MGP Ingredients reported a 15% sales drop after whiskey demand weakened.

MGP Ingredients reported a sharp drop in second-quarter sales as weaker whiskey demand continued to weigh on its distilling business and led the company to slow activity at two Kentucky operations earlier this year.

The Kansas-based supplier said total sales fell 15% to $124.4 million in the quarter. The steepest decline came from Distilling Solutions, the unit that sells bulk spirits, custom mash bills and barrel-aging services to other companies. Revenue in that division fell 42% to $29.2 million, driven by a 59% drop in brown goods sales, which the company said reflected lower demand for both aged whiskey and new distillate.

The results extend a downturn that had already appeared at the start of the year. In the first quarter, MGP’s Distilling Solutions business had also fallen sharply, down 40%. The latest figures suggest that pressure on whiskey inventories and orders has not eased.

In May, MGP paused operations at Limestone Branch and Lux Row Distillers in Kentucky after demand weakened. The move underscored how quickly softer whiskey purchasing has spread beyond retail shelves into production planning, contract distilling and barrel supply. For the broader beverage industry, the slowdown matters because MGP is a major supplier to brands that rely on sourced whiskey and private-label spirits. A pullback in bulk whiskey orders can signal wider caution across the brown spirits market and may lead to further adjustments in inventories, production schedules and sourcing strategies for distillers and bottlers.

Even as its supply business weakened, MGP’s branded portfolio held up better. Sales in Branded Spirits slipped 1% to $59.6 million. Excluding the “other products” category, which includes private-label bottled spirits, sales in that division rose 3%.

The company said its premium-plus portfolio remained a relative bright spot. Premium-plus sales increased 5% to $32.6 million in the quarter. Penelope Bourbon, which MGP acquired in 2023, posted 13% growth, while Yellowstone whiskey recorded what the company described as significant gains, helped by limited-edition releases. Combined sales of value and mid-priced brands were flat at $24.5 million, though the mid-priced segment alone rose 5%.

Julie Francis, MGP’s chief executive and president, said the quarter showed continued momentum in premium-plus brands led by Penelope Bourbon and Yellowstone, along with improvement in selected mid-priced and value labels. She said the company was continuing to pursue long-term growth while operating in what she called a challenging industry backdrop.

Outside spirits, Ingredient Solutions was MGP’s only business segment to post growth in the quarter, rising 2% to $33.5 million.

Operating income for the company fell to $17.7 million. MGP said that decline reflected expected reductions in Distilling Solutions and Ingredient Solutions, as well as a higher provision for credit loss tied to a customer bankruptcy.

The company said it spent the quarter reshaping parts of its sales, marketing and supply-chain operations while adding capabilities aimed at new and existing growth opportunities. It also said it was pursuing efficiencies through a cost management initiative.

MGP is now trying to reposition parts of its spirits business as whiskey demand cools. The company said it is working to rebuild its aged whiskey pipeline, expand further into premium white goods and grow its private-label programs. That strategy points to a broader shift underway among suppliers that had benefited from years of strong bourbon demand but are now facing slower replenishment orders and more selective buying from customers.

The latest quarter follows a difficult period for the company overall. MGP’s full-year sales for 2025 fell 24%, showing that current weakness did not begin this spring but has carried over into 2026.

Despite the second-quarter decline, MGP reaffirmed its fiscal 2026 guidance first issued in February. The company said it still expects full-year sales to range from $480 million to $500 million.

It has also continued to add staff during the downturn. Earlier this week, MGP announced four new hires, including Tom Neiheisel, a former Pernod Ricard executive, who joined as vice president of Distilling Solutions sales.

Francis said MGP plans to stay focused on its strategic roadmap through the second half of the year, with emphasis on what it sees as its strongest growth opportunities and on disciplined execution as market conditions remain difficult.