(Reuters) -Brown-Forman said on Tuesday it will lay off about 12% of its global workforce of 5,400 employees as the maker of Jack Daniel’s looks to cut costs amid weak alcohol demand.
The company has faced high input costs, including those of raw materials such as agave and wood barrels, and has increased prices for its whiskey brands to protect margins.
Consumers have also switched to cheaper brands as they face higher costs of living. Brown-Forman’s peer Constellation Brands cut its full-year forecast last week, flagging uncertainty around consumer spending on its beers and spirits.
Brown-Forman said it will close its barrel plant in Louisville by April 25, impacting about 210 employees and part of the overall global workforce reduction. The company said it will source barrels from an undisclosed third-party supplier in the future.
The announcement comes just days after the US Surgeon General said alcoholic drinks must carry a cancer risk warning on their label and called for a reassessment of alcohol consumption limit guidelines.
Brown-Forman’s restructuring plan is expected to deliver approximately $70 million to $80 million in annualized cost savings. The company is expected to pay approximately $60 million to $70 million in severance and other costs related to the layoffs.
The company also said it will restructure its executive leadership, including the appointment of a new Chief Marketing Officer and a Chief Strategy Officer.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Shilpi Majumdar)