More than 600 Brown-Forman workers are set to lose their jobs as the global spirits and wine maker seeks to realise up to $80m in annualised costs savings.
A multi-pronged initiative was revealed today (14 January) that also includes the planned closure and sale of a barrel-production facility in the US city of Louisville and the restructuring of its executive leadership team.
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The Jack Daniel’s brand owner said around 12% of its 5,400-strong global workforce will be cut “to enhance operational efficiency and agility”.
Around 210 hourly and salaried jobs will go – part of the 12% group-wide staff reductions – connected with the closure of the Brown-Forman Cooperage in Louisville, slated for before the end of April this year.
Together, those moves will cost the New York-listed business around $60-70m in terms of severance packages and related expenses, but Brown-Forman said it expects to receive more than $30m from the facility sale.
“This organisational evolution will simplify and streamline Brown-Forman’s structure, allowing it to become a more agile and efficient organisation and reinvest in the capabilities, technologies, brands and people that will drive future growth”, according to a statement from the company.
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By GlobalDataBrown-Forman’s shares moved between positive and negative territory in the wake of the announcement. The stock traded at $34.46 as of 16:25 GMT today.
Brown-Forman said the barrel plant closure and employee reductions will deliver around $70-80m in annualised cost savings for the business, some of which will “be reinvested to accelerate growth”.
Growth was absent when Brown-Forman announced its first-half results in December. Reported net sales dropped 5% to $2bn in the six months to 31 October and was flat on an organic basis. Operating income, gross profits and margins also declined.
At the time, president and CEO Lawson Whiting cited “challenging economic conditions” for the performance but said growth would return in the back half of the 2025 financial year.
Commenting today, he said: “In 2025, Brown-Forman celebrates 155 years of delivering ‘Nothing Better in the Market’. We have achieved this impressive milestone in part because of our relentless focus on evolving our strategy, our portfolio, and our organisation to grow and thrive.
“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.”
Giving their take, Bernstein analysts wrote in a research note that the announcements were “an incremental positive for investors amidst lots of uncertainty”, albeit they said Brown-Forman’s shares were trading at “all-time lows”.
Led by Nadine Sarwat, the Bernstein analysts framed their reaction in the context of a “perfect storm” – the “normalisation” of the US spirits market; potential import tariffs by the incoming Trump administration and possible retaliatory measures; and the “potential for a US whiskey supply glut”.
They added: “The pessimist would argue that today’s announcement might imply that BF believes that some challenges the spirits industry faces today are permanent and is adjusting the business accordingly.
“The optimist would argue that cost-savings programmes are a normal (and healthy) part of doing business for staples, and that today’s announcement shows welcome proactivity by management.”
At the half-way results stage in December, Brown-Forman said operating income was down 7% at $622m and fell 3% in organic terms. Gross profit dropped 8% and 4% across those metrics, while the associated margin decreased 240 basis points.
Net income deteriorated by 4% to $453m, with diluted EPS down 3% at $0.96.
While Brown-Forman maintained its full-year organic sales guidance in December at a 2-4% growth rate and operating income in the same range, it said the “outlook is tempered by our belief that global macroeconomic and geopolitical uncertainties will continue to create a challenging operating environment”.
In terms of executive changes, the company said today that Michael Masick will become president of the Americas division, adding the US and Canada to his existing remit of Mexico, South and Central America, and the Caribbean.
Yiannis Pafilis has been appointed president of Europe, Africa and the Asia Pacific, with the latter two regions added to his current role.
Chris Graven, meanwhile, has been promoted to chief strategy officer having held various positions in finance, HR and marketing during her 20 years with the business.
