks the second major investment in the firm’s spirits operations in recent months, following a US$4m expansion of Kentucky-based Lux Row Distillers announced in November 2021.

The Lux Row expansion is expected to be finished by late 2022. The move will allow the American whiskey distiller to increase its annual production capacity by 75% and operate 24 hours a day.

“With the increased demand we have been experiencing for our new distillate, aged whiskey and ultra-premium brands, these investments are necessary,” said Dave Colo, president and CEO, MGP Ingredients.

“When complete, the new barrel warehouse and Lux Row distillery expansions position us well for continued, sustainable growth. It is an exciting time for our company and the spirits industry.”

Lux Row Distillers is owned by Luxco, which was merged with MGP following a US$475m acquisition in April 2021.

According to the Kentucky Distillers’ Association (KDA), distillers in the state are expected to pay a record US$33m in ageing barrel taxes in 2021.

Kentucky has the fifth-highest spirits tax rate in the US, with distilleries paying more in federal alcohol tax (US$1.8bn) than any other state. The state remains to be the only place in the world that taxes ageing barrels of spirit.

The KDA said the industry currently has 10.3m ageing barrels of Bourbon, surpassing the 10m mark for the first time.