Whiskey giant MGP Ingredients has announced it will cease operations at its Atchison, Kansas distillery come January 2024.
The Kansas distillery manufactures grain neutral spirits and industrial alcohol products, alongside their associated co-products. Grain neutral spirit is a type of high-proof alcohol that is distilled from grains like corn, barley, or wheat. The base is often used for vodka, gin, and flavored liqueurs.
The company said it will continue to operate and invest in its Ingredient Solutions business located in Atchison, Kansas, including the completion of the previously announced texturized protein facility, a $16.7 million investment, expected to be operational by year-end. The company’s Lawrenceburg, Indiana distillery operations will also remain unaffected.
The decision to shutter the Kansas distillery aligns with the company’s plans to address profitability headwinds associated with its grain neutral spirits and industrial alcohol products within its Distilling Solutions segment, according to a statement.
“After careful deliberation, we have concluded that the closure of our Atchison distillery is a necessary step to further align the product categories we participate in and their supporting operations, consistent with our long-term strategic objectives,” said David Colo, president and CEO of MGP Ingredients.
Colo noted the impact of the increase in grain neutral spirits and industrial alcohol supply on the market in recent years. Coupled with a rise in local corn basis costs, he said, those factors have rendered the product lines no longer economically viable.
Beginning as a humble grain belt distillery in 1941, MGP Ingredients has become a leading producer and supplier of distilled spirits, food ingredients, and industrial alcohol for use in both food and non-food applications. The company saw sales grow 3% to $201 million for its first quarter ending in March. Distilling Solutions sales increased 2% to $113.2 million, due to higher brown goods sales, while the Branded Spirits segment also increased 2% to $56.9 million in that same period.
MGP is a major whiskey producer in the U.S., supplying distillate for well known brands such as Bulleit Rye and WhistlePig. The producer also has its own portfolio of branded spirits, like Rossville Union and George Remus, which are sold to distributors. With the $475 million acquisition of St.Louis-based spirit producer Luxco in 2021, the company furthered its long-term strategy to focus on higher value-added products. The subsidiary acquired Penelope Bourbon for $105 million upfront in May. That acquisition built on the company’s efforts to grow its own brands in the premium-plus American whiskey space.