Luxco, Inc., a subsidiary of Indiana-based whiskey giant MGP Ingredients, has acquired Penelope Bourbon for $105 million upfront, the company announced Monday. The deal also includes a maximum potential payout of $110.8 million by the end of 2025 if “certain performance targets” are achieved.
MGP is a major whiskey producer in the U.S., supplying distillate for well known brands such as Bulleit Rye and WhistlePig. The producer also has its own portfolio of branded spirits, like Rossville Union and George Remus, which are sold to distributors. With the $475 million acquisition of St.Louis-based spirit producer Luxco in 2021, the company furthered its long-term strategy to focus on higher value-added products.
MGP’s acquisition of Penelope builds on the company’s efforts to grow its own brands in the premium-plus American whiskey space.
“We are excited to welcome Penelope as part of our expanding premium-plus brand portfolio,” said David Colo, president and CEO of MGP Ingredients in a statement. “This acquisition aligns well with our premiumization strategy and our focus on growing high potential, high margin brands.”
The CEO added that the company will look to expand Penelope’s availability throughout its national distribution platform, Republic National Distributing Company.
Founded in 2018, Penelope Bourbon is a family-owned whiskey company offering a portfolio of bourbon expressions in the premium-plus segment. It is sold in over 30 states and four countries. The acquisition includes all intellectual property and inventory of bottled products, as well as Penelope’s aging whiskey inventory on a debt-and-cash-free basis. The brand is also a client of MGP, which means the producer is buying back barrels. The transaction is expected to close in June 2023.
“MGP has been an incredible partner of ours since we started our business in 2018,” said Michael Paladini, CEO & founder of Penelope in a statement. “We are excited to take our partnership to the next level with the goal of accelerating Penelope’s growth for years to come.”
Luxco’s products include premium bourbon, rye, and other whiskeys and grain neutral spirits, including vodka and gin. Beginning as a humble grain belt distillery in 1941, MGP Ingredients has become a leading producer and supplier of distilled spirits, food ingredients, and industrial alcohol for use in both food and non-food applications. The company saw sales grow 3% to $201 million for its first quarter ending in March. Distilling Solutions sales increased 2% to $113.2 million, due to higher brown goods sales, while the Branded Spirits segment also increased 2% to $56.9 million in that same period.
The deal comes at a time when higher end whiskey is driving spirits sales. American Whiskey sales were up 10.5%, totaling $5.1 billion in 2022, and more than 60% of the spirits sector’s total revenue was from sales of high-end and super-premium spirits, mainly led by Tequila and American Whiskey. Other whiskey acquisitions have made recent headlines: Pernod Ricard made a play for flavored whiskey with a majority stake in Skrewball Whiskey in March, and the Campari Group purchased Wilderness Trail last year for $600 million. As a non-distiller, Penelope’s financial value is significantly different.