MGP has been an open secret in the whiskey business for a while now - but it's good that the story is finally getting some press. I've had a couple of known MGP ryes (Bulleit and Dickel) and they're good - but they're not craft products. I think a distiller statement would go a long way to ending the deception.
I'm surprised MGP hasn't created its own brands or bought some existing ones, since their rye is a good product in its own right. They're missing an opportunity, though maybe they feel it's too much trouble to go into the retail side.
During the gold rush, sell picks and shovels. Lots of tech companies have the same model. With that model, MGP have production personnel and a few account managers. They don't have to pay for any marketing themselves, while they benefit from the full range of creative output of the American liquor industry. Some people want to buy whiskey that was made in New Mexico by hipsters like "Simeon Turley" and "Thomas Tate Tobin", while others want to buy whiskey made in Iowa by "small townsfolk".
Why should they? They are a platform. Sure, they might be able to secure shelf space, market their own wares, make a slightly higher margin, etc., but these activities would compete head to head with all the "craft" distillers MGP supplies. They'd also be entering a market that, from the looks of things, is going to reach saturation pretty soon (if it hasn't already). There are only so many spirits that stores can shelve, and so many that consumers can keep track of (or drink). (Frankly, I'm amazed that threshold hasn't been crossed yet. Sure, the craft beer market seems to support a gazillion beer labels. But consumers can drink beer by the gallon and keep replenishing every week. I doubt they do the same with expensive bottles of distilled spirits.)
By all accounts, MGP is doing just fine and dandy being a B2B seller, and supplying the current craft-distillery boom. They can do that with very little supply-chain risk and expense.
Their current position only becomes challenging if one or both of the following happen: 1) More industrial, B2B distillers enter the market, or more big-batch distillers devote resources to supplying the craft market; 2) the craft market goes bust, forcing a major demand shock onto MGP's supply. If #2 materializes, then MGP can sit on the excess inventory, and eventually bottle it as premium liquor.
> I'm surprised MGP hasn't created its own brands or bought some existing ones, since their rye is a good product in its own right. They're missing an opportunity, though maybe they feel it's too much trouble to go into the retail side.
(Fortunate?) Mismanagement. They wanted to make their own brand but contracted out all their old stock so the only thing they could sell now is very young ones unless one of the existing customers jumps ship.
"I'm surprised MGP hasn't created its own brands or bought some existing ones, since their rye is a good product in its own right. They're missing an opportunity, though maybe they feel it's too much trouble to go into the retail side."
I wonder whether their existing contracts prohibit that.
I'm surprised MGP hasn't created its own brands or bought some existing ones, since their rye is a good product in its own right. They're missing an opportunity, though maybe they feel it's too much trouble to go into the retail side.