Brown-Forman Announces Major Workforce Reductions and Plant Closure
Brown-Forman Corp, a leading spirits producer, declared on Tuesday that it will be cutting its global workforce by approximately 12% and shutting down its barrel-making facility located in Louisville, Kentucky. This decision arises from the mounting challenges being faced by American whiskey manufacturers due to shifts in consumer preferences and potential new tariff threats.
The company anticipates these measures will generate annual cost savings between $70 million and $80 million, with part of these savings earmarked for reinvestment to support the firm’s growth plans. Brown-Forman, recognized for its popular Jack Daniel’s Tennessee Whiskey, stated that its cooperage will cease operations by April 25, impacting roughly 210 employees, which include both hourly and salaried positions. Laid-off workers are set to receive severance packages, outplacement support, and additional benefits.
To continue producing barrel-aged spirits, Brown-Forman plans to procure barrels from an external supplier and expects to garner over $30 million through the sale of cooperage-related assets. Established in 1945, the company’s own cooperage crafted barrels to enhance the distinctive flavor profiles critical to bourbon.
In conjunction with workforce changes, the company revealed a reshuffling within its executive team, appointing Jeremy Shepherd as chief marketing officer. Shepherd previously oversaw the commercial division in the USA & Canada.
Brown-Forman’s President and CEO, Lawson Whiting, emphasized the company’s ongoing commitment to adapting its strategy and organizational structure to foster growth. He asserted that the firm is positioning itself to maintain a sustainable direction while pursuing investments that will promote growth for future generations.
In the previous month, the company disclosed a 5% decline in net sales during the first half of its fiscal year compared to the same period last year, predominantly attributed to the sales from Finlandia and Sonoma-Cutrer. Despite the challenging economic environment, Whiting expressed optimism for a better performance in the latter half of the year. The brand portfolio also includes notable names such as Woodford Reserve, Old Forester bourbons, and Herradura and el Jimador tequilas.
The current reductions come at a time when the American whiskey industry is facing significant difficulties, which have been compounded by soaring inventories of maturing whiskeys set to hit the market. In Kentucky alone, the state has a record 14.3 million barrels of bourbon aging, according to a report from the Kentucky Distillers’ Association.
Compounding these issues are demographic shifts indicating that younger adults are consuming less alcohol, alongside fears that the whiskey industry may become entangled in further trade disputes. Recently, U.S. Surgeon General Vivek Murthy urged for greater public awareness regarding the association between alcohol consumption and cancer risks, suggesting that such information be labeled on alcoholic beverages sold in the U.S.
With Donald Trump resuming the presidency, there are concerns about the potential for new tariffs on American whiskey. During his prior term, whiskey producers were adversely affected by a trade conflict, resulting in significant declines in exports to the European Union, which is the industry’s largest foreign market. The EU retaliated with tariffs on U.S. spirits following Trump’s imposition of tariffs on European aluminum and steel in 2018. Although a deal reached in 2021 temporarily lifted these tariffs, and American distillers began regaining EU market share, the reintroduction of tariffs could be detrimental.
Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, voiced concern that new tariffs would compound existing challenges faced by the spirits industry. The Kentucky Distillers’ Association noted that the EU is poised to reinstate tariffs on American whiskey at a staggering 50% rate by the end of March if preventative measures are not enacted, emphasizing that retaliatory tariffs have already cost Kentucky’s bourbon sector around $500 million in lost exports since 2018. Both Kentucky and Tennessee, where Jack Daniel’s is produced, significantly supported Trump during the last election.
Eric Gregory, president of the distillers’ association, articulated the current struggles the industry faces, describing it as a “triple threat” stemming from crippling tariffs, escalating taxes, and shifting consumer preferences that are impacting sales.
