Brown-Forman's Strategic Moves: Workforce Reduction and Cooperage Closure

Brown-Forman Corporation (NYSE:BFA,BFB), the iconic spirits company behind brands like Jack Daniel's and Woodford Reserve, has announced a series of strategic initiatives to position itself for continued growth in the dynamic global spirits market. These initiatives include restructuring the executive leadership team, implementing a workforce reduction, and closing the Louisville-based Brown-Forman Cooperage. The company aims to enhance operational efficiency, agility, and competitiveness while reinvesting in capabilities, technologies, brands, and people to drive future growth.

Workforce Reduction and Cooperage Closure

Brown-Forman has made the difficult decision to reduce its global workforce by approximately 12%, impacting around 648 employees worldwide. This organizational evolution is expected to deliver annualized cost savings of approximately $70 to $80 million. The company is committed to supporting departing employees with comprehensive transition agreements, including severance, outplacement services, and other benefits to help them through this career change.

In addition to the workforce reduction, Brown-Forman will close its Louisville-based barrel-making operation, Brown-Forman Cooperage, by April 25, 2025. This closure will impact approximately 210 hourly and salaried employees and is part of the overall 12% workforce reduction. The company will offer severance, outplacement services, and benefits consistent with their terms of employment. Moving forward, Brown-Forman will source barrels from an external supplier to ensure a steady supply of the same high-quality barrels at a competitive price.

The closure of the cooperage is projected to save between $70 and $80 million a year and allow the sale of the cooperage, which could bring more than $30 million in proceeds. The company expects to incur approximately $60 to $70 million in aggregate charges for severance and related costs associated with the workforce reduction and cooperage closing.



New Executive Leadership Team Appointments

Brown-Forman has restructured its executive leadership team to accelerate growth across its brands, business, and workforce. The new appointments include:

* Jeremy Shepherd as Chief Marketing Officer, previously leading the company's USA & Canada commercial division.
* Michael Masick as President, Americas, expanding his role to include USA & Canada in addition to his current commercial leadership for Mexico, South and Central America, and the Caribbean.
* Yiannis Pafilis as President, Europe, Africa, Asia Pacific, expanding his role to include Africa, the Asia Pacific region, and global travel retail in addition to his current leadership across Europe.
* Chris Graven joining the executive leadership team as Chief Strategy Officer, bringing her extensive experience in Brown-Forman's HR, finance, marketing, and commercial organizations.

Reinvesting in Growth

Collectively, these strategic initiatives are projected to deliver approximately $70 to $80 million in annualized cost savings, a portion of which is expected to be reinvested to accelerate growth. The company will receive more than $30 million in proceeds in connection with the sale of the cooperage assets. Brown-Forman is confident that these strategic initiatives will ensure the company's endurance for generations to come.



In conclusion, Brown-Forman's strategic moves, including the workforce reduction and cooperage closure, aim to enhance operational efficiency, agility, and competitiveness while reinvesting in capabilities, technologies, brands, and people to drive future growth. The company is committed to supporting its employees through this transition and is confident that these initiatives will position it for continued success in the dynamic global spirits market.