Brown-Forman, the owner of Jack Daniel’s, has announced plans to lay off approximately 640 workers and close its bourbon cooperage in Louisville, Kentucky as part of a restructuring plan. This facility is responsible for manufacturing barrels used to store and age whiskeys. Moving forward, Brown-Forman will be sourcing bourbon barrels from an external supplier at a competitive price.
The company stated that these decisions are aimed at streamlining their structure and enabling them to invest in technologies and brands that drive growth. Brown-Forman anticipates annual savings of around $70 million to $80 million as a result of these changes.
In response to a 5% decline in net sales in the second half of 2024, Brown-Forman is taking steps to reduce operational costs to address the slowdown. Sales of whiskey specifically saw a 1% decline during this period. The company attributes the decrease in sales to consumers cutting back on spirits consumption due to economic uncertainties. Additionally, younger consumers are gravitating towards alternative options such as canned cocktails, cannabis, and nonalcoholic beverages.
Brown-Forman’s CEO, Lawson Whiting, expressed confidence in the restructuring plan, stating that it will position the company for future growth. As part of the restructuring, the company has announced the appointment of key executives to drive strategic initiatives in marketing, operations, and international markets.
Analysts have noted that Brown-Forman’s workforce reduction reflects the ongoing challenges in the spirits industry. With a focus on premium products, the company aims to address the evolving preferences of whiskey consumers. Over the past five years, Brown-Forman has strategically adjusted its portfolio, divesting certain brands while capitalizing on the growth of canned ready-to-drink beverages.
This move by Brown-Forman is part of a broader trend in the beverage industry, with other companies like PepsiCo and AB InBev also announcing plant closures and operational adjustments. As the market landscape continues to evolve, companies are adapting their strategies to remain competitive and meet changing consumer demands.
