Industry Update: MGP Ingredients to Idle Two Kentucky Distilleries Due to Alcohol Surplus
- MGP Ingredients, a renowned spirits manufacturer and supplier to industry giants like Diageo, has announced the temporary closure of two of its Kentucky distilleries in response to sluggish consumption and an oversupply of alcohol.
- The company will cease distilling operations at Limestone Branch Distillery in Lebanon and Lux Row Distillers in Bardstown starting May 1. This pause is expected to last until inventory levels can support additional production, a process estimated to take at least one year.
- As a result of the production halt, 33 employees across the two facilities will face layoffs, while warehousing, bottling, and barrel programs will continue as usual.
Insights into the Industry Challenges
The decline in alcohol consumption, coupled with tariffs and limited international markets, has posed significant challenges for aged spirit producers who plan production levels years in advance. This has forced whiskey and bourbon makers to scale back production to address the growing surplus in the market.
Notable industry players like Suntory, Diageo, and Brown-Forman have also implemented cutbacks in response to the changing market dynamics. According to reports, the production of distilled spirits decreased by 28% in the first eight months of 2025 compared to the same period in 2024.
Julie Francis, president and CEO of MGP Ingredients, acknowledged the oversupply in the American whiskey market and emphasized the company’s efforts to align operations with current inventory levels while maintaining efficiency and productivity goals.
Despite the challenges in the alcohol segment, MGP Ingredients remains optimistic about its diversified portfolio, which includes popular brands like Rebel and Uncle Remus bourbons, as well as specialty food ingredients that cater to evolving consumer trends.
In the fourth quarter of 2025, MGP Ingredients reported a 52% decline in distilling solution sales, attributed to customer inventory adjustments. However, sales of branded products remained stable, with premium bourbons offsetting losses in value brands.