Brown-Forman Announces Series of Strategic Initiatives for Growth

Rhea-AI Summary

Brown-Forman (NYSE:BFA,BFB) has announced major strategic restructuring initiatives to drive future growth. The company is implementing three key changes: restructuring its executive leadership team, reducing its global workforce by approximately 12% of 5,400 employees, and closing the Louisville-based Brown-Forman Cooperage by April 25, 2025.

The executive reorganization includes new appointments: Jeremy Shepherd as Chief Marketing Officer, Michael Masick as President Americas, Yiannis Pafilis as President Europe, Africa, Asia Pacific, and Chris Graven as Chief Strategy Officer. The cooperage closure will impact about 210 employees, with the company planning to source barrels externally.

These initiatives are expected to generate $70-80 million in annual cost savings, with some portion being reinvested for growth. The company will receive over $30 million from cooperage asset sales but expects to incur $60-70 million in severance and related costs.

Positive

• Expected annual cost savings of $70-80 million
• One-time proceeds of over $30 million from cooperage asset sales
• Streamlined organizational structure for improved operational efficiency
• Consolidation of commercial structure for better market synergies

Negative

• 12% reduction in global workforce affecting approximately 648 employees
• Closure of Louisville Cooperage impacting 210 employees
• One-time charges of $60-70 million for severance and related costs
• Loss of in-house barrel production capability

Insights

Financial Restructuring Analyst

The strategic restructuring at Brown-Forman represents a significant operational transformation with material financial implications. The 12% workforce reduction affecting 648 employees and the closure of the Louisville Cooperage signal a decisive shift toward operational efficiency. The projected $70-80 million in annual cost savings, combined with $30 million in cooperage asset sale proceeds, will substantially impact the company's financial profile.

The decision to outsource barrel production, while incurring $60-70 million in restructuring charges, reflects a calculated move to optimize the supply chain. The net financial benefit should materialize within 12-18 months, improving margins and operational flexibility. Think of this as renovating a house - there's an upfront cost, but the long-term savings in maintenance and efficiency make it worthwhile.

The consolidation of commercial leadership under regional presidents suggests a streamlined decision-making process that should accelerate market responsiveness and reduce operational overhead. This restructuring positions Brown-Forman to better compete in the premium spirits market where agility and cost efficiency are important success factors.

Industry Operations Expert

The closure of the Brown-Forman Cooperage marks a pivotal shift in the company's operational strategy. While barrel-making has been a historical vertical integration advantage, the move to external sourcing indicates that the economics of in-house cooperage no longer provide a competitive edge. This aligns with broader industry trends where specialized suppliers can achieve better economies of scale.

The restructuring of the executive team introduces a more streamlined regional approach, consolidating USA & Canada with Latin America and combining Europe with Africa and Asia Pacific. This geographical consolidation should enhance market coordination and reduce organizational layers. It's like moving from a house with many small rooms to an open floor plan - fewer walls mean better flow and communication.

The timing of these changes, particularly the cooperage closure by April 2025, allows for a measured transition that should minimize supply chain disruptions. The retention of barrel quality standards through external sourcing suggests careful supplier selection and quality control measures are in place.

Company To Restructure Globally, Louisville Cooperage To Close

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Brown-Forman Corporation (NYSE:BFA,BFB) announced today a series of strategic initiatives to position the company for continued growth in the dynamic global spirits market. These initiatives include restructuring the executive leadership team, implementing a workforce reduction affecting approximately 12% of the company’s global workforce, and closing the Louisville-based Brown-Forman Cooperage.

Chris Graven, Chief Strategy Officer (Photo: Business Wire)

“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 organization to grow and thrive,” said Lawson Whiting, President & Chief Executive Officer. “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.”

New Executive Leadership Team Appointments

Brown-Forman has restructured its executive leadership team to accelerate growth across its brands, business, and workforce. This includes consolidating and streamlining its commercial structure to leverage greater synergies and effectiveness in its markets.

Among the new appointments, effective as of today:

• Jeremy Shepherd has been named Chief Marketing Officer. Shepherd previously led the company’s USA & Canada commercial division.
• Michael Masick has been named President, Americas. Masick will continue commercial leadership for Mexico, South and Central America, and the Caribbean. In his expanded role, he will add USA & Canada to his remit.
• Yiannis Pafilis has been named President, Europe, Africa, Asia Pacific. Pafilis currently leads teams across Europe. In this expanded role, he will add Africa, the Asia Pacific region, and global travel retail.
• Chris Graven has joined the executive leadership team as Chief Strategy Officer. Graven has held roles in Brown-Forman’s HR, finance, marketing, and commercial organizations in her 20 years with the company.

Workforce Reduction

To enhance operational efficiency and agility, Brown-Forman has made the difficult decision to reduce its global workforce by approximately 12% of its 5,400 employees worldwide. Brown-Forman is deeply committed to supporting departing employees with comprehensive transition agreements that include severance, outplacement services, and other benefits to help them through this career change.

This organizational evolution will simplify and streamline Brown-Forman’s structure, allowing it to become a more agile and efficient organization and reinvest in the capabilities, technologies, brands, and people that will drive future growth.

Brown-Forman Cooperage Closure

Brown-Forman will close its Louisville-based barrel-making operation, Brown-Forman Cooperage, by April 25, 2025. This closure, which will impact approximately 210 hourly and salaried employees, is part of the overall 12% workforce reduction. Brown-Forman 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.

Collectively, these actions 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. In addition, the company will receive more than $30 million in proceeds in connection with the sale of the cooperage assets. 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.

"I want to express my sincere gratitude to our employees, particularly those impacted by these changes, for their dedication and contributions to Brown-Forman," said Whiting. "We are committed to supporting them through this transition and are confident that these strategic initiatives will ensure the company endures for generations to come."

Bios and photos for executive leadership team members are available on Brown-Forman.com.

About Brown-Forman:

Brown-Forman Corporation has been building exceptional spirits brands for more than 150 years, responsibly upholding our founding promise of “Nothing Better in the Market.” Our portfolio of premium brands includes the Jack Daniel’s Family of Brands, Woodford Reserve, Herradura, el Jimador, Korbel, New Mix, Old Forester, The Glendronach, Glenglassaugh, Benriach, Diplomático Rum, Chambord, Gin Mare, Fords Gin, Slane, and Coopers’ Craft. With a team of approximately 5,400 employees worldwide, we proudly share our passion for premium beverages in more than 170 countries. Discover more about us at brown-forman.com and stay connected through LinkedIn, Instagram, and X.

Forward-Looking Statements

This press release contains statements that are “forward-looking statements” as defined under U.S. federal securities laws. These forward-looking statements reflect management’s expectations or projections regarding future events and speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections.

For further information on factors that could cause our actual results to differ materially from our historical experience or from our current expectations or projections, please refer to our public filings, including the “Risk Factors” section of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250114888794/en/

Elizabeth Conway

Director

External Communications

502-774-7737

elizabeth_conway@b-f.com

Sue Perram

Vice President

Investor Relations

502-774-6862

sue_perram@b-f.com

Source: Brown-Forman Corporation

FAQ

How much will Brown-Forman save annually from its 2025 restructuring?

Brown-Forman expects to generate approximately $70-80 million in annual cost savings from its restructuring initiatives.

How many employees will be affected by Brown-Forman's 2025 workforce reduction?

The workforce reduction will affect approximately 12% of Brown-Forman's 5,400 global employees, impacting about 648 positions.

When will Brown-Forman close its Louisville Cooperage facility?

Brown-Forman will close its Louisville-based Cooperage by April 25, 2025.

What is the expected one-time cost for BF's 2025 restructuring?

Brown-Forman expects to incur approximately $60-70 million in aggregate charges for severance and related costs.

Who are the new executive appointments in Brown-Forman's 2025 restructuring?

The new appointments include Jeremy Shepherd as CMO, Michael Masick as President Americas, Yiannis Pafilis as President Europe, Africa, Asia Pacific, and Chris Graven as Chief Strategy Officer.