Production

The Art of Craft

It's all in the spirit of MGP
By Liza Weisstuch
At first glance, the press release that hit my desk in July was just like every other press release - it heralded the arrival of an as-yet-unheard-of American whiskey. The announcement had all the buzz words: 'straight Bourbon whiskey,' 'limited edition,' 'hand-numbered bottles.' (And that was just the boldfaced heading!) But then there was a term that isn't normally broadcast around so-called 'craft' spirits: 'Mashed, distilled and aged at MGP's historic Lawrenceburg, Indiana, distillery.'

If you are a regular reader of this magazine, you already know the hullaballoo that's attracted increasing attention in the past few years. Many startup distilleries that release whiskey they bill as 'craft' are actually sourcing their spirit from bulk producers. The most popular bulk producer in the USA is - you guessed it - MGP.

The newly announced Bourbon, Metze's Select, named for MGP's Master Distiller Greg Metze, presents an interesting question for industry trackers. Here you have a producer turning out whiskey in huge bulk and selling it as product destined for bottles labeled as hand-crafted and promoted as being created with local water or some native touch. (Distillers that make that claim often will have used local water in their whiskey, but merely to cut the spirit down to bottling proof.) Very few will indicate their product was not produced on site. And thanks to a loophole with the TTB, the American governmental agency that oversees the liquor industry laws, they don't have to.

In some circles, the mention of MGP stirs frustration. It's seen as a soulless industrial corporation working with grassroots startups to dupe consumers and denigrate the notion of 'craft.' That aggravation is directed equally toward the small distilleries who buy MGP spirit, by the way. But as some savvy drinkers have come to realise in the past few years, 'mass production' does not necessarily equal 'bad', just as 'boutique' certainly does not automatically signify 'good' or 'quality.'

MGP boasts a long history of spirits production. It was founded in 1941 to produce industrial alcohol for the government, but when World War II ended and that demand ceased, the company started producing neutral grain spirits and gin for bottlers and rectifiers of all sizes. They dabbled in whiskey production, but remained focused on the other bulk spirits. Things changed in 2011, when MGP purchased the historic Seagram's Distillery in Lawrenceburg, Indiana. With this acquisition, MGP added premium Bourbons and other whiskeys to its portfolio. According to Gus Griffin, MGP President and CEO, the company's 'significant re-entry' into whiskey production was simply "a way to meet growing demand in that category."

Demand has only increased since 2011 and Greg Metze has been helming the operation the entire time. His stellar credentials are certainly up there with the best of them. He started at the Indiana distillery in 1978, soon after earning a degree in chemical engineering. Under the ownership of Seagram's, Metze worked many positions, from a Shift Supervisor to the Distillation Coordinator. When Pernod purchased the facility in 2001, he became Distillery Production Manager and in 2007, the year Lawrenceburg Distillers Indiana, LLC took over, he was crowned Master Distiller.

He formulated Metze's Select, which is bottled at 46.5% ABV, with three distinct straight Bourbons. It's comprised of 3 per cent 2006 Bourbon (21 per cent rye), 3 per cent 2006 Bourbon (36 per cent rye) and 59 per cent 2008 Bourbon (21 per cent rye). Six thousand hand-numbered bottles were released. Select, which retails for $74.99, is actually not MGP's first foray into a self-branded release. In 2014, Metze's Medley Indiana Straight Bourbon Whiskey, a very limited release, was introduced in conjunction with Lawrenceburg's inaugural Whiskey City Festival. It was not available for retail sale.

Some say that in a way this is not unlike how large distilleries, such as Beam, for instance, produce a variety of brands of diverse ages, prices and quality. After all, the average consumer isn't necessarily dialed into the fact that there are only a handful of large, historic distilleries in Kentucky producing scores of iconic Bourbon and rye brands. And the production facility isn't always easy to ascertain from a whiskey's label.

As far as Metze sees it, "Our ability to mash and distill all facets of beverage spirits really sets us apart from all other producers," he wrote in an email. "The talent, knowledge, tradition and expertise that our people bring to the table is now being recognised worldwide."

But some have raised questions over whether an MGP branded Bourbon might be seen as competition towards its own clients. It's an opinion strengthened by an October announcement that MGP invested in joining the Distilled Spirits Council of the US. The membership boosts the company's industry visibility and voice.

That couldn't be further from the truth, according to Griffin.

"The release of our own branded straight Bourbon whiskey does not alter our commitment to serving our existing customer base and adding to that base by continually building our legacy as one of the most preeminent suppliers of world-class spirits," Griffin wrote in an email. (Whisky Magazine was not granted a live interview.) "Our customers understand that we're committed to supporting all aspects of the whiskey category specifically, and the spirits industry in general. MGP is very proud to be part of this industry and our role in making a wide range of products that our customers turn into brands. We believe that we can also be a positive contributor to the industry by introducing brands such as Metze's Select that further reflect our expertise, long history and unique capabilities as a leading producer of premium distilled spirits."

Skepticism dies hard, though.

"They swore up and down up until a year ago that they'd never do it. They didn't want to be seen as competing with their customers," said Chuck Cowdery, American Bourbon industry's resident iconoclast and author, most recently, of Bourbon Strange. "I don't see this as something they're going to invest in and build national distribution for. I could be wrong, but I believe the strategy was to put something out and say 'We made this and we think it's an example of the best whiskey we can produce. Try it if you're thinking of buying a barrel.' I don't believe this is the beginning of MGP as a brand marketer."

Right now, MGP's priorities appear much grander than its own small brand. They recently announced a $16.4 million investment to nearly double its current warehouse capacity on a 20 acre campus next to the Lawrenceburg distillery facility.

The promise is already starting to manifest. In November, seekingalpha.com, an investment research platform, reported on MGP's excellent quarter and stock market potential. Net sales were up $2.8 million (3.6 per cent) and gross profit was up by $4.6 million. Gross margins increased by 5.4 per cent to 14.8 per cent. Net income was up 8.7% to $6.8 million. "Assuming that the company keeps this up for the fourth quarter, the stock trades at a price to earnings ratio of 13.8," the evaluation stated.

"We've taken steps to not only keep up with current demand for our premium whiskeys, but also to prepare for continuing growth," Griffin wrote. "We feel that US whiskey is in the early stages of a long-term growth trend."

Whose labels will end up on that growing supply remains to be seen.