Key Points:
- Brown-Forman, the owner of Jack Daniel’s, is laying off 640 workers and closing its bourbon cooperage in Louisville, Kentucky.
- The company will now source bourbon barrels from an external supplier to cut costs and streamline its structure.
- The restructuring plan is expected to save $70 to $80 million annually and allow for investments in growth-driving technologies and brands.
Insight:
Brown-Forman, known for its bourbons, tequilas, vodkas, and gins, experienced a 5% decline in net sales in the latter half of 2024, with whiskey sales dropping by 1%.
To combat this slowdown, the company is reducing operational costs through workforce cuts.
The decline in spirits consumption, particularly among younger consumers opting for alternative beverages, has impacted Brown-Forman’s sales.
CEO Lawson Whiting emphasized the importance of restructuring to ensure sustained growth and announced key hires to support the company’s future endeavors.
Analysts predict that challenges in the spirits market will persist, affecting brands like Jack Daniel’s, which may face competition from premium products.
Over the years, Brown-Forman has divested certain brands while focusing on canned RTD drinks like Jack Daniel’s Country Cocktails and collaborations with partners like Coca-Cola.
Following a trend in the beverage industry, Brown-Forman joins other companies in streamlining operations to adapt to changing consumer preferences and market conditions.