Brown-Forman Corp., the parent company of Jack Daniel’s Tennessee Whiskey, is reducing its global workforce by 12% and closing its barrel-making plant in Louisville, Kentucky. The cost-cutting moves aim to achieve annualized savings of $70 million to $80 million.
The company will lay off about 210 employees from the cooperage, where barrels are made for storing and aging spirits. However, Brown-Forman plans to source barrels from an external supplier and expects to receive over $30 million from selling cooperage assets.
Industry experts point to changing consumer trends and renewed tariff threats as major challenges facing American whiskey producers. A looming EU tariff increase of 50% on American whiskeys in late March could be devastating for distillers, who have already lost a half-billion dollars in exports since 2018.
The move reflects Brown-Forman’s efforts to adapt its strategy and stay competitive amidst the industry’s headwinds. The company has reported a 5% decline in net sales for the first six months of its fiscal year, largely due to divestitures. However, President and CEO Lawson Whiting predicts stronger performance in the second half of the year.
The American whiskey sector faces additional challenges, including declining consumption among younger adults and increased scrutiny on the link between alcohol and cancer. The Distilled Spirits Council of the United States warns that tariffs would exacerbate existing market challenges.
Source: https://apnews.com/article/brownforman-american-whiskey-sales-tariff-8948b2725b2aa565d537db7769969c0b