(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 demand for alcohol.
The company has struggled with high input costs, including raw materials such as agave and wooden barrels, and raised prices for its whiskey brands to protect margins.
Consumers have also shifted to cheaper brands as they face higher costs of living. Brown-Forman peer Constellation Brands cut its full-year forecast last week, signaling uncertainty around consumer spending on its beers and spirits.
Brown-Forman said it will close its Louisville-based keg manufacturing facility by April 25, which will affect about 210 employees and is part of an overall reduction in the global workforce. The company said it will source barrels from an unnamed third-party 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 guidelines on drinking limits to be reevaluated.
Brown-Forman’s restructuring plan is expected to generate $70 million to $80 million in annualized cost savings. The company is expected to incur between $60 million and $70 million in severance and other charges related to the layoffs.
The company also said it will restructure its executive leadership, including the appointment of a new chief marketing officer and chief strategy officer.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Shilpi Majumdar)