Jack Daniel’s parent Brown-Forman is cutting its workforce and closing its barrel-making plant

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LOUISVILLE, Ky. (AP) — Spirits giant Brown-Forman Corp. said Tuesday it’s reducing its global workforce by about 12% and closing its hometown barrel-making plant in Louisville. The cost-cutting moves come as American whiskey producers face stiff challenges from changing consumer trends and renewed tariff threats.

The actions are projected to produce about $70 million to $80 million in annualized cost savings, a portion of which is expected to be reinvested as part of the company’s growth strategy, said Louisville-based Brown-Forman, whose flagship brand is Jack Daniel’s Tennessee Whiskey.

The company’s cooperage, where barrels are made to store and age its spirits, will close by April 25, affecting about 210 hourly and salaried employees, it said. The closure is part of the overall 12% reduction in the company’s 5,400-employee global workforce. Laid-off workers will receive severance, outplacement services and other benefits, the company said.

Brown-Forman said it will source barrels from an external supplier and expects to receive more than $30 million from selling cooperage assets. The company established its own cooperage in 1945 — raising barrels and honing the craft of using wood to create distinct flavor characteristics to bourbon.

Brown-Forman also announced changes in its executive team, including the appointment of Jeremy Shepherd as chief marketing officer. Shepherd previously led its USA & Canada commercial division.

The actions reflect the venerable company’s “relentless focus on evolving our strategy, our portfolio and our organization to grow and thrive,” said Brown-Forman President and CEO Lawson Whiting. “Today’s announcement will ensure we have the structure and teams in place to continue on this path, while also making investments that we believe will facilitate growth for generations to come.”

Last month, Brown-Forman reported a 5% decline in net sales for the first six months of its fiscal year compared to the year-ago period. The decline was largely due to its Finlandia and Sonoma‑Cutrer divestitures, the company said. Whiting said the results came amid “challenging economic conditions” but he predicted a stronger performance in the second half of the year. Brown-Forman’s many brands also include Woodford Reserve and Old Forester bourbons and Herradura and el Jimador tequilas.

The company’s cutbacks come as the overall American whiskey sector faces headwinds that coincide with massive inventories of aging whiskeys that will someday reach the market. In Kentucky, a record 14.3 million barrels of bourbon are aging, the Kentucky Distillers’ Association said last month.

Industrywide challenges include indications that younger adults are drinking less alcohol and the threat of American whiskey getting entangled in another trade war. Meanwhile, U.S. Surgeon General Vivek Murthy said recently that Americans should be better informed about the link between alcohol and cancer. The risk should be clearly labeled on drinks Americans consume, Murthy proposed.

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Republican President-elect Donald Trump has threatened to impose new tariffs with his return to the White House. During Trump’s first term, American whiskey distillers got caught up in a trans-Atlantic trade fight, causing deep drops in exports to the European Union — the industry’s biggest overseas market. The EU imposed a retaliatory tariff on those spirits in 2018 in response to Trump’s decision to slap tariffs on European steel and aluminum. A 2021 deal suspended those tariffs on American spirits, and U.S. distillers began clawing back lost market share in the EU.

A looming return of EU tariffs — at an even higher rate — on American whiskeys would be devastating to distillers, said Chris Swonger, president and CEO of the Distilled Spirits Council of the United States.

“The U.S. spirits industry is contending with a challenging U.S. marketplace, and tariffs would only exacerbate these challenges,” Swonger said Tuesday.

The EU is set to reinstate tariffs on American whiskey at a 50% rate in late March if nothing is done to head it off, the Kentucky Distillers’ Association said. Retaliatory tariffs from the EU and other countries have cost Kentucky’s bourbon industry a half-billion dollars in exports since 2018, it said. Kentucky and Tennessee, where Jack Daniel’s is crafted, overwhelmingly backed Trump in last year’s election.

“We are up against a triple threat of back-breaking tariffs, snowballing taxes and shifts in consumer trends that have slowed sales,” Eric Gregory, president of the distillers’ association, said recently.