Distiller MGP Ingredients to Idle Two Kentucky Distilleries Due to Surplus Alcohol
The spirits manufacturer MGP Ingredients, known for supplying major companies like Diageo, has announced plans to cease operations at two of its Kentucky distilleries. The decision comes as a result of sluggish alcohol consumption leading to an oversupply in the market.
Effective May 1st, MGP Ingredients will temporarily halt production at Limestone Branch Distillery in Lebanon and Lux Row Distillers in Bardstown. The pause is anticipated to last until inventory levels support the need for additional production, which the company estimates could take up to a year to reach.
Unfortunately, the production stoppage will also result in 33 job layoffs across the two facilities. However, warehousing, bottling, and barrel programs will continue as usual.
Challenges in the Spirits Industry
While various alcohol segments are facing declining sales, aged spirit producers are particularly struggling due to the necessity of setting production levels years in advance. This predicament has been exacerbated by tariffs, which have limited international market opportunities for producers and caused a decline in exports.
As a surplus of alcohol continues to grow, whiskey and bourbon makers are scaling back their production. Similar cutbacks have been announced by competitors such as Diageo and Brown-Forman, reflecting the industry-wide challenges being faced.
According to an economic assessment conducted for the Kentucky Distillers Association, production of distilled spirits saw a significant 28% decrease during the first eight months of 2025 compared to the same period in 2024.
Adapting to Market Conditions
Julie Francis, President and CEO of MGP Ingredients, acknowledged the oversupply issue in the American whiskey market and stressed the importance of aligning operations with current inventory levels while also striving to maintain efficiency and productivity goals. In addition to supplying spirits to other producers, MGP Ingredients offers its own portfolio of brands, including Rebel and Uncle Remus bourbons.
Despite a 52% decline in distilling solution sales reported in the fourth quarter, MGP Ingredients remains optimistic about its future prospects. The company’s diverse range of products, including specialty food ingredients, is expected to help offset losses in the alcohol sector as more companies shift towards meeting evolving consumer trends.
Overall, MGP Ingredients is navigating the challenging environment in the spirits industry by making strategic adjustments to adapt to changing market dynamics and ensure long-term sustainability.