MGP Ingredients profits from restructuring during 2010

23-Aug-2010 - Last updated on 24-Aug-2010 at 12:32 GMT

MGP Ingredients returned to profitability in fiscal 2010 on the back of higher sales of food grade alcohol, the company has said, after sustaining heavy losses for the previous two years.

The Kansas-based producer of grain-derived starches, proteins and food-grade alcohols has described 2009 as a “difficult year”, having recorded a huge net loss of $69.1m, compared to an $11.7m net loss during 2008 – which had been the company’s first net loss in a decade. It blamed restructuring costs, as it moved away from commodity-based ingredients toward value-added products such as dietary fiber, protein isolates and concentrates, and textured proteins.

For the full fiscal year 2010, the company had net income of $8.7m and sales of $202m, compared to sales of $292m during fiscal 2009. MGP Ingredients has said that its reduced sales are due to a shift away from commodity-type products, such as fuel grade alcohols and vital wheat gluten.

President and CEO Tim Newkirk said: "This past fiscal year represents a significant and remarkably quick return to profitability. We ended the year on a strong note paced by higher sales of food grade alcohol and an improved sales mix of higher value specialty ingredients.”

He attributed the turnaround largely to higher sales of high quality food grade alcohol at its joint venture with Illinois Corn Processing, but also to progress in sales of specialty resistant wheat starch.

“With a growing focus on health and wellness, food companies are searching for new ways to make their products more nutritious and more convenient without sacrificing taste. MGPI's fiber platform is especially well-suited for a wide variety of prepared packaged foods,” he said.

Flavored vodka growth

Looking forward, Newkirk said that the company would concentrate on growing its market share of food grade alcohol, particularly flavored vodkas.

“Sales of flavored vodkas by our customers are growing almost twice as fast as unflavored varieties,” he said. “This is another area where we have recently increased our sales and marketing efforts to grow our existing relationships. Regarding industrial applications, we currently are seeing new opportunities to compete in high value niches, such as health-related and cooking products."