DDGS is the main by-product from the distillation of alcohol from wheat grain. Distilleries produce alcoholic beverages, industrial ethanol and ethanol biofuel with the following by-products. The availability of DDGS has grown considerably since the 1990s, due to the increasing demand for biofuel caused by environmental concerns and subsequent regulations.

There are two main distillery processes, dry-milling, and wet-milling. Dry-milling (or dry-grind) yields DDGS as the main by-product. It is the main process for producing ethanol. This process starts with grinding before steeping the grain in water and results in ethanol and various by-products.