Diddy is suing Diageo Spirits for focusing too much on George Clooney’s Casamigos tequila and not enough on itself, calling the neglect racially motivated.
It’s Sean “Diddy” Combs Sue Diageo alleges that the liquor company has neglected its DeLeón tequila brand, which it co-owns, while investing resources in two other tequila brands, including Casamigos, the George Clooney-backed brand that Diageo bought in 2017.
Diddy also accused Diageo of racial discrimination and claimed in his court filing that the company had labeled DeLeón a “black brand,” which Diageo has denied.
“This is a business dispute and we are saddened that Mr. Combs has chosen to rephrase this matter,” a company spokeswoman said. “We take our unwavering commitment to diversity within our company and the communities we serve very seriously.”
Wine and spirits company Diddy’s Combs filed the lawsuit Wednesday in the New York State Supreme Court in Manhattan. Combs is seeking an injunction to compel Diageo to comply with its 2013 joint venture agreement and subsequent written agreements between Combs and Diageo previously signed to resolve any grievances Combs may have raised, the court filing said .
According to the filing, Combs has complained to executives at the liquor company about their management of DeLeón for years. The issues he raised include chronically out-of-stock products, low distribution presence, a “botched” redesign, and confusing pricing changes. Diddy also reportedly protested Diageo’s decision not to allocate available agave to DeLeón during a shortage of the ingredient in 2020 and 2021.
Combs and Diageo joined forces in 2007 to develop the company’s Cîroc vodka brand. Combs became responsible for the brand’s strategic marketing and worked with the company on new product development. Cîroc’s sales rose rapidly after the deal.
In 2013, as tequila was gaining popularity in the US, Combs and Diageo formed a joint venture to buy DeLeón, a then-little-known brand of tequila that sells for more than $1,000 a bottle in some Hollywood bars became. While Diageo already had a stake in tequila brand Don Julio, within a few years the company took full control of that brand and added a third brand to its portfolio, Casamigos — the brand co-founded by George Clooney.
Casamigos is now the top-selling U.S. tequila brand, accounting for 12.6% of tequila sales in U.S. retail stores, according to Nielsen data analyzed by consulting firm Bump Williams. Don Julio is number three on this list with 12.1% of tequila sales. DeLeón now ranks 28th and represents 0.4% of tequila sales.
DeLeón retails for $40-$60 a bottle these days, while Combs regularly promotes both DeLeón and Cîroc on Instagram. According to court records, DeLeón was distributed in 3.3% of retail stores in 2022, compared to 36% for Don Julio and 34.4% for Casamigos.
Combs also alleges that Diageo chief executive Stephen Rust told him in 2019 that race was one of the reasons the company restricted distribution of Combs-backed spirits and told him that if Combs was Martha Stewart, he would Brand more widely distributed.
That same year, Diageo also introduced a redesigned DeLeón bottle with a label that was “prone to blistering, making the product look cheap,” according to the court filing. “Not surprisingly, the rebranded DeLeón product was unsuccessful.”
“DeLeón continues to be sabotaged by management and the neglect of Diageo,” Combs wrote to Diageo CEO Ivan Menezes in 2020, stating that the company does not treat Combs as a partner and that their unilateral decisions have damaged the brand.
“We have had a productive and mutually beneficial relationship with Mr. Combs on various business ventures for more than 15 years and have made significant investments that have resulted in financial success for all involved,” said the Diageo spokeswoman. “We are disappointed that our efforts to resolve this business dispute amicably have been ignored and that Mr. Combs has chosen to damage a productive and valued partnership.”