Diageo Halts Production at Two Kentucky Whiskey Distilleries

MGP Ingredients will pause distilling at two Kentucky sites beginning May 1. The company said the halt will last at least one year.

Facilities affected and workforce impact

The affected sites are Limestone Branch Distillery in Lebanon and Lux Row Distillers in Bardstown. Production will be idled until inventory levels justify restarting operations.

The company expects 33 layoffs across the two facilities. Warehousing, bottling and barrel programs will continue to operate.

Reasons for the production halt

MGP cited sluggish consumer demand that has created a surplus of alcohol. Aged spirit producers face added strain because they set production years in advance.

Tariffs have also reduced export demand. That has tightened international markets and worsened inventory pressures.

Rivals, including Diageo, have also paused output at Kentucky whiskey distilleries amid the downturn. Suntory announced a 12-month pause at Jim Beam’s main Kentucky facility earlier this year.

Industry-wide production has slipped sharply. An economic assessment for the Kentucky Distillers Association found a 28% drop in distilled spirit output in the first eight months of 2025 versus 2024.

Company strategy and financial trends

Julie Francis, MGP’s president and CEO, said the American whiskey market is oversupplied. She added the firm is aligning operations with current inventory while boosting efficiency.

MGP supplies spirits for other brands and sells its own labels. Its portfolio includes Rebel and Uncle Remus bourbons.

The company also sells specialty food ingredients. MGP expects those sales to help offset some losses as customers reformulate products.

MGP reported a 52% decline in distilling solution sales in the fourth quarter. Branded product sales stayed roughly flat as premium bourbons offset declines in value offerings.

Filmogaz.com will follow further developments in the industry and report updates as they become available.