Brown-Forman, the maker of Jack Daniel's, announced Tuesday that it will cut 12% of its workforce as more consumers cut back on their alcohol consumption.
Brown-Forman, the 155-year-old Louisville, Kentucky-based company that also makes Woodford Reserve, Old Forester and other spirits, will close its barrel-making operations by April 25th.
The company says its so-called Cooperage business employs 210 hourly and salaried employees. Brown-Forman will now purchase barrels from outside suppliers, the company said.
According to the Wall Street Journal, the company announced it would cut a total of 648 employees as whiskey sales declined for the first time since 2002 (down 1.2% in 2023) due to the trend towards alcohol prohibition. Street Journal reported. report.
“Today's announcements ensure that we have the structure and team in place, as well as the investments we believe will drive future generations of growth,” Brown-Forman CEO Lawson Whiting said in a statement. We will also do so.”
The layoffs are part of a reorganization that saw four key executives expand their roles, including the promotion of Michael Macic to president of the Americas.
Mr. Masic previously led operations in Mexico, Latin America and the Caribbean, and currently oversees the United States and Canada.
Brown-Forman shares rose less than 1% to $35 on the news.
These reductions are expected to result in annual cost savings of approximately $70 million to $80 million, a portion of which is expected to be reinvested to accelerate growth.
Brown-Forman also plans to sell its Barrel business for $30 million and spend a total of $60 million to $70 million in severance and related expenses related to employee reductions.
Although overall alcohol consumption has fallen since the pandemic, sales have soared as residents in lockdown stocked up on spirits and wine.
Producers even introduced new, larger bottles to meet the demand for bubbles.
However, the tide has changed.
On January 3, alcohol stocks plunged after the US Surgeon General called for cancer warnings to be placed on alcoholic beverage labels.
Alcohol consumption increases the risk of developing breast, colon, liver and other cancers, U.S. Surgeon General Vivek Murthy said in the advisory.
Murthy's warning comes in the wake of another initiative that could revise the government's dietary guidelines, which have recommended no more than two drinks a day for adult men and no more than one drink a day for women, for decades. This comes on the heels of a Ministry-ordered study. day.
This study was ordered after the WHO report concluded in 2023 that “alcohol consumption at any level is not safe for our health,” the first dire warning from an influential global nonprofit organization.
