Dive Brief:
- Jack Daniel’s owner Brown-Forman will lay off roughly 640 workers and close its bourbon cooperage in Louisville, Kentucky as part of a restructuring plan.
- The facility manufactures barrels to store and age whiskeys. Going forward, Brown-Forman will source bourbon barrels from an external supplier “at a competitive price,” the company said in a press release.
- The decisions will “streamline Brown-Forman’s structure” and allow it to invest in technologies and brands that drive growth. The company expects annual savings of roughly $70 million to $80 million.
Dive Insight:
Brown-Forman — whose portfolio consists of bourbons, tequilas, vodkas and gins — saw its net sales decline 5% in the second half of 2024. Net sales of whiskey declined 1% in that timeframe.
The company is responding by cutting its operational costs to combat the slowdown.
Brown-Forman’s sales are down as drinkers pare back their consumption of spirits amid an uncertain economy. Younger consumers also are turning away from traditional booze in favor of canned cocktails, cannabis and nonalcoholic beverages.
“Today’s announcement will ensure we have the structure and teams in place to continue on this path, while also making investments that we believe will facilitate growth for generations to come,” Lawson Whiting, Brown-Forman’s CEO, said in a statement.
As part of its restructuring, the Woodford Reserve producer also announced four hires. Brown-Forman named a chief marketing officer, chief strategy officer, president of its Americas operations and president of its Europe and Africa businesses.
In a note to investors, TD Cowen analyst Robert Moskow said Brown-Forman’s decision to cut its workforce indicates the decline in spirits consumption remains a challenge for producers. The analyst said he expects weak Jack Daniel’s sales will continue to weigh on the company as whiskey consumers turn to “above-premium” products.
Brown-Forman has trimmed its portfolio during the last five years, including its 2020 sale of Canadian Mist and two other spirits brands to Fireball owner Sazerac. At the same time, the company has leaned into the growth of canned RTD drinks, with Jack Daniel’s Country Cocktails and the whiskey brand’s collaboration with Coca-Cola.
Brown-Forman is the latest beverage company to reduce its footprint since last fall. PepsiCo announced in October it would shutter three bottling plants, while beer maker AB InBev said it was closing a distribution center two months earlier.