By Brett Atlas

 

Several of you new to bourbon are familiar with the initials “MGP” or even “LDI” if you’re a super-geek. Midwest Grain Products (or Lawrenceburg Distillers Indiana for the OG’s) was originally outed as the mass-producer for all those incredible new craft distilleries that began popping up at the front-end of the American whiskey boom. The curtain was ripped back when the popular Templeton Rye, advertised as a Prohibition-era family recipe, turned out to be nothing more than a common whiskey mass-produced at an Indiana factory. Lawsuits and embarrassment for the fraudulent Templeton marketing scheme spread to closer scrutiny of bottle labels, where other brands were dismissed for disingenuousness and lack of transparency.

It takes skill to make good whiskey, time to age it, and a lot of capital to eventually turn a profit. The public began to understand this and accept that not many new brands would ever pull it off. Sourcing already-aged barrels from MGP was a way for new brands to have product to sell immediately, buying time for their own distillate to age a few years. Whether or not their loyal customers would mind the taste of their brands completely changing from MGP to their own distillate once the switch occurred didn’t seem to matter too much.

As MGP’s acceptance grew, “Distilled In Indiana” shifted from a stigma to a symbol of quality. In late 2012, just after MGP purchased the old Seagram’s plant in Lawrenceburg, MGP’s stock price sat just over $3.  By the time Whisky Advocate Magazine anointed MGP “Distiller of the Year” in 2015, the stock had already rocketed to nearly $26. There was no longer any question of the impact the Indiana bourbons and ryes were having on the industry. For the next few years, the stock continued to soar into the $90’s.

As MGP ascended, so did the popularity of private barrel picks. Stores and whiskey clubs would purchase entire barrels of whiskey and bottle them with their own names attached. Given the variance among barrels, they became highly collectable and highly debatable. In 2011, a company called Smooth Ambler in West Virginia began selling MGP bourbon and ryes as its “Old Scout” brand. Several Old Scout private picks took on legendary status until the barrels began running out in 2015. Eventually, Smooth Ambler began selling the Old Scout releases periodically, and only in their gift shop.

A “whack-a-mole” game began to take hold, as a new “MGP bottler of the moment” popped up just when another faded out. After Smooth Ambler, we saw New Riff’s “OKI” brand, Belle Meade, Boone County, Traverse City, Mayor Pingree, Litchfield, Smoke Wagon and others. One company would release MGP bottles under their brand, a brief buying frenzy ensued, and suddenly they were gone. Then another would pop up. Prices crept higher and higher.

Every frothy market dismisses a certain level of reason, but when it comes to MGP whiskey, people have literally lost their minds. I can appreciate, to a large extent, stocking up and collecting whiskey when it truly has become lost to history. When a distillery burns to the ground like Heaven Hill, or closes like Stitzel-Weller and National Distillers, a premium for those bottles is surely justified. The new processes, machinery, warehouses and personnel often cannot replicate the same taste profile.

How, then, are we to justify the lofty premiums that collectors are placing on older MGP private picks now? Was there a fire that wasn’t widely reported? Has MGP made sweeping changes to the way the Seagram’s plant was making whiskey prior to their purchase in 2011? Perhaps this is a gamble by collectors that MGP will never again be able to produce those earlier epic barrels again. It’s a valid concern, but how likely is it really?

MGP stock price was sliced in half earlier this year by slowing sales concerns. CEO Gus Griffin noted, “Sales of aged whisky have lagged our expectations.”  The stock has since failed to recover. As far as I could discover, the yeast hasn’t been changed. The production hasn’t been impacted. Granted, new palletized warehouses have been added, but the original LDI rickhouses are still in use. Perhaps there was a major shift in grain procurement. However, even if radical changes did take place after the 2011 purchase, the aged MGP whiskey being sold for the last couple of years would have been produced prior to then anyhow.  Yet new releases of aged MGP whiskey have been available to purchase for far less than bottles from just 4-5 years ago.

It is too soon to determine whether the aged MGP whiskey of the future will be appreciably different from the aged MGP whiskey of 4 years ago. Against that backdrop, there is a basic question that must be asked: Why have people recently been paying over $300 for private picks of MGP whiskey from just a few years ago? If you are one of these people, I’d love to hear your rationale.