Brown-Forman intends to reduce about 12% of its global workforce as part of the restructuring

(Reuters) – Brown-Forman Co said on Tuesday it would lay off about 12% of its global workforce of 5,400 employees, as the Jack Daniel’s maker looks to cut costs amid weak demand for alcohol.

The company has struggled with rising input costs, including the costs of raw materials such as agave and wood barrels, and has raised prices for its whiskey brands to protect profit margins.

Consumers have also turned to cheaper brands as they deal with rising costs of living. Brown-Forman’s Constellation Brands lowered its annual forecast last week and cited uncertainty about consumer spending on beer and spirits.

Brown-Forman said it will close its Louisville-based barrel-making facility by April 25, which will affect about 210 employees and is part of an overall reduction in its global workforce. The company said that it would import barrels from an unnamed external supplier in the future.

The announcement comes just days after the US Surgeon General announced that alcoholic beverages should carry a warning about cancer risks on their labels, and called for a re-evaluation of guidelines on alcohol consumption limits.

Brown-Forman’s restructuring plan is expected to deliver approximately $70 million to $80 million in annual cost savings. The company is expected to incur approximately $60 million to $70 million in severance pay and other fees related to the layoffs.

The company also said it will restructure its executive leadership, including appointing a new chief marketing officer and chief strategy officer.

(Reporting by Juviria Tapasom in Bengaluru; Editing by Shilpi Majumdar)