MGP’s distilling sales plunge 40% in Q1
Third-party producer MGP Ingredients reported a 40% sales drop for its Distilling Solutions segment in the first quarter (Q1) of 2026.
For the first three months of this year, MGP’s Distilling Solutions business plunged to US$28m, while gross profit plummeted by 54% to US$8.6m.
The US-based contract distiller blamed the unit’s losses on the expected lower demand for aged whiskeys and new distillates, with a 56% decline to US$14.9m in brown goods sales.
MGP said the lower volumes for brown goods put pressure on its profitability, leading to declines in total gross profit (down by 22%) and margin, which fell by 400 basis points to 31.6%.
Within the Distilling segment, white goods and other co-products saw a decrease of 8% to US$4.8m, while warehouse services rose by 3% to US$8.3m.
Earlier this month, MGP revealed it would pause operations at Kentucky whiskey distilleries Limestone Branch and Lux Row Distillers from 1 May due to a drop in demand.
MGP continues to distil at Ross & Squibb Distillery, its largest facility, which is located in Lawrenceburg, Indiana.
As a whole, MGP’s consolidated Q1 sales fell by 13% to US$106.4m, with gross profit sitting at US$33.6m.
The company’s Branded Spirits segment, which includes Ezra Brooks, Remus Bourbon and El Mayor Tequila, was down by 8% to US$44.2m in Q1. It was affected by a 3.1% decrease to US$19.7m for mid- and value-priced products.
Within Branded Spirits, premium-plus sales saw an uptick of 1.5% to US$22.7m, led by Penelope Bourbon (up by 10%).
During Q1, the company recorded non-cash adjustments of US$179.5m for its Branded Spirits division. MGP said this was mainly attributed to “unfavourable macroeconomic factors such as a higher discount rate and lower peer valuation multiples”.
On the other hand, the company’s Ingredient Solutions arm rose by 29% to US$34.2m.
MGP president and CEO Julie Francis noted that Q1 sales were in line with expectations as the business navigated a “challenging industry backdrop”.
She added: “As we move through 2026, we will continue to follow our strategic roadmap and drive our key growth initiatives, while prioritising our best opportunities for growth, taking decisive actions, and executing with discipline.”
The third-party producer reiterated its full-year guidance for 2026, with sales expected to be in the range of US$480m to US$500m.
MGP’s sales dropped by nearly a quarter last year as demand for its whiskey plunged.
Limestone Branch, Lux Row Distillers and Tequila maker Destiladora Gonzalez Lux joined MGP’s portfolio following its US$475 acquisition of Luxco in 2021.
MGP also operates a distillery in Northern Ireland, where it makes Irish whiskey The Quiet Man and Saint Brendan’s cream liqueur.
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