LDI Sold, Finally.

[cowdery]

The new owner of Lawrenceburg Distillers Indiana (LDI) is MGP Ingredients, Inc., of Atchison, Kansas. Their press release is here and my blog post about it is here.

MGP, which stands for Midwest Grain Products, is a big and well-respected grain neutral spirits (GNS) producer. They have a big GNS distillery in Pekin, Illinois, near Peoria.

Since MGP is already in the business of selling bulk GNS to beverage alcohol companies, this is probably good news for everybody who buys whiskey from LDI. Because MGP is a public company, there probably will be a lot more transparency going forward, which is also good news.

MGP is only buying the distillery, not the nearby bottling plant. No mention was made of who's getting the Rushville Grain Division.

[chefnash51]

Because MGP is a public company, there probably will be a lot more transparency going forward, which is also good news.

Hope this hold to be true! I think it's far time for some transparency.

[macdeffe]

Maybe they will sell Charles Medley as well, to someone reopening it ? :-)

Steffen

[cowdery]

I'm told Medley was sold some time ago but I can't find out to whom or why. Angostura didn't get very far with the restoration. They repaired the warehouses, so those might now be usable, but the distillery is no nearer to being operational than it was when they bought it.

[White Dog]

Fascinating. I've said it before and I'll say it again: by complete accident, LDI is the most interesting producer of Rye Whiskey in the U.S.

[cowdery]

Latest news. Proximo appears to be buying the bottling operation.

[White Dog]

Latest news. Proximo appears to be buying the bottling operation.

That's a bad sign.

[tmckenzie]

Ainlt they the ones who bought Stranahans? uh oh.

[cowdery]

From what I've heard, things have gotten so bad at LDI that they can only get better.

Proximo is the company that bought Stranahan's. The money behind Proximo comes from the family that owns Jose Cuervo. Diageo controls the marketing rights to Cuervo, but they're paying some kind of royalties to the folks who own it, which they are investing in Proximo.

Their biggest brand is 1800 Tequila.

They are, by their own admission, very secretive.

[jburlowski]

I learned that The Party Source has purchased / committed to buying 300+ barrels of LDI bourbon for future bottling & distribution. The sampling we tasted was 5-6 yo and quite good... although I would say it would benefit from additional aging.

TPS has also contracted to aging their distillate (once they get their distillery up and running) at LDI.

[Bourbon Boiler]

I learned that The Party Source has purchased / committed to buying 300+ barrels of LDI bourbon for future bottling & distribution. The sampling we tasted was 5-6 yo and quite good... although I would say it would benefit from additional aging.

TPS has also contracted to aging their distillate (once they get their distillery up and running) at LDI.

That's certainly geographically convenient, and probably the best way to get TPS started. Chuck pointed out a few months ago about the dangers of a startup making headway with contracted distillation, then trying to transition to their own product. While this will be an issue, I think TPS is smart enough to recognize the challenges, and not to try to pretend that all white dog is the same.

[jburlowski]

That's certainly geographically convenient, and probably the best way to get TPS started. Chuck pointed out a few months ago about the dangers of a startup making headway with contracted distillation, then trying to transition to their own product. While this will be an issue, I think TPS is smart enough to recognize the challenges, and not to try to pretend that all white dog is the same.

[cowdery]

My inside source at LDI told me last week that very little of the whiskey in the warehouses at LDI is owned by LDI. Virtually all of it is owned by Diageo and destined for Seagram's Seven. If what he told me is correct, it is implausible that they would have 300+ barrels of 5-6 year old whiskey to sell. I don't really know how reliable he is, and no one official is saying anything, but what he told me is logical in the context of what else I know, which is that LDI has been running on a shoestring and has been making very little whiskey on the if-come. They are functioning as a contract distiller, meaning you pay them a fee to distill something for you, then pay them an additional fee to age it, meaning you'll have something to sell at the end of the aging cycle. So it's plausible that they have contracted for 300+ barrels to be distilled now and delivered in 5-6 years, and perhaps have tasted a representative sample of what that recipe will taste like in 5-6 years.

The other possibility, and this is plausible but strictly speculation, is that Diageo has dialed down the amount of whiskey it actually needs and has offered to sell some back to LDI, so LDI can sell it to someone else, such as TPS.

The other odd thing is that, if TPS wants to make bourbon, if they distill and age it in Kentucky, they can call it Kentucky Straight Bourbon Whiskey. If they distill it in Kentucky but age it in Indiana, they can't. There isn't a strictly delineated law on that, but my interpretation is that to say "Kentucky" it has to be distilled in Kentucky and aged in Kentucky for at least two years, at which point it is Kentucky Straight Bourbon Whiskey. If it receives additional aging somewhere else, that's okay.

Another thing I learned recently about TPS's planned distillery, and this is from a very reliable source, is that TPS has not filed any paperwork yet with the feds, i.e., they haven't even applied for a DSP license. They haven't even talked to the feds. Legally, they can't even place an order with LDI until they have their DSP.

[jburlowski]

TPS plans on aging their distillate at LDI, then bring it to KY and age it for at least a year and a day (the legal minimum so the Commonwealth can get its two years of taxes). They can then call it Kentucky Straight Bourbon Whiskey.

[cowdery]

I've heard that 'year and a day' thing but I'm not sure it's true. Legally, Kentucky doesn't control use of the word 'Kentucky' on whiskey labels or anywhere else and the TTB has no such rule. What the TTB does have is a rule saying place of origin labeling has to be truthful. I've always interpreted it as if it is distilled and becomes straight bourbon in Kentucky (i.e., after 2 years in wood), then it is Kentucky Straight Bourbon Whiskey, even if it receives additional aging elsewhere.

But that's just my interpretation. There doesn't appear to be a genuine hard and fast rule, so what I assume would happen is that if somebody did something hinky, a competitor would have to object and then the TTB would decide if it violated the 'truth' rule.

Also, it would make no sense to move the whiskey to LDI then move it back to Kentucky.

My sense is that TPS is saying a lot of stuff that isn't strictly true in order to build buzz. LDI, of course, has new owners so that could affect their plans too.

[sku]

It appears that the only required label information regarding a state name is the state of distillation. Given that, if it was distilled in KY, couldn't they call it KSBW no matter where it was aged?

[cowdery]

The only requirement for place of distillation labeling is for BIB products.

That has nothing to do with it.

"Kentucky Straight Bourbon Whiskey" was a wording devised by Kentucky producers to 'brand' the Kentucky-made product, much like California with raisins, dairy, and other stuff.

They wanted to plant a belief in the minds of consumers that bourbon from Kentucky is superior to bourbon made anywhere else, and they largely succeeded.

There is no law regulating it and nobody has ever tried to play games with it, hence the exact parameters of what makes whiskey Kentucky-made have never been tested.

Most people who have an opinion understand it to mean distilled in Kentucky and aged there for some or all of its aging. Since it's more expensive to move barrels around than it is to just pick one place and let them age there, everybody picks a place either at the distillery or not too far away, where the barrels will eventually be dumped for bottling.

Since there is little incentive to do otherwise, especially to move them out-of-state to finish aging elsewhere, it's a largely moot point.

It's my personal contention that if pressed to do so, you can make a legally-defensible case for what I described a few posts back.