Thursday, September 30, 2021

The Indiana distillery formerly known as Seagram's, LDI, and MGP is now Ross & Squibb (sort of)

 

The huge letters atop several buildings in Lawrenceburg, Indiana, still say 'SEAGRAMS,' but the famed GNS and whiskey-maker is now Ross & Squibb Distillery.

Back in January it was announced that MGP Ingredients, based in Atchison, Kansas, had acquired St. Louis-based Luxco. Nothing much seemed to happen after that. In Kentucky, it was business-as-usual at Luxco's Limestone Branch in Lebanon and Lux Row in Bardstown, as well as at MGP's Indiana distillery. Until Wednesday, when it was announced that the oft-renamed Indiana joint will be known henceforth by two names plucked from its past, Ross & Squibb.

Sort of.

The press release says this:  "Luxco will rename the 174-year-old, Lawrenceburg, Indiana, distiller of its branded spirits Ross & Squibb Distillery™ as it joins the Luxco family of brands. Effective immediately, the distiller of George Remus Straight Bourbon Whiskey and Rossville Union Straight Rye Whiskey will go by its new name."

The 'sort of' part comes later in the release where it says this:  "MGP will continue to produce bourbon, rye, whiskey, gin and grain-neutral spirits from this facility under its current name:  MGPI of Indiana, LLC."

It's a lot to unpack.

Luxco is a 63-year-old company. For most of that time it was a successful regional rectifier, a non-distiller producer with most of its business in St. Louis and vicinity. Along the way it picked up a few small national brands such as Ezra Brooks Bourbon, Everclear Grain Neutral Spirit, and Saint Brendan’s Irish Cream Liqueur. For many years, it bought almost all of its bourbon from Heaven Hill. Before that, its David Nicholson wheated bourbon came from Stitzel-Weller. 

The bourbon boom has been good for Luxco. In 2014, it acquired a one-half interest in craft distillery Limestone Branch, now the home of Yellowstone Bourbon. In 2018, Luxco opened Lux Row, a major distillery. For the year that ended October 31, 2020, Luxco generated approximate net revenues of $202 million and 9-liter case volume of 4.8 million.

At the time of the sale to MGP, Luxco was still owned by its founding Lux family and Donn Lux, formerly chairman and CEO of Luxco, is now a member of MGP's board. He and his fellow shareholders also are now $475 million richer.

MGP is public but tightly controlled by its founding Cray family. Cloud Cray started it in 1941, buying a small distillery which he enlarged to make ethanol for the war industries. It was known as Midwest Grain Processors. After the war, it continued to make ethanol for beverage and industrial use, as well specialty proteins and starches extracted from wheat. His son, Bud, who succeeded him, just passed away last year at age 96. Bud's daughter, Karen Seaberg, chairs MGP's board today. For calendar 2020, MGP reported net income of $40.3 million on sales of $395.5 million.

MGP has long been one of the country's largest distillers of grain neutral spirits (GNS, aka vodka) but has struggled with the low margins typical of commodity production. Its 2011 acquisition of the Lawrenceburg distillery, which makes GNS but also makes whiskey, was a bid to move into "higher value-added products," as they put it. So instead of commodity GNS, the company now also sold commodity whiskey, a minor improvement. It toyed with the next step up, selling branded products, but progress was glacial. Buying Luxco seemed to solve that problem at a stroke.

Maybe it will, but today's branding exercise needed work. That massive, red-brick distillery and maturation facility just downriver from Cincinnati will be called by its new name if you buy one of its branded products, such as Rossville Union Straight Rye Whiskey (which is pretty good, but perhaps not $60 good). If you want to buy contract whiskey, bulk whiskey, or GNS, it's still MGP. And if you're in town and need directions, ask a local how to get to Seagram's, because they all still call it that.  

Confusing, right? 

As for the new name itself, the 'Ross' part is a reference to George Ross, who is believed to have established a distillery there in 1847. He called it Rossville despite there being no town of that name in the vicinity. Then again, maybe it was 1857, as Seagram's claimed (see photo, above).

Regardless, Ross was out of the picture by 1875, when James Walsh & Company, a Cincinnati rectifier, bought the place. The Walsh operation was huge and it owned or controlled several distilleries in the region. The offices were in downtown Cincinnati but the main rectification plant was in Covington, Kentucky, at the other end of John Roebling's new bridge over the Ohio River.

Peter O'Shaughnessy was Walsh's partner and his three sons took the company over after Walsh and their father retired. They operated Rossville as a medicinal whiskey bottler during Prohibition. When Prohibition ended they sold it to Joseph E. Seagram and Sons Inc., aka, Seagram's. The Canadian distiller made it their principal U.S. distillery. They bought a grain silo in nearby Aurora to supply it. The O'Shaughnessy brothers then built a new distillery nearby and gave it the Walsh name, but it didn't last long. The enlarged and improved Seagram's plant produced Seagram's Seven Crown Blended Whiskey and Seagram's Gin, two major brands. 

It was Seagram's for 70 years, the longest name tenure in its claimed 174-year history.

The 'Squibb' part of the new name refers to brothers W. P. and G. W. Squibb, who bought a Lawrenceburg distillery called Dunn and Ludlow in 1866. In 1885, their Squibb Distillery installed a column still and made other improvements to increase its capacity to 330 bushels per day. It was a major distillery until Prohibition closed it. Near the end of Prohibition, Schenley bought it and another shuttered distillery nearby, combining them under the name Old Quaker, a popular pre-Pro brand Schenley had acquired.

For MGP, the significance of the Squibb name is its association with George Remus, the notorious Cincinnati-based bootlegger who briefly owned Squibb as part of his phony medicinal whiskey scheme during Prohibition. MGP has been selling a George Remus Bourbon (also good, about $40) as part of its fledgling effort to add profitable branded products to its portfolio.

Schenley and Seagram's were two of the post-Prohibition 'Big Four' distilled spirits producers and Lawrenceburg was the only place they had big distilleries side-by-side. That made Lawrenceburg "Whiskey City," a legacy the local community has recently embraced. In that context, Ross & Squibb is a great name because it salutes those two local whiskey giants, Seagram's and Schenley, without trespassing on anyone's intellectual property.

Schenley stopped distilling at Old Quaker in the late 1980s when it became part of what is now Diageo. They continued bottling until the warehouses ran dry. The bottling plant was sold and for a short time continued to operate as a separate company. Everything else was either demolished or converted to other uses. 

Seagram's Lawrenceburg kept going even after Seagram's itself was dissolved and sold for parts in 2000. The facility first went to Pernod Ricard, which sold it to CL Financial, which sold it to MGP, after first selling the bottling plant to Proximo. Through all that and more, it never closed.

MGP now has six distilleries, in Atchison (KS), Lawrenceburg (IN), Lebanon, Bardstown (KY), Mexico, and Washington, D. C., where it last year bought a quirky little gin maker called Green Hat. 

We just got our first glimpse of how this new MGP/Luxco mash-up will work. It has a few bugs. Maybe better luck next time. 

UPDATE (10/14/21): Hey, look! The new sign is up.



9 comments:

billyhacker said...

Green Hat is good. Innovative. Feels local. Works with tiny independents like a local vermouth maker. I assumed MGP would be a catastrophe, but they keep making interesting gin (probably a lot more of it more broadly distributed).

Richard Turner said...

Chuck, you mention in the last few paragraphs that Seagram's sold it's bottling plant to Proximo. Two questions: 1) What (brands or other) business is Proximo in? 2) To whom did Schenley sell their bottling plant (mentioned in the previous paragraph)?
Note: I just love these historical tales about changes of ownership, and sometimes function, of physical plants and the impacts upon brands, towns and regions; Thanx!

Chuck Cowdery said...

Proximo is a New Jersey company that is owned by Mexico's Beckmann family, which owns Jose Cuervo Tequila, Proximo's main brand. They have others. Three-Olives Vodka was the main thing being bottled there when they bought the place about ten years ago.

Chuck Cowdery said...

Bob Allison, who ran Stitzel-Weller until it closed, bought the Schenley bottling plant in Lawrenceburg in the 90s and ran it as a contract bottler. I don't know when that ended. There seem to be a variety of businesses in the Schenley/Old Quaker buildings that remain, none involved with whiskey.

Andy said...

Thanks for writing this up, I've long found it fascinating to ponder the revenue generated by others selling LDI/MGP whiskey compared to the rather small totals it seems to generate for them.

Chuck Cowdery said...

For MGP, it's another step up the ladder. Luxco is in the cats-and-dogs business. Their margins are better than commodity, but not a whole lot better. One rung at a time.

crash75 said...

Loved the blog on Lawrenceburg. Having spent 24 years @ Seagram until it’s sale, Lawrenceburg has a certain “grounding” for all the ol’ Seagram folks. I was lucky enough to be a part of the -1st distillery training for Sales Leaders in the early ‘90’s. Larry Ebersole was our “Professor”. Not a bad way to learn. In those days the Bronfman’s were still proud leaders of the Company. So “largest” was a word we heard often. We were told Lawrenceburg had the largest and best cattle feed(Seagram#1) since our spent mash was of such high quality, cattle folks paid a premium for it. Also, that Lawrenceburg was the “largest” capacity distillery in the “Free World” (USSR & PRC excluded). Also, we had the largest concentration of patented yeasts, over 175, of any distillery in the World Dave Pickerell and I spent a bus ride together at an early ACSA meeting and he confirmed the number existing at that time of over 125 survivors since the new occupants let many die off. He felt those test patents were more valuable than Lawrenceburg’s “bricks & mortar”. As always great article. Thanks!

Anonymous said...

According to histories of the Seagram Company, the date 1857 was the date of the establishment of a distillery in Waterloo, Ontario, Canada that was acquired by Joseph E. Seagram in the 1860s and became the basis of his distilling business. Labels for products that still carry the Seagram's name include the tag line "Distillers Since 1857". That year has nothing to do with the Rossville name or with Lawrenceburg, Indiana production facility.

Anonymous said...

Your mention of the post-Prohibition "Big Four" - Seagram, Schenley, Hiram Walker & National Distillers - brings up thoughts about the fates of those companies, their brands and their production facilities. How little of all that remains. In the United States it seems that the former Seagram plant at Lawrenceburg, IN with all of its convoluted post-Seagram history is the only sizable original facility of the "Big Four" that remains currently producing distilled spirits.