(Reuters) – Brown-Forman said on Tuesday it would lay off about 12% of its 5,400 employees worldwide, as the maker of Jack Daniel’s seeks to cut costs amid weak demand for alcohol.
The company has faced high input costs, including raw materials such as agave and wooden barrels, and has raised prices on its whiskey brands to protect margins.
Consumers have also shifted to cheaper brands as they face a higher cost of living. Constellation Brands, Brown-Forman’s peer, lowered its annual forecast last week and signaled uncertainty surrounding consumer spending on beer and spirits.
Brown-Forman announced it will close its Louisville-based barrel manufacturing plant by April 25, impacting approximately 210 employees and part of overall global workforce reductions. The company said it would source barrels from an unnamed external supplier in the future.
The announcement comes just days after the U.S. Surgeon General said alcoholic beverages should carry a warning about cancer risks on their labels and called for a reevaluation of guidelines on alcohol consumption limits.
Brown-Forman’s restructuring plan is expected to generate approximately $70 million to $80 million in annualized cost savings. The company is expected to pay between $60 million and $70 million in severance and other costs related to the layoffs.
The company also announced it would restructure its executive management, including appointing a new chief marketing officer and chief strategy officer.
(Reporting by Juveria Tabassum in Bangalore; editing by Shilpi Majumdar)
