MGPI CEO to resign as sales slide, inventories swell, stock sinks
MGPI’s struggles with soft sales and high inventory appears to reflect similar battles being fought at American whiskey makers large and small. Since about the middle of 2023, all American whiskey sales have declined steadily.
MGP Ingredients (MGPI) announced that CEO David Bratcher will step down from the company’s board of directors at the end of December. Since taking the top post at the Atchison, Kan., spirits producer one year ago, the company’s sales have declined sharply as its inventory has soared. Additionally, its once-solid stock has lost more than two-thirds of its value.
Brandon Gall, MGP Ingredients’ chief financial officer, will become interim president and CEO on January 1. The C-suite shuffle was announced on Dec. 20.
Though Bratcher will leave the board, he will serve in an advisory role to aid in the leadership transition. Once the new CEO is appointed, he will retire. Prior to becoming CEO, Bratcher was MGPI’s COO and president of its premium spirits division for two years.
Donn Lux, an MGPI board member and former owner of Luxco, which merged with MGPI in 2021, will take over the chairman’s role from current chair, Karen Seaberg, in order to guide the transition to a new CEO. With an eye on expanding distribution for its own products and growing its own premium spirits sales, MGPI paid Lux $475 million in cash and stock to conjoin the long-established liquor giants.
Investment analysts regarded Bratcher’s departure as a noteworthy end to 12 challenging months in which MGPI stock plummeted from a height of more than $100 per share to less than $40 per share.
On December 18, a class-action suit was filed against MGPI alleging that, "throughout the Class Period, MGPI and certain of its senior executives made materially false and misleading statements regarding the Company’s business and demand for its liquor products. Specifically, Defendants falsely and repeatedly assured investors that the Company was not facing excess inventory issues and demand for its products remained strong.”
Also stated in the action was the Oct. 17, 2024 revelation by the company that “soft demand and high inventories were in fact undermining its sales.” Immediately afterward, MGPI share prices dropped more than 30 percent.
MGPI’s struggles with soft sales and high inventory appears to reflect similar battles underway at American whiskey makers large and small. Since about the middle of 2023, American whiskey sales have declined steadily.
Initially, market analysts blamed the downturn on “Covid destocking” as consumers continued to drink through excess bottles purchased during pandemic-era lockdowns. But as case depletions at retailers and distributors have remained stagnant, the sales problem appears to be more multifaceted and perplexing to pin down. The same is happening in Scotch and other malt whiskey sales globally.
BourbonBanter.com will continue to report on this evolving story.