Whisky Advocate

More From Inside MGP

November 20th, 2013

My article, “LDI: The Mystery Distillery,” was published in the Winter 2011 issue of Whisky Advocate. It was a hard story to write because no one involved with the former Seagram-owned plant in Lawrenceburg, Indiana, would talk about it. Not aauthor-cowdery word, on the record or off.

A few facts about the place were known, but by 2011 it wasn’t even possible to determine exactly who owned it. Available public records simply showed the owner as Lawrenceburg Distillers Indiana, LLC.

Between when the story was written and when it went to press, LDI was sold. In the nick of time, we were able to update the piece to report the sale. “In late October,” we wrote, “MGP Ingredients Inc., a major food grade ethanol (i.e., vodka) producer, announced that it is buying LDI for $15 million.”

What we did not know then was that the new ownership would be as open as the previous had been secretive. We recently spoke with Dave Dykstra, MGP vice president for sales and marketing; and Don Coffey, vice president for research and development, about the company’s plans for the Indiana plant.

David Dykstra

David Dykstra

Dykstra began by explaining the facility’s historical footprint as the maker of Seagram’s Gin (now owned by Pernod-Ricard) and Seagram’s Seven Crown American Blended Whiskey (now owned by Diageo). Both brands are in the value segment and though large, both have been moribund recently. Now they are growing again.

In addition to that business, MGP believes there is a need for a bulk producer that won’t compete with brand companies, globally. This applies to their whole product mix: vodka, gin, and whiskey.

“We see a huge need for it,” says Dykstra. “Most companies like dealing with us because we’re not their competitor.” They have grown the business in the 18 months since they bought it, picking up many new customers.

Although MGP is best known as a grain neutral spirits producer, the Lawrenceburg acquisition marks their return to the whiskey business. McCormick, a historic distillery in Weston, Missouri, was owned by MGP from the 1950s until 1999. MGP also made whiskey at its distillery in Pekin, Illinois, until 1993.

With its new whiskey program, MGP is aiming for 50% to 60% of its whiskey business to come from contract distilling (in which the customer buys the whiskey when it is distilled and pays an annual fee for maturation), with the rest coming from bulk or ‘spot’ sales (in which the customer buys and takes immediate delivery of aged whiskey).

“Our focus is on the European and Asian markets for growth,” says Dykstra. “And we’re focusing on the private label business.”

One early change they made was expanding their whiskey offerings. They now make five bourbon recipes, three rye recipes, and one each for corn, wheat, and malt. No other major American distillery makes that many different recipes…and they are working on more.

Coffey explained that, with so many different mash bills in play, they have decided to use one yeast for all whiskey products.

Don Coffey

Don Coffey

“We’re freezing that as a variable,” says Coffey. But when it comes to maturation, variety is once again the rule. “We used seven different barrels for the new mash bills,” says Coffey, “different toasts and chars, to create different sub-species of bourbon and other whiskeys.” The idea is that producers will be able to buy distinctive whiskeys from MGP, whiskeys that are uniquely their own.

“We have eight novel bourbons going now, with four more cued up,” says Coffey. “The standard is the 21% rye recipe, but we will offer a variety of small grains: oats, quinoa, whatever the customer wants. We’ll study how the small grain changes the bourbon’s character, as compared to the standard.”

Since mixtures of one or more straight bourbons are still considered straight bourbon, not a blend, the possibilities are endless.

MGP intends to be most innovative and consistent supplier of distilled spirits.

“What customers value from us are consistency and reliability, the ability to replicate success,” says Coffey. ”We want to be the customer’s research and development team.” It is their intention to supply liquid, not packaged products, as they have no bottling facility. It was sold separately to Proximo Spirits. Many of MGP’s customers are bottler-rectifiers and they don’t want to compete with their customers.

Going forward, they expect to upgrade many of the distillery’s systems and will expand capacity as needed. They’ve sold most of the aged inventory made under the former owners but the warehouses are filling up again.

As a large, fulltime, non-brand producer that values creativity and innovation, MGP of Indiana adds a welcome new dimension to the American whiskey landscape.

5 Responses to “More From Inside MGP”

  1. Jordan says:

    Wow. It sounds like they’re basically trying to become a one stop shop for new distillers who want to bottle sourced whiskey. Exotic grain bills have been almost the exclusive domain of Corsair and Koval (though BT has obviously done some work in the Experimentals). It’ll be a whole new game if you can just call them up and order something young and funky.

    Really makes you wonder how long the secrecy about provenance can be maintained. If there’s another explosion of private label bottlings, you’d think customers would eventually figure out what’s up.

  2. Randy Perrelet says:

    I had read previously that, “MGP’s board is considering a sale of the company.” I hope that they have reconsidered. They are sitting on a gold mine.

  3. Lazer says:

    I like this idea, I’m calling it vertical dis-integration. It should be a healthy thing for the marketplace. Expanding the possibilities.

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