MGP sees operating income almost double

MGP Ingredients, one of the largest third party spirits producers in the US, has reported an operating income increase of 97.7% in 2015 as the group makes “great progress” in its strategic plan.

MGP Ingredients provides liquid for a multitude of spirits brands under third party supply contract

Revealing its FY 2015 financial results, the Indiana-based firm saw its operating income grow to US$32.9 million, while net sales increased 4.5% to US$327.6m and net income increased 10.6% to US$26.2m.

In the fourth quarter of the year, MGP Ingredients saw net sales grow 6.8% to US$81.5m, while operating income was US$10.1m, compared to US$8.2m in the same period a year ago.

However, net income for Q4 declined US$1.1m to US$6.5m, reflecting year-over-year comparison with a US$8.3m insurance settlement gain in 2014 and a higher tax rate.

“We are very pleased with our results this year,” said Gus Griffin, president and CEO of MGP. “We continue to make great progress in the implementation of our strategic plan. That plan, combined with recent investments, has us strongly positioned to benefit from longer term macro consumer trends.”

The group’s Distillery Products Segment, which produces a plethora of third party spirits brands under supply contract, increased net sales 5.3% to US$270.2 million. Meanwhile, gross profit more than doubled US$50.7m due to the “continuing sales mix shift to premium spirits, higher selling prices as well as lower raw material costs”.

“We are starting to see the benefits of our targeted investments, which should ensure that we can fully support the growth of the whiskey category,” said Griffin.

“Strong tailwinds for our business include spirits gaining share from beer, the continued strong demand for Bourbon and rye whiskeys, and the overall premiumisation of the beverage alcohol industry.”

Griffin added that that company is starting to see “benefits” from its “targeted investments” to “support growth of the whiskey category”.

“While we realised many of the immediate opportunities in 2015, we are very confident that we are building a strong team and making the necessary investments to enable us to deliver against our longer term potential,” he said.

“As our business grows, there will be some inherent quarter-to-quarter volatility due to product and customer mix, but we believe that sustained long-term growth will be the underlying trend.”

In October last year, MGP revealed plans to embark on a US$16.4m project to double its already significant warehousing capacity.

Speaking to The Spirits Business last year, Griffin said third party producers were “fundamental” to the future growth of the spirits industry since they offer “variation and innovation”.