Music mogul and entrepreneur Sean “Diddy” Combs is suing business partner Diageo today alleging that the brands he co-owns with the spirits group, Cîroc Vodka and DeLeon Tequila, were given worse treatment because he’s Black.
Among accusations of racial discrimination, the lawsuit also says Diageo has put more resources into the portfolio’s other tequilas, including George Clooney’s Casamigos, which Diageo acquired in 2017 for up to $1 billion.
“Rather than equal treatment, Diageo has treated Mr. Combs worse than others because he is Black,” read the filing. The complaint describes that the company allegedly typecasted DeLeón as a “Black brand” that should target “urban” consumers.
The complaint was filed by Combs Wines and Spirits, a company owned by Combs, in New York State Supreme Court in Manhattan against Diageo’s North American business. Combs is seeking a court order asking Diageo to comply with their 2013 joint-venture agreement, in addition to written agreements between Combs and Diageo that the partners signed to resolve complaints by Combs, according to the filing. The filing states that Combs Wines and Spirits plans to seek “billions of dollars in damages due to Diageo’s neglect and breaches” in a separate lawsuit.
Combs is often credited with illustrating the power of celebrity backing to boost spirit sales. In 2007, Diageo and Combs formed a partnership to develop Diageo’s Cîroc , at the time a low-ranked vodka. After Combs took charge of the brand’s strategic marketing, Cîroc ascended to a top seller within a few years, growing from a 50,000-case-per-year vodka into nearly 2 million-per-year. It has since released several product variations, including ready-to-drink line CÎROC Vodka Spritz. In 2014 Combs formed a joint venture with Diageo and purchased DeLeón, a boutique high-end tequila brand that was distributed in 18 U.S. states at the time.
Since then Diageo has emerged as a major agave contender among spirit groups. After parting ways with Jose Cuervo in 2012, it has built its portfolio around other premium brands Don Julio and Casamigos. Casamigos is now the top-selling U.S. tequila brand, growing by more than 400,00 cases to nearly 2.4 million last year, which is 300,000 more than Don Julio, the number three brand, according to NIQ data. DeLeón ranks 28th, representing 0.4% of tequila sales. In 2022, DeLeón was distributed in 3.3% of retail outlets, compared with 36% for Don Julio and 34.4% for Casamigos, according to the court filing.
Combs regularly posts about both brands on social media, and recently announced the launch of Diddy Direct, a platform created to help retailers and consumers find and purchase spirits under his Combs Spirits portfolio.
The filing details Combs’ complaints to top executives including frequently out-of-stock products, not allocating agave to the brand during a shortage, a tiny distribution footprint, a rebranding that did not “take off” due to labeling hiccups, and changes on pricing. Diageo executive Stephen Rust “acknowledged the company’s racist undertones” in 2019, according to the filing, and told Combs that some within the company resented Combs for making too much money. Rust said if Combs “were Martha Stewart,” his brands would be distributed more broadly, according to the filing.
“This is a business dispute, and we are saddened that Mr. Combs has chosen to recast this matter as anything other than that,” said a Diageo spokesperson in a statement. “Our steadfast commitment to diversity within our company and the communities we serve is something we take very seriously. We categorically deny the allegations that have been made and will vigorously defend ourselves in the appropriate forum.”
The statement added that the group is 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,” and added that while the company respects Mr. Combs as an artist and entrepreneur, “his allegations lack merit, and we are confident the facts will show that he has been treated fairly.”
Eboni Major, a Black whiskey maker for Diageo’s Bulleit, also filed a lawsuit against the spirits group in April 2022 alleging racial discrimination. Major alleged she was the subject of persistent racial hostility, including pay discrepancies and demeaning treatment by co-workers, and was met with indifference and eventually pushed out by the company. Diageo has received accolades for workplace diversity and is the anchor backer of Pronghorn, an initiative focused on boosting Black entrepreneurship in spirits.
The lawsuit follows another music and business tycoon’s dispute with a major spirit company: Shawn “Jay-Z” Carter and Bacardi recently resolved a long legal battle when the spirits giant announced it has agreed to acquire the majority of Cognac venture D’ussé, with Carter retaining a significant ownership stake through his company SCLiquor. Race was also a factor in that case: after Bacardi won several early rounds of arbitration, Carter took the case to court in challenging the arbitration panel with claims that one member was a racist, while alleging another held a personal grudge against him.