LOUISVILLE, Ky. — Spirits large Brown-Forman Corp. mentioned Tuesday it’s lowering its world workforce by about 12% and shutting its hometown barrel-making plant in Louisville. The price-cutting strikes come as American whiskey producers face stiff challenges from altering shopper tendencies and renewed tariff threats.
The actions are projected to supply about $70 million to $80 million in annualized price financial savings, a portion of which is predicted to be reinvested as a part of the corporate’s development technique, mentioned Louisville-based Brown-Forman, whose flagship model is Jack Daniel’s Tennessee Whiskey.
The corporate’s cooperage, the place barrels are made to retailer and age its spirits, will shut by April 25, affecting about 210 hourly and salaried workers, it mentioned. The closure is a part of the general 12% discount within the firm’s 5,400-employee world workforce. Brown-Forman mentioned it’ll supply barrels from an exterior provider and expects to obtain greater than $30 million from promoting cooperage belongings.
Laid-off staff will obtain severance, outplacement providers and different advantages, the corporate mentioned.
Brown-Forman additionally introduced adjustments in its govt crew, together with the appointment of Jeremy Shepherd as chief advertising officer. Shepherd beforehand led its USA & Canada industrial division.
The actions replicate the venerable firm’s “relentless focus on evolving our strategy, our portfolio and our organization to grow and thrive,” mentioned Brown-Forman President and CEO Lawson Whiting. “Today’s announcement will ensure we have the structure and teams in place to continue on this path, while also making investments that we believe will facilitate growth for generations to come.”
Final month, Brown-Forman reported a 5% decline in web gross sales for the primary six months of its fiscal yr in comparison with the year-ago interval. The decline was largely as a result of its Finlandia and Sonoma-Cutrer divestitures, the corporate mentioned. Whiting mentioned the outcomes got here amid “challenging economic conditions” however he predicted a stronger efficiency within the second half of the yr. Brown-Forman’s many manufacturers additionally embody Woodford Reserve and Outdated Forester bourbons and Herradura and el Jimador tequilas.
The corporate’s cutbacks come as the general American whiskey sector faces headwinds that coincide with large inventories of ageing whiskeys that can sometime attain the market. In Kentucky, a file 14.3 million barrels of bourbon are ageing, the Kentucky Distillers’ Affiliation mentioned final month.
Industrywide challenges embody indications that youthful adults are consuming much less alcohol and the specter of American whiskey getting entangled in one other commerce warfare. In the meantime, U.S. Surgeon Basic Vivek Murthy mentioned not too long ago that People needs to be higher knowledgeable in regards to the hyperlink between alcohol and most cancers. The chance needs to be clearly labeled on drinks People eat, Murthy proposed.
Republican President-elect Donald Trump has threatened to impose new tariffs together with his return to the White Home. Throughout Trump’s first time period, American whiskey distillers bought caught up in a trans-Atlantic commerce battle, inflicting deep drops in exports to the European Union — the business’s largest abroad market. The EU imposed a retaliatory tariff on these spirits in 2018 in response to Trump’s determination to slap tariffs on European metal and aluminum. A 2021 deal suspended these tariffs on American spirits, and U.S. distillers started clawing again misplaced market share within the EU.
Nevertheless, the EU is ready to reinstate tariffs on American spirits at a 50% price in March if nothing is completed to go it off, the Kentucky Distillers’ Affiliation mentioned. Retaliatory tariffs from the EU and different international locations have price Kentucky’s bourbon business a half-billion {dollars} in exports since 2018, it mentioned. Kentucky and Tennessee, the place Jack Daniel’s is crafted, overwhelmingly backed Trump in final yr’s election.
“We are up against a triple threat of back-breaking tariffs, snowballing taxes and shifts in consumer trends that have slowed sales,” Eric Gregory, president of the distillers’ affiliation, mentioned not too long ago.