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Brown-Forman said on Tuesday it will lay off about 12% of its global workforce of 5,400 employees, as the Jack Daniel’s maker looks to reduce costs amid weak alcohol demand.
The company has struggled with high input costs, including of raw materials such as agave and wood barrels, and raised prices for its whiskey brands to shield margins.
Consumers have also traded down to cheaper brands as they deal with higher costs of living. Brown-Forman’s peer Constellation Brands cut its annual forecast last week and flagged uncertainty around consumer spending on its beers and spirits.
Brown-Forman said it will close its Louisville-based barrel-making facility by April 25, which will impact about 210 employees and is part of the overall global workforce reduction. The company said it will source barrels from an unnamed external supplier in the future.
The announcement comes just days after the U.S. Surgeon General said alcoholic drinks should carry a warning about cancer risks on their labels and called for guidelines on alcohol consumption limits to be reassessed.
Brown-Forman is also one of the many companies ending its DEI initiatives as the new conservative administration takes office.Â
Brown-Forman’s restructuring plan is expected to generate about $70 million to $80 million in annualized cost savings. The company is expected to incur about $60 million to $70 million in severance and other charges related to the layoffs.
The company also said it will restructure its executive leadership, including appointing a new chief marketing officer and a chief strategy officer.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Shilpi Majumdar)
