Brown-Forman Corp., the spirits giant behind Jack Daniel’s Tennessee Whiskey, announced on Tuesday that it will be reducing its global workforce by about 12% and closing its barrel-making plant in Louisville. This move is in response to challenges faced by American whiskey producers, including shifting consumer trends and potential tariff issues.
The company expects the restructuring to save around $70 million to $80 million annually, some of which will be reinvested into its growth strategy. The closure of the cooperage, where barrels are made to age its spirits, will impact approximately 210 employees, both hourly and salaried. The plant is scheduled to close by April 25. Affected workers will receive severance pay, outplacement assistance, and other benefits, according to the company.
Brown-Forman announced it will now source barrels from an external supplier and anticipates generating over $30 million from selling its cooperage assets. The company, which established its own cooperage in 1945, has long focused on crafting barrels to enhance the distinct flavors of its bourbon by carefully selecting and using wood.
Brown-Forman has also made changes to its executive team, including the appointment of Jeremy Shepherd as chief marketing officer. Shepherd, who previously led the company’s USA & Canada commercial division, will now oversee marketing efforts.
These moves reflect the company’s ongoing commitment to evolving its strategy, portfolio, and organizational structure to drive growth, according to President and CEO Lawson Whiting. “Today’s announcement will ensure we have the right structure and teams in place to continue our growth path while making investments that will support future growth for generations,” Whiting said.
Last month, Brown-Forman reported a 5% decline in net sales for the first half of its fiscal year, compared to the previous year. The decrease was mainly due to the sale of its Finlandia vodka and Sonoma-Cutrer wine brands. Whiting attributed the results to “challenging economic conditions” but expressed confidence in a stronger performance in the second half of the year. In addition to Jack Daniel’s, Brown-Forman owns several other brands, including Woodford Reserve, Old Forester, Herradura, and el Jimador.
The company’s cost-cutting measures come as the broader American whiskey industry faces challenges, including large inventories of aging whiskey that will eventually hit the market. In Kentucky, a record 14.3 million barrels of bourbon are currently aging, according to the Kentucky Distillers’ Association.
The sector is also grappling with several issues, such as a decline in alcohol consumption among younger adults and the potential for American whiskey to be caught up in another trade dispute. Additionally, U.S. Surgeon General Vivek Murthy recently emphasized the need for better public awareness of the link between alcohol and cancer, suggesting that the risk should be clearly labeled on alcoholic beverages.
President-elect Donald Trump has threatened to impose new tariffs upon his return to the White House, a move that could heavily impact the American whiskey industry. During Trump’s first term, a trade dispute between the U.S. and the European Union resulted in significant declines in American whiskey exports, which were hit by retaliatory tariffs in 2018. The EU’s tariffs were in response to Trump’s imposition of tariffs on European steel and aluminum. A 2021 agreement temporarily suspended these tariffs, allowing U.S. distillers to regain some of their lost market share in Europe.
However, the EU is set to reintroduce tariffs on American whiskey at a 50% rate in late March unless action is taken to prevent it. Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, warned that such tariffs would severely harm distillers, who are already struggling with a challenging domestic market. Since 2018, retaliatory tariffs have cost Kentucky’s bourbon industry half a billion dollars in exports.
Eric Gregory, president of the Kentucky Distillers’ Association, highlighted the combination of high tariffs, rising taxes, and changing consumer trends as major hurdles for the industry. Kentucky and Tennessee, where iconic brands like Jack Daniel’s are produced, strongly supported Trump in the last election.