Always bad news when these things happen! Brown-Forman, famous maker of Jack Daniel’s Tennessee Whiskey, a prominent name in the global spirits market with a 155-year legacy, has recently announced significant changes to its operations, including a reduction in its workforce and the closure of its long-standing barrel-making facility in Louisville. This strategic shift reflects the company’s response to a confluence of evolving market dynamics and economic pressures. Greatly contrasting with their neighbours Buffalo Trace, who are expanding currently.
The workforce reduction will impact approximately 12% of Brown-Forman’s global workforce of 5,400 employees, translating to around 648 individuals. Notably, this includes the closure of the Brown-Forman Cooperage by April 25th 2025, affecting approximately 210 hourly and salaried employees. This decision to cease in-house barrel production marks a significant change for the company, which has historically maintained this aspect of its operations since 1945, providing a unique level of control over the flavour profiles of its whiskeys. Affected employees will receive severance packages, outplacement services, and other benefits to support their transition. The move to outsource barrel production signals a prioritisation of cost efficiency, aligning Brown-Forman with the practices of most other whiskey producers. The company aims to streamline its structure and reinvest the anticipated $70 to $80 million in annual cost savings to fuel future growth.
Several factors appear to be driving these strategic decisions. Changing consumer preferences, with a noted trend of younger adults consuming less alcohol and a rise in popularity of ready-to-drink beverages and other alternatives, present a challenge to traditional spirits producers. Furthermore, the potential reinstatement of tariffs on American whiskey by the European Union poses a significant threat to exports, a concern echoed by the Kentucky Distillers Association. Please also see Jack Daniel’s maker says Canada pulling US alcohol off shelves ‘worse than tariff’. The company also reported a 5% decline in net sales for the first half of its fiscal year, attributed to challenging economic conditions. In certain segments, such as the tequila portfolio, a competitive environment in the United States and macroeconomic challenges in Mexico have also contributed to sales declines. The divestiture of brands like Finlandia Vodka and Sonoma-Cutrer has further impacted net sales figures. Despite these headwinds, certain brands within Brown-Forman’s portfolio, such as Woodford Reserve and Jack Daniel’s Tennessee Whiskey, always propelled by the always-american-icon Jack Daniel’s Black Label Tennessee Whiskey 70cl, have shown growth, indicating a mixed performance across its offerings.
Brown-Forman views these restructuring efforts as essential to enhance operational efficiency and agility, allowing for greater investment in key brands, technologies, and its workforce to drive future growth. The company has also restructured its executive leadership team as part of this strategic realignment. The closure of the cooperage is expected to generate over $30 million in proceeds from the sale of assets. While incurring approximately $60 to $70 million in charges related to severance and the closure. these actions are projected to deliver substantial annual cost savings.
Brown-Forman’s recent difficulties, evidenced by workforce reductions and the closure of its cooperage, reflect a proactive response to a shifting spirits landscape characterised by evolving consumer tastes, potential trade headwinds, and broader economic uncertainties. These strategic moves underscore the company’s commitment to adapting its operations to ensure long-term sustainability and growth in a dynamic global market.
References :
https://www.youtube.com/watch?v=3IGitn8AYW8
https://www.thespiritsbusiness.com/2025/01/brown-forman-axes-more-than-600-jobs-and-closes-cooperage/
https://investors.brown-forman.com/investors/news-releases/press-release/2025/Brown-Forman-Reports-Year-to-Date-Fiscal-2025-Results-Reaffirms-Full-Year-Growth-Outlook/default.aspx
https://www.brown-forman.com/article/brown-forman-announces-series-strategic-initiatives-growth-company-restructure-globally
