Brown-Forman Cuts Workforce, Shuts Louisville Barrel Plant Amidst Industry Challenges

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Brown-Forman Cuts Workforce, Shuts Louisville Barrel Plant Amidst Industry Challenges
Jack DanielsBrown-FormanWhiskey

Brown-Forman Corp., owner of Jack Daniel's, is restructuring to address shifting consumer trends and potential trade disputes. The company will reduce its global workforce by 12% and close its Louisville barrel-making plant, aiming to save $70-80 million annually.

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Brown-Forman Corp., the maker of renowned spirits like Jack Daniel's Tennessee Whiskey, announced sweeping cost-cutting measures, including a 12% reduction in its global workforce and the closure of its historic barrel-making plant in Louisville. The company cited shifting consumer preferences and the specter of renewed trade tariffs as key drivers behind these decisions.

These changes are anticipated to generate annual cost savings of $70 million to $80 million, a portion of which will be reinvested in the company's growth strategy.The closure of the cooperage, where barrels are meticulously crafted to age and store the company's spirits, will impact approximately 210 hourly and salaried employees by April 25th. This move aligns with the overall 12% workforce reduction across Brown-Forman's 5,400-employee global structure. The company intends to procure barrels from an external supplier and projects to earn over $30 million from the sale of cooperage assets.Alongside these structural adjustments, Brown-Forman announced leadership changes, appointing Jeremy Shepherd as Chief Marketing Officer. Shepherd previously led the company's USA & Canada commercial division. Lawson Whiting, President and CEO of Brown-Forman, stressed the company's unwavering commitment to adapting its strategies, product portfolio, and organizational structure to ensure continued growth and success. He emphasized that the recent actions will solidify the company's foundation for future expansion. Last month, Brown-Forman reported a 5% decline in net sales during the first half of its fiscal year compared to the previous year. This downturn was primarily attributed to the divestitures of Finlandia and Sonoma-Cutrer brands. While acknowledging the challenging economic environment, Whiting expressed confidence in a stronger performance during the second half of the year. Brown-Forman's diverse portfolio encompasses other renowned brands such as Woodford Reserve and Old Forester bourbons, as well as Herradura and el Jimador tequilas.These cost-cutting measures come amidst a broader headwind facing the American whiskey sector. This includes an unprecedented surge in aging whiskey inventories and concerns about evolving consumer drinking habits. The threat of renewed trade tensions, particularly with the European Union, further compounds these challenges.The EU is poised to reinstate tariffs on American spirits at a 50% rate in March unless a resolution is found. This would inflict significant damage on the industry, which has already suffered substantial losses due to retaliatory tariffs imposed on American whiskey since 2018. The Kentucky Distillers’ Association warns that these tariffs have cost Kentucky's bourbon industry nearly half a billion dollars in exports since 2018.Eric Gregory, president of the Kentucky Distillers’ Association, highlights the industry's vulnerability to a confluence of factors, including crippling tariffs, escalating taxes, and shifts in consumer preferences that have dampened sales

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