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Diving overview:
- Brown-Forman, owner of Jack Daniel’s, plans to lay off about 640 employees and close its bourbon operation in Louisville, Kentucky, as part of a restructuring plan.
- This facility manufactures casks for storing and maturing whiskey. from now on, Brown-Forman The company said in a press release that it will source bourbon casks from external suppliers “at competitive prices.”
- The decision will “streamline Brown-Forman’s structure” and allow it to invest in technologies and brands that drive growth. The company expects annual cost savings of approximately $70 million to $80 million.
Dive Insights:
Brown-Forman, whose portfolio consists of bourbon, tequila, vodka and gin, saw net sales decline 5% in the second half of 2024. Net sales of whiskey decreased 1% during the period.
Companies are responding by cutting operating costs to combat the economic downturn.
Brown-Forman’s sales have fallen as drinkers reduce their consumption of spirits amid an uncertain economy. Younger consumers are also moving away from traditional alcohol in favor of canned cocktails, cannabis, and non-alcoholic beverages.
“Today’s announcement ensures we have the structure and team to continue on this path, while making investments we believe will foster growth for the next generation,” Brown-Forman CEO Lawson Whiting said in a statement. “It will happen,” he said.
As part of the restructuring, the Woodford Reserve producer also announced four recruitments. Brown-Forman named Chief Marketing Officer (CMO), Chief Strategy Officer (CSO), President of Americas, and President of Europe and Africa.
TD Cowen analyst Robert Moskow said in a note to investors that Brown-Forman’s decision to cut its workforce suggests that declining spirits consumption remains a challenge for producers. The analyst said he expects weak sales at Jack Daniel’s to continue to weigh on the company as whiskey consumers prefer “more premium” products.
Brown-Forman has slimmed its portfolio over the past five years, including selling Canadian Mist and two other liquor brands to Fireball owner Sazerac in 2020. At the same time, the company focused on growing canned RTD beverages through Coca-Cola’s collaborations with Jack Daniel’s Country Cocktails and whiskey brands.
Brown-Formanis the latest beverage company to reduce its footprint since last fall. PepsiCo announced last October that it would close three bottling plants, and beer maker AB InBev said two months ago it would close a distribution center.
