Here’s why Diddy sued Diageo over the vodka and tequila brands

Diddy attends The After, hosted by Entrepreneur and Doja Cat, powered by Ciroc Premium Vodka and DeLeon Tequila at Club Love in New York City, May 1, 2023.

Sherif Ziadat | Getty Images

Sean “Diddy” Combs is suing multinational spirits giant Diageo over alleged racial discrimination in the handling of its vodka and tequila brands, which Combs claims the company has classified as “black brands.”

in lawsuit Coombs’ attorneys filed Wednesday in New York Supreme Court in Manhattan, accusing Diageo of neglecting his brands Ciroc vodka and DeLeon tequila, and sidelining their appeal by marketing them as “urban” brands.

The rapper and entrepreneur, formerly known by the stage names Puffy Daddy and P. Diddy, alleged that Diageo also “sabotaged” his brand DeLeon tequila with shoddy packaging that “made the product look cheap,” while offering other brands to celebrities, such as actor George Clooney’s Casamigos tequila, More attention and resources.

Diageo acquired Clooney’s Casamigos in 2017 for $1 billion. It is the best-selling tequila brand in the United States, accounting for 12.6% of tequila sales in US retail stores, according to data from Nielsen and consulting firm Bump Williams.

Combs Wines and Spirits entered into an equal partnership with Diageo in 2007 to market and promote Ciroc. After the success of the partnership, Diageo co-purchased the DeLeon tequila brand with Combs in 2013.

Diageo, a multi-billion dollar spirits company headquartered in London, owns more than 200 brands, including the Don Julio tequila brand.

According to court documents, in 2022 Don Julio was distributed in 36% of its retail outlets, compared to 34.4% for Casamigos, and only 3.3% for DeLeon Combs.

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Combs claims his brands were “bereft” of production, distribution and sales resources. According to the lawsuit, Diageo CEO Stephen Rust told Combs that the run in 2019 was among the reasons the company limited its distribution to DeLeon and Ciroc. If Combs Wines and Spirits were owned by Martha Stewart, its brands would be distributed more widely, it is alleged, according to the lawsuit.

In a statement to CNBC, Diageo called the matter a “commercial dispute.”

“Our unwavering commitment to diversity within our company and the communities we serve is something we take seriously. We categorically deny the allegations made and will vigorously defend ourselves in the appropriate forum,” a Diageo spokesperson said in the statement.

The company said it has had a “productive and mutually beneficial relationship” with Combs for 15 years, “making significant investments that have resulted in financial success for all involved.”

“We are disappointed that our efforts to resolve this commercial dispute amicably have been ignored, and that Mr. Combs has chosen to harm a fruitful and valuable partnership. While we respect Mr. Combs as an artist and businessman, his claims lack merit, and we are confident that the facts will show that he was treated fairly.” .

Coombs’ attorneys are seeking a court order of “equal treatment” that they say Diageo was “contractually promised” under the partnership.

They are also seeking “billions of dollars in damages for Diageo’s negligence and violations” through separate legal actions.

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