Brown-Forman is under pressure as Slane production pauses
Brown-Forman investors will be looking for signs of recovery when the spirits group reports results later this week. The update comes as the company pauses production at its Slane Irish whiskey distillery amid continuing challenges across the global spirits sector.
Investors will examine Brown-Forman’s results closely later this week for any signs of an upturn in its fortunes following the news that it is to halt production at Slane, its Irish whiskey distillery.
The owner of the Jack Daniel’s bourbon brands has been hit by a series of setbacks over the past five years during which the shares have slumped from US$80 to just US$25 today.
In that period Brown-Forman has been embroiled in tariff wars, a public switch away from bourbon and a sales slump following the end of Covid.
A difficult few years
Last year it made 12% of its staff redundant and sold its cooperage interests. Earlier this spring the controlling Brown family aborted merger talks with Pernod Ricard, largely over future control of the company, and then rejected a US$15 billion takeover offer from Sazerac.
Earlier this year, the company paused production at its Glenglassaugh Scotch distillery on Speyside and shifted operations into what it called a “shared production model” with the nearby Benriach facility.
Slane production paused
Brown-Forman told Robb Report: “Demand planning and production forecasting are critical parts of our business; standard practice requires adjusting production to align with market conditions.
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“We have a robust supply of maturing whiskey, ensuring there will be no interruption in the availability of Slane for our customers worldwide.
“Additionally, the Slane visitor centre will remain open, and tours are still available for trade and VIP guests.”
However, a social media post from a Slane employee claimed the distillery was shutting down “for the next number of years”, to which the company countered by replying that a reopening would be “determined by demand planning and forecasting, though it is listed as temporary.”
Major investment at Slane
After buying the property in 2015, Brown-Forman spent about US$50 million to build a state-of-the-art distillery on the grounds of the historic Slane Castle Estate in County Meath.
Wider challenges for Irish whiskey
In April, Pernod Ricard’s Irish Distillers subsidiary, which produces the best-selling Jameson range, halted output at its Midleton distillery in County Cork and although it said it would reopen this summer, no date has been specified.
The French group also halted the completion of a €250 million expansion at the distillery.
Industry awaits direction
With weakening demand, excess inventory and ongoing uncertainty across key markets, Brown-Forman’s latest results will be closely scrutinised for evidence that the company’s restructuring efforts are beginning to gain traction. Investors will also be keen to hear management’s outlook for both American bourbon and Irish whiskey as the sector continues to adjust to changing consumer habits.
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