MGP Ingredients Plans to Upgrade Distillery Equipment to Boost Alcohol Production Capacity

01/09/06 MGP Ingredients, Inc. today announced plans for a series of distillery equipment upgrades that are expected to help boost the company's total alcohol production capacity by up to 15 percent above existing capacity of 110 million gallons annually. The upgrades are scheduled to be completed in phases between now and the summer of 2007 at the company's plants in both Pekin, Ill., and Atchison, Kan., at a projected combined cost of $10 million. They follow a recently completed $2 million project that involved the installation of a new fermentation unit at the company's Pekin plant.

"The new fermentation unit has set the stage for us to proceed with the additional upgrades and to realize a portion of the incremental volume increases," said Tim Newkirk, chief operating officer. "It should also enable us to improve our production cost efficiencies."

Newkirk explained that the new capacity "will be dedicated to the production of fuel grade alcohol in the immediately foreseeable future." MGPI also produces food grade alcohol for beverage applications, principally vodka and gin, and a variety of industrial uses, including household cleansing products, detergents and personal care systems, as well as pharmaceuticals and vinegar.

"We expect to see the additional capacity come on line in increments beginning in the second quarter of fiscal 2007," Newkirk said. "While all of the new production is currently earmarked for use in the fuel market," he added, "we remain firmly committed to supplying the needs of our food grade customers with what we believe is among the highest quality, highest purity alcohol anywhere in the world. We consider our ability to produce both food grade and fuel grade alcohol a real advantage and will continue to maintain a solid presence in each area while exploring ways to further enhance the capabilities and efficiencies of our overall distillery operations."

Randy Schrick, vice president of manufacturing and engineering, commented that the upgrades "should provide an exceptionally quick payback with a continuation of favorable conditions in our alcohol markets, and also as the result of anticipated cost savings from more efficient operations." Newkirk agreed, stating that "over the years, tremendous advancements have been made in alcohol production technologies, of which we have been a part in both developing and utilizing to strengthen our efficiencies while delivering better products to our customers and better returns for our stockholders."