
A securities class action lawsuit has been filed against MGP Ingredients, Inc. in the United States District Court for the Southern District of New York, representing investors who purchased company stock between May 2023 and October 2024.
The lawsuit alleges MGP Ingredients failed to properly disclose information about a slowdown in consumption and oversupply in their brown goods portfolio, which includes American whiskies and tequila products.
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The impact on MGP Ingredients’ stock has been significant. The company’s February 2024 guidance announcement fell 4.9% below analyst consensus, with President and Chief Executive Officer David S. Bratcher confirming that “inventory destocking at a wholesale level will remain an issue for the branded spirits industry in 2024.” The stock dropped $13.65 per share that day.
Further developments in October 2024 saw MGP Ingredients admitting to soft demand and high inventories, followed by Wells Fargo citing “credibility issues” in their analysis. The stock fell $19.71 per share after these announcements. By October 31, when MGP Ingredients disclosed that excess inventories would have an “even greater impact” on 2025 sales, shares dropped another $8.27.
What This Means for Whiskey Consumers
As whiskey lovers, we’re all too familiar with rising prices and limited availability of our favorite bottles. This market correction and oversupply situation at MGP Ingredients might seem like welcome news – after all, who hasn’t wished for more affordable whiskey? But let’s not get too excited just yet.
While market oversupply typically points toward better pricing and increased availability, the reality might be more complex. Yes, there’s excess inventory in the system, but MGP Ingredients’ planned scaling back of operations could mean we’re looking at another supply swing in the years ahead. We’ve seen this cycle before in the industry – feast followed by famine.
Industry Impact
The situation at MGP Ingredients sends ripples beyond their own balance sheet. As a significant supplier in the American whiskey market, their production decisions have widespread implications for the industry.
The company’s plans to scale back operations in response to these challenges could impact both established brands and craft distillers who source their whiskey. With MGP Ingredients warning that excess inventories will have an “even greater impact” on sales in 2025 than previously indicated, we might see significant changes across the industry’s supply chain.
SOURCE: ABC4.com