Brown-Forman to cut workforce and shut down barrel-making plant in Louisville

In Louisville, Kentucky, Brown-Forman Corp., the parent company of Jack Daniel’s Tennessee Whiskey, announced significant cutbacks, including a 12% reduction of its global workforce, which comprises approximately 5,400 employees. As part of this restructuring, the firm is also closing its barrel-making plant situated in its hometown. The company expects these actions to generate annualized cost savings ranging between $70 million and $80 million. A portion of these savings is intended for reinvestment in the company’s growth strategy. Brown-Forman has decided to source barrels from external suppliers, moving away from in-house production. It anticipates making over $30 million from selling off its cooperage assets. The organization's leadership indicated that the decision was influenced by challenging economic conditions, including the decline in market performance due to the divestitures of its brands, Finlandia and Sonoma-Cutrer. Lawson Whiting, President and CEO of Brown-Forman, expressed optimism about a stronger performance in the latter half of the year despite the overall challenges. The American whiskey sector has been hampered by high inventories of aging whiskeys, with Kentucky holding a record of 14.3 million barrels aging currently. Moreover, the distillation industry has been facing severe headwinds including retaliatory tariffs due to international trade disputes that emerged in 2018 when the EU imposed tariffs on American whiskey in response to the U.S. government's tariffs on European steel and aluminum. These retaliatory actions have reportedly cost the bourbon industry in Kentucky around half a billion dollars in export revenues since the tariffs were enacted. Eric Gregory, president of the Kentucky Distillers’ Association, emphasized the dire situation created by a combination of tariffs, rising taxes, and evolving consumer preferences that have led to declining sales in the whiskey sector. The changes announced by Brown-Forman come during a critical period for the American spirits market, as the company approaches a phase of reevaluation aimed at ensuring the longevity and growth of its business. The recent announcement was also coupled with leadership changes within the organization, including the appointment of Jeremy Shepherd as the new chief marketing officer, who previously led the company's commercial division in the USA and Canada. These developments signal a potential shift in strategy as Brown-Forman seeks to realign its operations in response to the shifting economic landscape.