Whiskey glut weighs on MGP as Q3 sales fall 19%
As US whiskey production slows and inventories remain high, MGP Ingredients’ third-quarter (Q3) sales slid 19% with distilling revenue nearly halved.
Kansas-based third-party spirits producer MGP reported sales of US$130.9 million for the three months ending 30 September 2025, a decline of 19%.
Gross profit fell by 25% to US$49.4m for the quarter, while net income plummeted by 35% to US$15.4m.
The Q3 results followed a 24% drop in the previous quarter and a sales slump of 29% in the first three months of this year.
“Our third-quarter results demonstrate the resilience of our business and our team’s ability to continue to deliver against our key initiatives amid ongoing industry headwinds,” said Julie Francis, who joined MGP as CEO and president in July, from frozen food firm Schwan’s Company.
MGP said its Q3 sales and profit decline was primarily due to expected decreases for brown goods sales.
MGP operates the Ross & Squibb Distillery in Lawrenceburg, Indiana, as well as Limestone Branch and Lux Row Distillers, which are both in Kentucky. It also owns Destiladora Gonzalez Lux, a Tequila distillery in the Highlands of Jalisco, Mexico.
‘Elevated’ barrel inventories
The Distilling Solutions segment was hit hard with a 43% sales slump to US$40.9m in Q3, which MGP attributed to ‘constrained’ demand for its brown goods ‘amid elevated industry-wide barrel inventories’.
The division’s profits also plummeted by 50% to US$14.2m.
According to the Kentucky Distillers’ Association, the number of ageing barrels of Bourbon in Kentucky hit a record high of 16.1m this year, with taxes on the casks soaring by 163% over the last five years.
During the Q3 earnings call, Francis said the year-to-date results “came in ahead of our expectations, reflecting disciplined pricing, operational efficiencies and better aged whiskey sales”.
Regarding the segment, MGP said: “As anticipated, several of our large strategic customers completed their existing contracts and expressed the need to temporarily pause their near-term whiskey purchases as they rebalance their inventories.”
Francis added that many of its customers have “expressed their commitment” to continue their partnerships with MGP in the long term and are working with them to “develop innovative solutions that leverage our unrivalled scale and aged whiskey inventories” as well as opportunities in categories such as gin, white spirits and speciality grain distillates.
Francis also highlighted that the wider whiskey industry “continues to recalibrate to the current environment”, citing data from the US government’s Alcohol and Tobacco Tax and Trade Bureau (TTB).
“According to TTB data through June of 2025, total US whiskey production is down 19% over the prior 12 months, down 28% over the prior six months and down 32% over the prior three months,” she said.
“While inventories remain high, this trend is encouraging signal that the market is working through its imbalance. We believe this rational behaviour by the broader industry, combined with our strong partnership with strategic customers, will position MGP to emerge stronger once brown goods supply and demand dynamics normalise.”
As a result of better than expected results, MGP expects its 2025 full-year Distilling Solutions sales and gross profit to be down by 46% and 55%, respectively. This is up from the previous outlook of a 50% decrease for sales and a 65% drop in profit.
Penelope Bourbon boosts Branded Spirits sales
MGP is focusing on its Branded Spirits division, which the company believes will be the main driver of growth for the business in the future.
In recent years, MGP has acquired a number of brands, most notably whiskey and Tequila maker Luxco for US$475m in 2021. MGP also added Penelope Bourbon to its portfolio in May 2023.
The Branded Spirits part of the business was down by 3% to US$60.7m, but premium-plus sales rose by 3% – its third consecutive quarter of growth. Within this portfolio, Penelope Bourbon maintained its strong growth trajectory, MGP highlighted. Other brands within premium-plus include El Mayor Tequila and Rebel Bourbon.
Francis told investors in the earnings call: “According to Nielsen dollar sales data for the past 52 weeks, Penelope now ranks among the top 30 premium-plus American whiskey brands in the country. Even more impressively, it has been the second fastest-growing brand in this group over the last 52 weeks and the fastest-growing over the past 13 to 26 weeks.”
Meanwhile, combined sales of mid- and value-priced brands declined by 7% as a result of lower volumes of certain cordial and Tequila brands. MGP’s Tequila portfolio includes Luxco-made brands such as Exotico and Dos Primos.
MGP’s Ingredient Solutions arm fell by 9% to US$29.3m.
For the 2025 full year, MGP has “tightened” its sales guidance to US$525m-US$535m (previously US$520-US$540m).
New hires
At the same time as announcing its Q3 results, MGP has also made several changes to its team. The company has appointed Matias Bentel as its chief marketing officer and Chris Wiseman as its senior vice-president, operations.
Bentel joins the business from his position of executive vice-president, chief brands officer at Brown-Forman. Before his stint at Brown-Forman, he held various marketing roles at Diageo and Allied Domecq.
Most recently, Wiseman served as the vice-president of manufacturing at Schwan’s Company. Prior to this, he led multiple facilities for Bimbo Bakeries USA.
“Matias brings decades of marketing experience in the alcohol beverage industry and a proven ability to build and grow brands,” Francis noted.
“Chris has a strong track record of driving operational efficiency, building high-performing teams, and improving reliability that delivers consistent results.
“Their appointments reflect our continued focus on building a strong leadership team to support MGP’s strategic growth agenda and underscore our commitment to strengthening operational execution.”
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