By Jordan Valinsky, CNN

New York (CNN) — Brown-Forman, the parent company of Jack Daniel’s whiskey and Woodford Reserve bourbon, is laying off approximately 12% of its 5,400 employees amid a downturn in spirits sales.

The Louisville-based company has hiked prices in recent years to offset inflation and shield itself from the rising costs of materials, like wood for barrels. Inflation-weary drinkers have simultaneously dialed back their spending on pricey liquors, putting premium spirits makers like Brown-Forman in financial peril.

Brown-Forman said the job cuts, which amount to nearly 700 people, will “enhance operational efficiency and agility.” It’s laying off 200 people by closing a Louisville cooperage, where wooden barrels are produced to age whiskey and bourbon.

Closing the cooperage and the layoffs will save between $70 and $80 million in annualized cost savings, according to Brown-Forman. A portion of that is “expected to be reinvested to accelerate growth,” the company said in a statement. Barrels will be sourced from an external supplier at a “competitive price,” the company added.

“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 CEO Lawson Whiting.

The announcement comes a few weeks after the US Surgeon General issued a warning that alcohol consumption can increase the risk of cancer and called for an updated health warning label on alcoholic beverages.

Following a pandemic peak in 2020 through 2022, spirit companies have been contending with slowing sales. Brown-Forman first sounded the alarm in 2023 when it reported whiskey sales were falling — a stark contrast compared to a year prior when they were soaring by double-digit percentage points.

Brown-Forman’s (BF.B) shares have lost more than 30% of their value over the past year. The company has a diverse portfolio of liquor, owning Herradura tequila, The Glendronach scotch whisky, Diplomático Rum and Fords Gin among others. It also produces a canned cocktail with Coca-Cola.

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