(Reuters) – Jack Daniel’s maker Brown-Forman said on Tuesday it would lay off about 12% of its 5,400 employees worldwide as it seeks to cut costs due to weak demand for alcohol.
The company struggled with high input costs, including raw materials such as agave and wooden barrels, and raised prices on its whiskey brands to protect margins.
Consumers are also turning to cheaper brands to cope with the rising cost of living. Brown-Forman’s peer Constellation Brands last week cut its full-year outlook, citing uncertainty over consumer spending on its beer and spirits products.
Brown-Forman announced it will close its Louisville-based barrel manufacturing facility by April 25, a move that will affect about 210 employees and is part of a global workforce reduction. It will be. The company said it will source barrels from unnamed external suppliers in the future.
The announcement comes days after the U.S. Surgeon General said alcoholic beverage labels should carry warnings about cancer risks and called for a reassessment of guidelines on limiting alcohol consumption.
Brown-Forman’s restructuring plan is expected to save approximately $70 million to $80 million annually. The company expects to incur approximately $60 million to $70 million in severance and other costs related to the layoffs.
The company also announced that it will reorganize its management team, including the appointment of a new chief marketing officer and chief strategy officer.
(Reporter Juveria Tabassum in Bengaluru; Editing by Shilpi Majumdar)
