Brown-Forman has announced plans to lay off about 12% of its global workforce of 5,400 employees, as the Jack Daniel's maker looks to reduce costs amid weak alcohol demand.
The company has struggled with high input costs, including of raw materials such as agave and wood barrels, and raised prices for its whiskey brands to shield margins.
Consumers have also traded down to cheaper brands as they deal with higher costs of living. Brown-Forman's peer Constellation Brands cut its annual forecast last week and flagged uncertainty around consumer spending on its beers and spirits.
Restructuring
Brown-Forman said it will close its Louisville-based barrel-making facility by 25 April, which will impact about 210 employees and is part of the overall global workforce reduction. The company said it will source barrels from an unnamed external supplier in the future.
The announcement comes just days after the US Surgeon General said alcoholic drinks should carry a warning about cancer risks on their labels and called for guidelines on alcohol consumption limits to be reassessed.
Brown-Forman's restructuring plan is expected to generate about $70 million (€68.million) to $80 million (€77.7 million) in annualised cost savings. The company is expected to incur about $60 million (€58.3 million) to $70 million (€68 million) in severance and other charges related to the layoffs.
Appointments
The company also said it will restructure its executive leadership, including appointing a new chief marketing officer and a chief strategy officer.
The company has named Jeremy Shepherd as its new chief marketing officer and Michael Masick as the president of its Americas unit.
Elsewhere, Yiannis Pafilis has been named president of the Europe, Africa and Asia Pacific division, while Chris Graven joined the executive leadership team as chief strategy officer.
Currently, Pafilis leads teams across Europe and the new role will include Africa, the Asia Pacific region, and global travel retail.
News by Reuters, additional reporting by ESM.
