Brown-Forman to Cut Workforce, Close Barrel-Making Plant Amid Industry Challenges

Brown-Forman Corp., the parent company of Jack Daniel's, has announced a 12% reduction in its global workforce and the closure of its barrel-making plant in Louisville, Kentucky. This strategic move is expected to save the company between $70 million and $80 million annually. The closure of the Louisville plant, scheduled by April 25, will affect 210 employees, with the company planning to source barrels from external suppliers thereafter.

The decision comes amid challenges posed by shifting consumer trends and the looming threat of tariffs on American whiskey exports. The European Union (EU) had previously imposed a 25% tariff on American whiskey in 2018, which was lifted in 2021. However, there are concerns about the potential reinstatement of these tariffs, which could adversely affect the industry.

In addition to workforce reductions and plant closure, Brown-Forman anticipates gaining over $30 million from asset sales. The company is offering severance packages, outplacement services, and other benefits to the affected employees. This restructuring is part of a broader strategy to prioritize strategic investments and adapt the organizational structure for sustained growth.

The American whiskey industry has been facing headwinds, including a decline in sales volumes. Reports indicate that U.S. whiskey sales volumes fell by 1.2% in 2023 and by 4% in early 2024. Factors contributing to this downturn include changing consumer preferences, increased health consciousness, and competition from alternative beverages.

The potential reinstatement of EU tariffs poses a significant threat to American whiskey exports. Retaliatory tariffs from the EU and other countries have previously cost Kentucky's bourbon industry a half-billion dollars in exports since 2018. The EU is set to reinstate tariffs on American spirits at a 50% rate in March if no action is taken to prevent it.

Brown-Forman's proactive measures reflect the company's efforts to navigate these challenges and maintain its market position. By streamlining operations and reducing costs, the company aims to enhance its resilience against market fluctuations and external pressures.

The broader alcohol industry is also experiencing a challenging period. Alcohol stocks have had a difficult start to 2025, influenced by potential tariffs, new health advisories, and ongoing consumer inflation concerns. Companies like Constellation Brands and Anheuser-Busch InBev have seen stock declines, reflecting investor apprehensions about the sector's future performance.