Brown-Forman, the parent company of popular whiskey brand Jack Daniel’s and bourbon brand Woodford Reserve, has announced a significant workforce reduction, affecting approximately 12% of its 5,400 employees. This decision comes amidst a decline in spirits sales, prompting the Louisville-based company to take measures to enhance operational efficiency and agility.
In recent years, Brown-Forman has raised prices to counter inflation and mitigate the impact of rising material costs, such as wood for barrels. However, consumers, wary of inflation, have scaled back their spending on premium liquors, leading to financial challenges for companies like Brown-Forman.
The job cuts, totaling nearly 700 employees, include the closure of a Louisville cooperage where wooden barrels are manufactured for aging whiskey and bourbon. This move is expected to result in annual cost savings of $70 to $80 million, with a portion of the savings earmarked for reinvestment to drive growth.
CEO Lawson Whiting expressed gratitude to the affected employees for their dedication and contributions to the company. The decision to source barrels from an external supplier at a competitive price will enable Brown-Forman to streamline operations and optimize costs.
The announcement follows a recent warning from the US Surgeon General regarding the health risks associated with alcohol consumption, including an increased risk of cancer. This regulatory development adds to the challenges faced by spirit companies, which have seen a slowdown in sales post the peak experienced during the pandemic years of 2020 and 2021.
Brown-Forman reported a decline in whiskey sales in 2023, marking a significant shift from the previous year when sales were experiencing double-digit growth. The company's stock value has also declined by over 30% in the past year, reflecting the broader challenges in the spirits industry.
Despite these setbacks, Brown-Forman maintains a diverse portfolio of liquor brands, including Herradura tequila, The Glendronach scotch whisky, Diplomático Rum, and Fords Gin. Additionally, the company offers a canned cocktail in partnership with Coca-Cola, showcasing its commitment to innovation and adaptation in a changing market landscape.
