What effect will MGP's acquisition of Luxco have on Ezra Brooks, Rebel, Yellowstone, etc.?

[k-train]

Given the news that MGP plans to purchase Luxco (https://www.globenewswire.com/news-release/2021/01/25/2163506/0/en/MGP-Ingredients-Inc-Announces-Definitive-Merger-Agreement-with-Luxco.html), should we expect any noticeable changes in price and/or quality for any of the brands in Luxco's portfolio?

[BigRich]

Hopefully better stock to blend with.  I haven't been very impressed with anything that Luxco has distilled on site. 

[BottledInBond]

I would think it would benefit the Luxco labels. MGP makes good whiskey generally and having access to MGP barrel stock should only be a good thing for those brands. Seems like a smart play for MGP to me, and this is probably terrible news for NDPs that have historically bought barrels from MGp

[smokinjoe]

I wonder if MGP might absorb some/all of the Luxco labels into their own portfolio and market as such.  Strictly a guess, but I’m not sure that MGP bourbon and rye brands have garnered much traction in the marketplace.  

[PhantomLamb]

Will this mean just blending MGP stock with Luxco aging distillate?

[geclbxf]

I think Yellowstone, Rebel Distillers, some Ezra products, and Nicholson 10 year are all products with an upward trajectory.   I hope these brands get the pick of the litter and can somehow improve.

[The Black Tot]

It used to be a very good thing that MGP made tons of excellent distillate and sold it to NDPs who would age it spectacularly, yielding some truly monstrous single barrels (Willett and Smooth Ambler particularly).

 

When every man and his dog started a new distillery, demand went up for MGP distillate so much that they sharply raised their price and the two examples above stopped buying it (both of them were working on their own stills as well, but SA certainly suggested they would have continued laying down MGP if the price hadn't tripled (I think I remember they said it tripled)).

 

Nowadays, even though the supply of MATURED stocks of bourbon aren't yet hitting the streets, the flow of fresh DISTILLATE has risen in the multi-hundreds of percent. 

 

It strikes me that MGP, rather than having to go back to selling their distillate cheaply again now that they're in competition with the likes of BBC and most of their biggest former customers now make their own, thanks very much - buying a set of brands means that even if they make their distillate cheap, they will still reap the profits in the wholesale matured bourbon marketplace.

 

The concern is, will Luxco do the various mashbills justice - I'd love to hear that this move means that Luxco is going to add some serious warehousing focus and expand their portfolio into bringing MGP monsters back into the marketplace, with solid age and at cask strength. A 10yr old plus "MGP BTAC" series in several of their excellent mashbills (they have enough to create at least a collection to match the breadth and depth of the BTAC) would give the majors' boutique products a serious run for their money and truly establish Luxco as a quality kingpin. Based on some of the SA barrels I've tasted over the years, they'd have no trouble taking US whiskey of the year in reasonably short order.

 

Then the question is, does Luxco have a Deatsville or a Willett or an SA type microclimate/warehouse - because some places just seem to work magic on that distillate, where others don't quite. If they crack that code and, as I say, put some serious focus on reverse engineering what makes those rack houses honey houses and building a few, then the partnership with MGP could be history in the making. 

 

Luxco brands do get some high praise around here sometimes, so maybe they already do have this in place - but you can never have too many when it comes to magic warehouses. I feel like the sometimes unpredicted specialness of certain warehouses is something the old master distillers discuss a lot among themselves, and yet efforts to recreate the conditions don't seem to receive enough attention when it comes to the expansion business plans.

 

Fingers are crossed and the news ultimately has me licking my lips.

Edited January 25, 2021 by The Black Tot

[flahute]

Luxco has a shiny new distillery in Bardstown with a 43' tall column still and 6 rickhouses and are already rapidly expanding. I imagine they will continue to distill their own product.

All of the current brands are already sourced so it's likely that the source switches over to the MGP whiskey which will ultimately be more profitable since they won't have to go through brokers anymore.

[gurgalunas]

Are all the Luxco brands KSBW?  Will have to drop that label if IN spirits enter the mix.  Seems the distilleries in KY value that designation...

[Bourbon Boiler]

45 minutes ago, gurgalunas said:

Are all the Luxco brands KSBW?  Will have to drop that label if IN spirits enter the mix.  Seems the distilleries in KY value that designation...

Good Point.  Rebel and Ezra both market as Kentucky Straight.  Maybe they'll have older age stated expressions later that don't.  

[PhantomLamb]

12 hours ago, Bourbon Boiler said:

Good Point.  Rebel and Ezra both market as Kentucky Straight.  Maybe they'll have older age stated expressions later that don't.  

Yep, I don't think that would be a bad thing necessarily.  Older expressions that aren't KSBW but incredible using MGP stocks and continuing to let their own distillate mature.  Either way, could be a huge win for Luxco. 

[bayouredd]

I don't have the bourbon expertise like do the Big Dogs on here, so my synopsis may be more a businessman's observation. It probably is also more perceived than real, but there seems to be so much  MGP juice out there in so many places that I have intentionally looked elsewhere for my enjoyment. I think in this case that they had better get a very successful blender early on or their market will be disrupted from two different points of interest. The first steps had better be good choices. JMHO...

[Harry in WashDC]

On 1/25/2021 at 2:25 PM, smokinjoe said:

I wonder if MGP might absorb some/all of the Luxco labels into their own portfolio and market as such.  Strictly a guess, but I’m not sure that MGP bourbon and rye brands have garnered much traction in the marketplace.  

Back when I owned MGP stock (bought 1000 shares on a whim @ $5 a share because of their non-whiskey business), I decided to follow their whiskeys.  SB really helped out, and SA’s openness with its OS had me trying to find other NDPs they supplied.

 

Frankly, I found their own releases, when I could find them, expensive for what I got and not as complex as I expected.

 

I do like what Luxco puts behind their labels and their price points, including but just barely their high proof OE, just fine for what I got.  Except for the Nicholson line - never became a fan.

I think TBT’s comments are spot on, too.

 

EDIT - Sold the stock at a double as part of a new car purchase.  Alas.

 

 

 

 

Edited January 27, 2021 by Harry in WashDC

[gurgalunas]

I personally found Luxco's lineup, with few exceptions, to be lacking.  Most of their standard fare, while being HH product, seemed to be released at too young of age.  That's my palate talking, as I like most HH, but generally only care for RY10 from Luxco.

 

To me, this change alters the trajectory of the company from one that lost its NDP status, forced into distilling it's own product.  Now, it's being driven by a powerhouse distiller.  Trajectory changes from arrow down to arrow up IMO.

 

I like MGP done right.  I don't buy young product of any sort, including sourced MGP.  But give more opportunity for MGP to circle their wagons and control the release of their product in-house (vs relying on selling to NDP and having no control over the end product), it has to be a win.  I don't know how it will all shake out, but I'm hopeful for the opportunities that are presented.

Edited January 27, 2021 by gurgalunas

[DontDrinkTheLabel]

I've enjoyed Ezra and Yellowstone and think they are positioned well in the market.  Hope their trajectory isn't impacted by this merger.

[Shizzy]

I thought this was an interesting merger and I feel like there may be more on the horizon in 2021.  I think this gives MGP a few things they lacked.  Marketing, distribution and the word "Kentucky".   I don't think it will have much effect on the labels you've mentioned, but it will most certainly affect the liquid going in at least one of those bottles.  We'll see how this transforms the bourbon landscape as the year progresses.  Hoping for big things.

[Jazz June]

This is certainly very interesting. It seems that long term this will move MGP strongly towards bottling its own distillate and less bulk sales, but I can't imagine they will end all sales to NDPs. Luxco also had quite a bit of capacity, with their own Lux Row Distillery and a half interest in the Limestone Branch Distillery. Given that Luxco's other distilleries are in Kentucky and that their products are mostly Kentucky straight bourbons, it will be interesting to see which brands MGP puts their Indiana whiskey in. Personally, I hope this leads to more higher end releases of MGP whiskey by MGP/Luxco. Ezra Brooks, Rebel Yell (now just Rebel I guess), David Nicholson, Blood Oath, and Yellowstone all have some higher end releases and will now have access to more quality product to push that trend further. I also wonder if this will increase distribution/market access for MGP's Remus and Rossville Union brands, as these have not expanded as much as I would have expected and I wonder if MGP not historically having their own brands led to a dearth of the necessary relationships to get that done. All in all, I'm hopeful that this is a good thing for American whiskey lovers in the long term.

[DontDrinkTheLabel]

I would anticipate Luxco dissolving it's contract distilling and now distilling in IN as well as seeing a ton of aged MGP show up under Luxco brands.  I actually think they lose the KY aspect here more so than they gain it.  I could be wrong on this early take though...

[ebo]

On 1/25/2021 at 3:18 PM, geclbxf said:

I think Yellowstone, Rebel Distillers, some Ezra products, and Nicholson 10 year are all products with an upward trajectory.   I hope these brands get the pick of the litter and can somehow improve.

I'm a fan of Ezra Brooks. It's pretty hard to beat for the price. Hopefully they won't raise the price.... too much. 

[BDanner]

I grab an occasional Ezra Brooks when I need a value bottle and the RY100 has become one of my go-to sub $20 bottles. I hope it stays the same. I haven't seen or tried the new Ezra 99 proof yet.

 

[geclbxf]

6 hours ago, BDanner said:

I grab an occasional Ezra Brooks when I need a value bottle and the RY100 has become one of my go-to sub $20 bottles. I hope it stays the same. I haven't seen or tried the new Ezra 99 proof yet.

 

I tried the Ezra 99 this weekend and Liked it well enough.  Not remarkable but certainly solid.

[ebo]

On 2/4/2021 at 2:44 PM, BDanner said:

I grab an occasional Ezra Brooks when I need a value bottle and the RY100 has become one of my go-to sub $20 bottles. I hope it stays the same. I haven't seen or tried the new Ezra 99 proof yet.

 

They were just putting this out when I was going in to get another bottle of OGD BiB.  I told the girl to just hand me one...lol. 

 

Initial feelings on this one:

Not impressed. It seems young, thin and astringent. I much prefer the regular 90 proof Ezra Brooks over this.  To be fair, it was just a small pour and I just wanted to taste it. I'll give it a better shot (pun intended) later when I can sit down and relax with another pour.

[ebo]

Okay.... I just tried the 99 again. This stuff is paint thinner. It sucks. I'll be mixing it with other stuff or pouring it down the drain. Don't waste you time or money on it.

[BDanner]

23 hours ago, ebo said:

They were just putting this out when I was going in to get another bottle of OGD BiB.  I told the girl to just hand me one...lol. 

 

Initial feelings on this one:

Not impressed. It seems young, thin and astringent. I much prefer the regular 90 proof Ezra Brooks over this.  To be fair, it was just a small pour and I just wanted to taste it. I'll give it a better shot (pun intended) later when I can sit down and relax with another pour.

I haven't been impressed with those Distiller's Collection releases either. Young, thin and astringent describes it to a tee. The standard issue is better and $20/bottle cheaper

 

Edited February 8, 2021 by BDanner

[smokinjoe]

23 hours ago, ebo said:

They were just putting this out when I was going in to get another bottle of OGD BiB.  I told the girl to just hand me one...lol. 

 

Initial feelings on this one:

Not impressed. It seems young, thin and astringent. I much prefer the regular 90 proof Ezra Brooks over this.  To be fair, it was just a small pour and I just wanted to taste it. I'll give it a better shot (pun intended) later when I can sit down and relax with another pour.

 

8 minutes ago, BDanner said:

I haven't been impressed with those Distiller's Collection releases either. Young, thin and astringent describes it to a tee. The standard issue is better and $20/bottle cheaper

 

My experience, as well.  At least, with the Rebel offering.  A local shop did a barrel and it was an utter thin, hot mess.  Terrible.