Diageo Aims to Cut Diddy After Mogul Claims Racial Discrimination

The music mogul pointed to Diageo's $1 billion acquisition of competing tequila brand Casamigos, which was founded by George Clooney, as evidence of racial discrimination.

Spirits giant Diageo said it’s severing a partnership of 15 years with Sean “Diddy” Combs, who helped grow the company’s then-struggling Ciroc label as a brand ambassador and joint-venture partner.
The move was in response to the music mogul suing the British alcoholic beverage maker in June for racial discrimination, claiming that Diageo starved his vodka and tequila brands of promised investments and only marketed them to “urban” consumers. Diageo made the announcement on Tuesday in a court filing seeking to dismiss the case or move it into arbitration.

In a statement, Combs’ lawyer John Hueston said, “Diageo attempting to end its deals with Mr. Combs is like firing a whistleblower who calls out racism.”
“Over the years, he has repeatedly raised concerns as senior executives uttered racially insensitive comments and made biased decisions based on that point of view,” he added. “Diageo even acknowledged the problem by agreeing in his contract to treat DeLeón the same way it treated their other tequila brands.”
Diageo first approached Combs in 2007 to handle marketing and promotion for Ciroc in an equal-share joint venture. He said in the suit that he “sparked spectacular growth” for the Ciroc and DeLeón labels despite the company refusing to devote proper resources, arguing that they were “typecasted” as “black brands that should be targeted only to ‘urban’ consumers.” Diageo allegedly didn’t comply with its obligations in the agreement by producing lower quantities, distributing in “fewer outlets” and “limiting its marketing and promotion of” DeLeón, as compared to other brands, according to the complaint.
In 2014, Diageo acquired competing tequila brand Don Julio and committed to spending $400 million to grow the business. The company then spent $1 billion three years later to acquire Casamigos.
“Following its acquisition of these competing brands, Diageo effectively abandoned DeLeón,” states the complaint. “Diageo instead focused its market positioning efforts on brands like Casamigos (with its founders George Clooney, Randy Gerber, and Mike Meldman), Aviation Gin (with its owner Ryan Reynolds), and Ketel One (with the Nolet family) as its preferred choices for the broader market.”
Diageo, moving to dismiss the suit, stressed that its contract with Combs doesn’t require equal treatment of his brands but rather “measured and proportionate treatment and support of the DeLeón brand, while ‘taking into account’ a variety of differences among the brands,” according to a court filing.

The company said in a statement on Tuesday that Combs has “repeatedly undermined our partnerships and threatened to publicly defame Diageo if we did not meet his unreasonable financial demands.”
“We tried for years to salvage the broken relationship with Mr. Combs,” added the company. “We funded the purchase of DeLeón for the joint venture and proceeded to invest more than $100 million to grow the brand. Despite having made nearly a billion dollars over the course of our 15-year relationship, Mr. Combs contributed a total of $1,000 and refused to honor his commitments.”

​Vonoi Magazine