Brown-Forman sells shuttered cooperage for $13.66m
Missouri-based barrel maker Independent Stave Company (ISC) has purchased Brown-Forman’s Louisville cooperage for US$13.66 million.
In January, the Jack Daniel’s maker announced it would close its Louisville-based barrel-making operation by April, while reducing its 5,400-strong global workforce by approximately 12%.
Now, deed records show that Kentucky Cooperage Investments, a newly created business that is a subsidiary of ISC, bought the 16-acre property on 2 May.
However, marketing and communications director for ISC Teri Smith confirmed in a statement that the firm has no current plans to restart production at the site.
“At the time of acquisition, the cooperage was not in operation, and we have no plans to reopen it. The property will be sold at a later date,” Smith said.
Brown-Forman first purchased the site from the Blue Grass Cooperage Company in 1994 for US$1.47m.
Under the company’s ownership, the cooperage, which first opened in 1945, employed 210 hourly and salaried workers. The site underwent a US$45m modernisation project in 2017, which enabled workers to produce more than 2,500 barrels daily.
Last year, the company said the Louisville cooperage produced approximately half the barrels for Brown-Forman’s portfolio of brands while housing “ongoing barrel research, development, and innovation for brands and new expressions”.
However, Lawson Whiting, Brown-Forman president and CEO, said in a March earnings call that wood costs were significantly impacting the company’s profit margins and the closure of the Louisville cooperage represents the final step in Brown-Forman’s wood supply chain strategy, which, he said “will create efficiencies and allow us to further optimise our capital allocation.”
The firm previously said it expected the closure of the cooperage to save it up to US$80m each year, noting the cooperage industry has evolved to the point where external suppliers can provide price-competitive barrels at a high quality.
As such, the company said it would now source barrels from an external supplier, but declined to name which one.
The company also said it expected to generate approximately US$30m in asset sales, and a portion of those funds raised would be reinvested ‘to accelerate growth’.
The sale to ISC comes one year after Brown-Forman announced it would sell its Alabama cooperage, which opened in 2014, to the company. Brown-Forman reported a US$12m gain on its sale.
Last week, Brown-Forman reported organic full-year revenue growth of 1% despite a decline in its fourth quarter and struggling Tequila sales.
Whiting believes Gin Mare and Diplomático could be key to driving long-term growth.
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