Diddy attends The After hosted by the entrepreneur and Doja Cat, powered by Ciroc Premium Vodka and DeLeon Tequila at Club Love in New York City May 1, 2023.
Shareif Ziyadat | Getty Images
Sean “Diddy” Combs is suing multinational liquor giant Diageo for alleged racial discrimination in its handling of its vodka and tequila brands, which Combs claims the company characterizes as “black brands.”
In a court case Filed Wednesday in the New York Supreme Court in Manhattan, Combs’ lawyers accuse Diageo of neglecting its Ciroc vodka and DeLeon tequila brands and marginalizing their appeal by marketing them as “urban” brands.
Formerly known by the stage names Puffy Daddy and P. Diddy, the rapper and entrepreneur alleged that Diageo had also “sabotaged” its DeLeon brand tequila with shoddy packaging that “made the product look cheap” while selling other well-known brands. showed, like actor George Clooney’s Casamigos tequila, more attention and resources.
Diageo bought Clooney’s Casamigos in 2017 for $1 billion. It is the top-selling U.S. tequila brand, accounting for 12.6% of tequila sales in U.S. stores, according to data from Nielsen and consulting firm Bump Williams.
Combs Wines and Spirits entered into an equal partnership with Diageo in 2007 for the marketing and promotion of Ciroc. Following the success of the partnership, Diageo and Combs’ company purchased the DeLeon tequila brand in 2013.
Diageo, a multi-billion dollar public spirits company based in London, owns more than 200 brands, including the Don Julio tequila brand.
According to court documents, Don Julio was distributed in 36% of outlets in 2022, compared to 34.4% for Casamigos and just 3.3% for Combs’ DeLeon.
Combs claims his brands are “starved” of production, distribution and sales resources. According to the lawsuit, Diageo CEO Stephen Rust told Combs that the 2019 race was one of the reasons the company restricted distribution of DeLeon and Ciroc. If Combs Wines and Spirits were owned by Martha Stewart, its brands would be more widely distributed, Rust allegedly said, according to the lawsuit.
In a statement to CNBC, Diageo called the case a “business dispute.”
“We take our steadfast commitment to diversity within our company and the communities we serve very seriously. We categorically deny the allegations that have been 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 amicably resolve this business dispute have been ignored, and that Mr. Combs has chosen to damage a productive and valued partnership. While we respect Mr. Combs as an artist and entrepreneur, his allegations have merit, and we are confident that the facts will demonstrate that he was treated fairly,” the company said in a statement.
Combs’ lawyers are seeking an injunction for “equal treatment” that they say Diageo “contractually promised” under the partnership.
They are also seeking “billions of dollars in damages for Diageo’s neglect and infringement” through separate court proceedings.