Brown-Forman, one of the largest spirits conglomerates, has announced that it will be reducing its global workforce by about 12% and closing its hometown barrel-making plant in Louisville. This announcement comes amid overall economic and global challenges the industry is facing due to consumer trends and renewed tariff threats.
By doing this they will save $70 million to $80 million in annualized cost savings. The plan with some of this money is to reinvest it as part of the company's growth strategy.
About 210 hourly and salaried workers will be impacted by the company's planned closure of its cooperage, where barrels are constructed to age and store its spirits, by April 25. The closure is a component of the company's overall 12% decrease in its global workforce of 5,400 employees. According to Brown-Forman, it will purchase barrels from a third party and anticipates making over $30 million from the sale of cooperage assets.
Jeremy Shepherd was appointed as the company's chief marketing officer, among other executive team changes announced by Brown-Forman. Shepherd used to be in charge of its commercial division in the USA and Canada.
In comparison to the same period last year, Brown-Forman announced last month that its net sales for the first half of the fiscal year had decreased by 5%. The business stated that its Finlandia and Sonoma-Cutrer divestitures were mostly to blame for the decline. According to Whiting, the achievements were obtained in the midst of "challenging economic conditions," but he anticipated better results in the second half of the year. Herradura and el Jimador tequilas, as well as Woodford Reserve and Old Forester bourbons, are among Brown-Forman's numerous brands.
The company's reductions coincide with significant stocks of aged whiskeys that will eventually be put on the market, which are causing challenges for the whole American whiskey industry. According to the Kentucky Distillers' Association, a record 14.3 million barrels of bourbon are maturing in Kentucky as of last month.
With his return to the White House, Republican President-elect Donald Trump has promised to levy further tariffs. American whiskey producers were embroiled in a transatlantic trade dispute during Trump's first term, which resulted in sharp declines in exports to the European Union, the largest foreign market for the sector. Trump's decision to impose tariffs on European steel and aluminum in 2018 prompted the EU to implement a retaliation tax on those spirits. Following a 2021 agreement that lifted the tariffs on American spirits, American distillers started regaining market dominance in the EU.
However, the Kentucky Distillers' Association stated that if nothing is done to prevent it, the EU will reimpose 50% duties on American spirits in March. Since 2018, Kentucky's bourbon business has lost half a billion dollars in exports due to retaliatory tariffs imposed by the EU and other nations, the report stated. In this year's election, Kentucky and Tennessee, the states where Jack Daniel's is made, largely supported Trump.
