MGP sees 16% sales drop in Q4

US producer MGP Ingredients closed out 2024 with a slump in sales – and has forecast further declines for 2025.

Last year, the Kansas-based company announced it would scale back its whiskey production to focus on its branded spirits, amid declining sales across all of its segments.

The company produces distilled spirits (vodka, gin, Bourbon and American whiskey) under its ‘distilling solutions’ segment, food ingredients (under the ‘ingredient solutions’ segment), and branded spirits.

Its branded spirits arm includes American whiskey maker Luxco, which it acquired for US$475 million in April 2021, as well as Mexico-based Tequila producer Destiladora González Lux and Indiana’s Ross & Squibb Distillery.

For the full year 2024, the company’s consolidated sales were at US$703.6.m, down by 16% from 2023.

Looking at just the fourth quarter (Q4) of 2024, sales were down by 16% in comparison to 2023 at US$180.8m.

This is in line with the company’s predictions following Q3 (third quarter), where full-year sales were revised to be in the US$695m to US$705m range.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were down by 6% to US$196.5m for the full year. For Q4, they were then down by 9% to US$53.1m.

Meanwhile, its consolidated gross profit for 2024 was US$286.3m (down by 68%), and US$74.5m for Q4 (down by 13%).

MGP interim president, CEO and CFO Brandon Gall, who assumed duties from David Bratcher after his retirement announcement in January, said despite “ongoing industry-wide challenges” the results in the fourth quarter were “in line with our expectations”.

He explained: “Elevated industry-wide barrel whiskey inventories continue to weigh on overall brown goods sales and pricing trends, pressuring our financial performance and overshadowing the meaningful strides we continue to make across our branded spirits and ingredient solutions businesses.

“Led by Penelope [Bourbon], our premium-plus portfolio outpaced category growth in 2024, even as we faced headwinds from the repositioning of certain brands for long-term success.

“At the same time, the sequential improvement in ingredient solutions sales and gross margin reinforces our belief that our specialty wheat ingredients platform is structurally positioned to win in the faster growing ‘healthier for me’ food segments.”

Branded spirits performance and 2025 projections

The company’s full-year sales for its branded spirits in 2024 reached US$240.8m, down by 5% compared with 2023. Additionally for Q4, the segment dropped by 12% to US$64m.

In Q4, the results were attributed to a double-digit decline in mid- and value-priced brands and below, plus a double-digit decline in the premium-plus portfolio. This, however, was due to ‘lapping strong growth in the year-ago period’, the company said.

Factor in the full year, and premium-plus was up by 5% as the company continued to focus on Tequila and American whiskey. MGP noted this growth was partially offset by the ‘negative impact from the planned optimisation of our mid- and value-priced portfolio as we continue to align our portfolio with consumer trends’.

Full-year gross profit for branded spirits was US$118.2m, up by 2% in 2024 compared with 2023.

Looking at the year ahead, sales for 2025 are expected to amount between US$520m and US$540m. EBITDA is then projected to be between US$105m and US$115m.

Speaking on the company’s decision to change its focus and reduce whiskey production last November, the CEO at the time, Bratcher, said that for 2025 the company planned to “further lower our net ageing whiskey put away, scale down our whiskey production, and optimise our cost structure to mitigate lower production volumes”.

In MGP’s August reading, it had projected full-year sales for 2024 to be somewhere in the US$742m to US$756m area, before it revised the outlook again in November.

Gall added: “Our 2025 financial guidance, particularly the revised outlook for the distilling solutions business, reflects our decisive, proactive actions that are designed to de-risk our brown goods outlook.

“As we reposition this business to the evolving industry landscape, executing our long-term strategy to establish MGP as a premier branded spirits company remains a top priority.”

MGP’s branded spirits include Bourbons and American whiskeys produced by Luxco, including those from Lux Row Distillers, Ross & Squib, Bardstown and Limestone Branch Distillery.  Its Tequilas from Destiladora González Lux include El Mayor, Exotico, and Dos Primos. And it also looks after Pearl Vodka, Green Hat Gin Saint Brendan’s Irish Cream and The Quiet Man Irish Whiskey.