Profile: MGP Ingredients Inc (MGPI.O)

MGP Ingredients, Inc., incorporated in 1957, is an integrated producer of certain ingredients and distillery products, which are derived from wheat flour and corn, respectively, and which are produced to serve the packaged goods industry. The Company has three business segments: ingredient solutions, distillery products and other. Its ingredient solutions segment products primarily consist of specialty starches, specialty proteins, commodity starches and commodity vital wheat gluten. The distillery products segment consists of food grade alcohol, along with a minimal amount of fuel grade alcohol, commonly known as ethanol, and distillers feed, which are co-products of its distillery operations. The Company’s other segment products consists of resins and plant-based polymers and composites manufactured through the further processing of certain of its proteins and starches and wood. The Company’s wholly owned subsidiaries include Midwest Grain Pipeline, Inc., Firebird Acquisitions, LLC and D.M. Ingredients GmbH. During the fiscal year ended June 30, 2009 (fiscal 2009), the Company shutdown its wheat flour milling operations at the Atchison, Kansas plant.

Ingredient Solutions Segment

The Company’s ingredient solutions segment consists of specialty wheat starches, specialty wheat proteins, commodity wheat starch and vital wheat gluten. Wheat starch constitutes the carbohydrate-bearing portion of wheat flour. It produces a white wheat starch powder by extracting the starch from the starch slurry. The Company produces its Fibersym resistant starch. The Company sells its specialty starches on a nationwide basis, primarily to food processors and distributors. In addition, it also sells specialty starches for non-food applications in pet treat applications and in the manufacture of biopolymer products.

The Company’s specialty wheat starches are used primarily for food applications as an additive in a variety of food products. The Company also sells its specialty starches for a number of non-food applications, which include pet and biopolymer products, and for use in the manufacture of adhesives, paper coatings, carbonless paper, and wall board. The Company’s Specialty Wheat Starches include Fibersym Resistant Starch series, FiberRite RW Resistant Starch, Pregel Instant Starch series and Midsol Cook-up Starch series.

The Company has developed a range of specialty wheat proteins for food and non-food applications. Specialty wheat proteins are derived from vital wheat gluten through a variety of processes, which change the molecular structure of vital wheat gluten. Wheat proteins for food applications include gliadin, glutenin, and products in the Arise, Wheatex, HWG 2009 and FP series. Its vital wheat gluten is a free-flowing light tan powder, which contains approximately 75% to 80% protein.

Distillery Products Segment

The Company’s Atchison plant processes corn, mixed with the starch slurry from starch and protein processing operations, into food grade alcohol and distillery co-products consisting of fuel grade alcohol and distillers feed. Food grade alcohol consists of beverage alcohol and industrial food-grade alcohol that are distilled to remove impurities. Fuel grade alcohol, or ethanol, is grain alcohol that has been distilled to remove all water to yield 200 proof alcohol suitable for blending with gasoline. Distillers feed is principally derived from the residue of corn from alcohol processing operations. It sells food-grade industrial alcohol for use as an ingredient in foods, personal care products, cleaning solutions, biocides, insecticides, fungicides, pharmaceuticals and a variety of other products. It sells food-grade industrial alcohol in tank truck or rail car quantities direct to a number of industrial processors.

Other Segment

Produced from the further processing of certain of its wheat proteins and wheat starches (and other plant sources), its plant-based biopolymers and composites can be used to produce a variety of eco-friendly products, while its plant-based resins have been manufactured for use primarily in pet treat applications. In August 2009, the Company discontinued its production of the pet-related products. Its applications include disposable eating utensils, golf tees, food and feed containers and similar type vessels, as well as non-degradable hard plastic-like products.

The Company competes with Cargill Incorporated, National Starch and Chemical Corporation, Manildra Milling Corporation, Penford Corporation, Archer-Daniels-Midland Company, The Solae Company, US Energy and Grain Processing Corporation.