MGP Reports Sharp Drop In Sales

The Ross & Squib Distillery, owned by MGP Ingredients and popularly known by the overall company’s name, has announced a sharp drop in sales of their sourced whiskey.

Indiana-based MGP has seen many twists and turns in its storied modern history. Part of the Seagram conglomerate for decades, the distillery was bought by a Caribbean holding company and renamed Lawrenceburg Distillers Indiana (LDI) after the dissolution of Seagram in the 2000s. After said holding company collapsed, it came into the hands of MGP Ingredients in 2011 and was promptly renamed for that company.

Although the distillery made many products, it is best known as America’s principal dealer in stocks of aged whiskey. They also produce for other companies under contract. Those roles only became more entrenched as the Bourbon Boom and associated demand pressures caused all of America’s major legacy distillers to allow their contract production arrangements to expire and exited the market for aged whiskey, preferring to keep their production capacity and stocks to meet their own requirements. During the 2010s, MGP was best known for their ubiquitous 95% rye, 5% malted barley rye whiskey, which was used in many, many sourced brands.

Later, MGP Ingredients renamed the distillery Ross & Squibb, after its pre-Seagram forebear. They launched their own in-house brands (Remus) and acquired some of their best customers (Luxco, Penelope). While they were joined in the contract distilling business by Bardstown Bourbon Company (BBCo) but continued in their role as America’s major source for ready-aged stocks of whiskey.

MGP’s Bad News
The company has announced sales contraction of almost 59% year-on-year. What that means has been misinterpreted by many observers, so I will do my best to correct that here. MGP has separates its spirits business into two different divisions, Branded Spirits and Distilling Solutions. The former is where all the brands owned by MGP call home–Lux Row, Yellowstone, Penelope, Remus– as well as other brands such as Everclear, and sales in this division rose by 3%, bucking overall national trends. The latter represents contract distilling, warehousing and aged stock sales, of which contract distilling was described as falling by 42% year-on-year. Their brown spirits business overall sank by 59% year-on-year overall. With contract distilling seeing a heavy fall and in-house brands modest growth, the remainder of the decrease comes from sales in aged whiskey stocks.

The numbers suggest a number of MGP’s contract distilling clients exiting their production contracts, and the surprising part of the report is just how much this has been the cases relative to sales of stock whiskey, which has fallen steeply, but accounts for approximately a quarter or a fifth of the overall slide. The news seems to suggest a number of MGP’s clients reacted swiftly to the initial signs of market softening in 2025, giving whatever notice was required, with the effects showing themselves now in mid-2026.

What Comes Next
The reason I say the slump in MGP’s supply contracts being the main drag on their business is a surprise is because I expect the market for mature, ready-to-blend whiskey either is or will soon be drowned. Most observers seem to have either never known or forgotten than before 2015 and especially 2010, most or all of the major distillers in Kentucky and Tennessee were engaged in the business of trading stocks of aged whiskey. Heaven HIll was the only major company that admitted to such sales (without disclosing clients); most of their peers denied doing so, but sold such wholesale products anyway, With the Bourbon Boom underway, they abandoned that business model.

Now those same major distillers have seen their own sales slump, and some have gone on distilling holiday for 2026 (MGP itself has temporarily shuttered Lux Row and Yellowstone distilleries in Kentucky). For the first time in a decade, double and triple shifts running for six days a week is not the norm at a Kentucky distillery. Everyone acknowledges the major legacy distillers are sitting on an oversupply of whiskey. I have seen some clear signs and heard rumors that go beyond this that the Kentucky Majors, if not their peers in Tennessee, are again engaged in selling aged stocks of whiskey. It is a safe guess to assume the market for wholesale barrels of mature whiskey in early 2027 will be a sea change from what it was in early 2025, when MGP was still the only major player in that business. That points to another major drop coming in MGP’s overall sales.

With the news that MGP is taking it in the teeth over contract production, a fair industry question is what is happening at BBCo? That company was designed from the ground up as a contract producer and has never been a major seller of aged whiskey stocks. They have already cut production in a situation that was probably similar to what happened at MGP: the delayed effect of contract clients exiting their contracts.

No credible expert has gone on record with the expectation of any of the major companies dumping an ocean of aged whiskey on the market in an attempt to get it off their books, and for good reason. The erosion of the contract distilling business clearly indicates the buyers just aren’t there for that ocean, so such an act would drive prices below a level that could sustain breaking even, let alone a profit. However, as more players enter that aged stocks market, the market itself will become more cut-throat. Although BBCo will be spared that particular storm, MGP will not. Both will suffer from the contract distilling market drying up, but only MGP will feel serious hurt from the slowdown in the market for stocks of mature whiskey, and the reaction to the retail sales slump is still playing out.