Dive Brief:
- MGP Ingredients, a manufacturer of spirits and a supplier to giants like Diageo, will idle two Kentucky distilleries as sluggish consumption has created an alcohol surplus.
- The distiller said it will halt distilling operations at its Limestone Branch Distillery in Lebanon and Lux Row Distillers in Bardstown beginning May 1. The pause will last until "inventory levels support additional production," which the company estimated would take at least one year.
- The halt in production will also result in 33 layoffs across the two facilities. Warehousing, bottling and barrel programs will continue.
Dive Insight:
While other segments, such as beer and wine, also face declining sales, aged spirit producers have had a more difficult time adjusting because they must set production levels years in advance. Declining alcohol consumption has been compounded by tariffs, which are limiting the once-lucrative international market for producers and leading to a decline in exports.
As a surplus builds, whiskey and bourbon makers are now scaling back production. Earlier this year, spirits giant Suntory announced a 12-month pause at Jim Beam's main Kentucky facility. Competitors Diageo and Brown-Forman have also announced cutbacks.
Production of distilled spirits fell 28% during the first eight months of 2025 compared to the same period in 2024, according to an economic assessment prepared for the Kentucky Distillers Association.
“The American whiskey market continues to be structurally oversupplied, with excess capacity and elevated inventory," Julie Francis, president and CEO of MGP Ingredients, said in a statement. "Like many companies across the industry, we are navigating a challenging environment and taking steps to better align our operations with current inventory levels while supporting our efficiency and productivity goals."
In addition to supplying spirits for other producers, MGP Ingredients has its own portfolio, including Rebel and Uncle Remus bourbons. It's also a major supplier of specialty food ingredients, which it expects to help offset some of the losses in alcohol as more companies reformulate to add protein or meet other consumer trends.
MGP Ingredients reported a 52% decline in distilling solution sales in the fourth quarter as large customers paused purchases to balance their own inventories. Sales of its branded products remained roughly flat as premium bourbons compensated for losses in its value brands.
