new York
CNN
—
Brown-Forman, the parent company of Jack Daniel’s whiskey and Woodford Reserve bourbon, is laying off about 12% of its employees. 5,400 employees in a context of falling spirits sales.
The Louisville-based company has raised prices in recent years to offset inflation and protect against rising costs of materials, such as wood for barrels. Inflation-weary drinkers have simultaneously cut back on spending on expensive liquor, putting premium spirits makers like Brown-Forman in financial peril.
Brown-Forman said the job cuts, amounting to almost 700 people, “will improve operational efficiency and agility”. He laid off 200 people by closing a cooperage in Louisville, where wooden barrels were produced to age whiskey and bourbon.
The cooperage closure and layoffs will save between $70 million and $80 million in annualized cost savings, according to Brown-Forman. Part of this sum should “be reinvested to accelerate growth,” the company said in a statement. The barrels will come from an external supplier at a “competitive price,” the company added.
“I want to express my sincere gratitude to our employees, especially those impacted by these changes, for their dedication and contributions to Brown-Forman,” said CEO Lawson Whiting.
The announcement comes weeks after the U.S. Surgeon General issued a warning that alcohol consumption may increase cancer risk and called for an update to the health warning label on alcoholic beverages .
After a pandemic peak between 2020 and 2022, spirits companies faced a slowdown in sales. Brown-Forman first sounded the alarm in 2023 when he reported that whiskey sales were falling – a stark contrast to the previous year, when they skyrocketed by percentage points two digits.
Shares of Brown-Forman (BF.B) have lost more than 30% of their value over the past year. The company has a diverse alcohol portfolio, owning Herradura tequila, The Glendronach scotch. whisky, Diplomático Rum and Fords Gin among others. It also produces a canned cocktail with Coca-Cola.