DIAGEO

The details of Sean “Diddy” Combs’ lawsuit against spirits brand Diageo have been made public, shedding light on allegations of mismanagement and unfair treatment of Combs’ Cîroc Vodka and DeLeon Tequila brands. Several claims have emerged in an unredacted version of the lawsuit, which was filed in May and recently made public.

One allegation suggests that Diageo presented Combs with a watermelon-flavored version of the tequila, despite his objections and attempts to educate the company about the racial history and connotations associated with watermelon. Additionally, it is claimed that Diageo planned to allocate all its agave, the main ingredient in tequila, to its other tequila brands, leaving none for DeLeon.

Sloppy paperwork reportedly resulted in a shipment of DeLeon being impounded by Mexican authorities, while erratic production led to repeated shortages of the brand, with at least ten instances of being out of stock in the past year alone.

The unredacted filing also included an email from Combs to Deborah Crew, the former President and current CEO of Diageo North America, expressing frustration with the company’s alleged discriminatory conduct.

“For years I have written to leaders at Diageo to explain that the problems regarding African American diversity and inclusion are bigger than the company has been willing to acknowledge,” Mr. Combs said in the email. “I know what the experience of working with Diageo has been like for me and my team, so I can imagine what African American employees and suppliers have experienced. While our relationship has been financially successful for all stakeholders, we have not made enough progress on including and empowering the African American community Diageo relies on for billions of dollars.”

The court ruling on June 30 allowed the majority of the redacted material to be revealed publicly, with only specific numerical information related to agave plants, shipments, and cases being kept under seal.

Diddy’s attorney, John Hueston, issued a new statement in response to the unredacted allegations, further highlighting the claims of mismanagement and unfair treatment of Combs’ brands by Diageo.

“These newly revealed allegations show the legitimacy and seriousness of Mr. Combs’ concerns about Diageo’s systemic mistreatment of the DeLeon brand,” said John Hueston, Combs’ attorney. “Rather than treat DeLeon equally, as required by contract, Diageo ignored Mr. Combs’ global appeal and inappropriately pigeon-holed his brands as ‘urban.’  The allegations reveal that Diageo’s approach has resulted in repeated mismanagement of production, insufficient distribution, and nonexistent sales support. Diageo has failed to take responsibility and instead has attempted to terminate its relationship with Mr. Combs merely because he spoke up. We look forward to vindicating these claims in Court and holding Diageo to its promises.”

Additional allegations include:

• Cîroc and DeLeon continued to be described as “urban brands” within the Diageo portfolio. An internal Diageo presentation described Ciroc as an “urban African American brand tied to one personality,” and an internal Diageo document characterized Mr. Combs and Ciroc as having “strong hip hop associations.”
• In advance of the launch of Ciroc’s watermelon flavor, Mr. Combs and his team explained that Diageo needed to be careful about “watermelon” with a brand that it consistently characterized as an “urban African American brand.” After Diageo’s assurances, Mr. Combs signed off on the watermelon flavor for Ciroc. He was adamant, however, that DeLeon should not launch any flavor until the public learned more about the brand. Yet Diageo showed up in person to Mr. Combs and his team with a developed watermelon-flavored DeLeon Tequila. They did this despite DeLeon not having flavored tequila, Mr. Combs’ consistent objection to adding flavors, and the efforts to educate Diageo about the racial history and connotations relating to watermelon.
• Amidst a growing shortage of agave, the key ingredient in tequila, Diageo allocated all of its existing supply to its other tequila brands, forcing DeLeon to scramble and acquire agave from the spot market at significantly higher costs. Diageo’s plan in 2021 was for none of the agave being grown over the next five to six years would be provided to DeLeon.
• In 2019, Diageo failed to provide the proper documentation to the Mexican government, so Mexican authorities impounded cases of a critical shipment of DeLeon at the border. 
• In 2020 Combs Wines was informed that DeLeon was on track to be out of stock during the busiest time of the year—a potential death knell for even established brands. Over the past year alone, DeLeon products have been out of stock and unavailable for purchase in certain markets 10 times. 
• Diageo senior sales executives have admitted that there have been no sales incentives for Ciroc or DeLeon since 2017. Senior salespeople at Diageo have admitted to long stretches where they made no attempt to sell DeLeon. 
• Diageo unilaterally discontinued the production of the popular 375 milliliter bottles, causing a sharp decline of DeLeon sales in key markets. And Diageo caused DeLeon to miss its initial brand targets by changing DeLeon’s distribution approach without Board review and alignment.
• Diageo’s unreliable and erratic pricing caused confusion and inconsistencies across key markets. Diageo first launched DeLeon at a relatively high price and sales lagged. After Diageo finally reduced the price, DeLeon enjoyed more than a year of increased sales growth. Yet Diageo then inexplicably raised DeLeon’s price (over Combs Wines’ objections), effectively killing the brand’s hard-won momentum. 
• Diageo reassigned 13 employees from the DeLeon bottling plant in Mexico to work on other Diageo products, without seeking the approval or even the input of Combs Wines or the DeLeon board of directors.

Previous entries in the Diddy and Diageo dispute are available here and here.

The post New Allegations Highlight Diddy’s Brands Were Unfairly Treated by Diageo appeared first on The Source.

After Diageo announced they had severed ties with Diddy, the Hip-Hop icon’s team is firing back. In a statement directly to The Source, the president of Combs Global, Tarik Brooks, responded to the liquor company.

“It’s absurd for Diageo to suggest that a Black person should be quiet and accept racism or discrimination because they earned a lot of money,” said Brooks. “Sean Combs is a spirit’s pioneer who has accomplished historic success with Ciroc. He will always fight to be treated fairly.”

Diddy’s attorney, John C. Husteon, offered a statement:

“Diageo attempting to end its deals with Mr. Combs is like firing a whistleblower who calls out racism. It’s a cynical and transparent attempt to distract from multiple allegations of discrimination. 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. Diageo even acknowledged the problem by agreeing in his contract to treat DeLeon the same way it treated their other tequila brands. He brought the lawsuit to force them to live up to that contract, and instead they respond by trying to get rid of him. This lawsuit and Mr. Combs are not going away.”

On Wednesday, liquor titan Diageo PLC has severed ties with Sean “Diddy” Combs after the Bad Boy mogul filed a lawsuit stating the company ignored his DeLeon tequila brand. Diageo also houses Diddy’s Ciroc.

According to The Wall Street Journal, Diageo has directed its attention to two other tequila brands, one of which is the George Clooney-led Casamigos. Included in the suit, Diddy notes Diageo exhibits racial discrimination by placing DeLeón in the “urban” category and also referring to the tequila as a “Black brand.”

According to court filings, Diddy and his company are seeking Diageo to comply with the terms of their 2013 joint agreement and additional statements to develop written agreements on further business.

The court docs also highlight a history of Diddy having complaints to Diageo, including out-of-stock products, limited distribution, and botched redesign. Additionally, in 2010 and 2021, Diageo allegedly did not provide agave to DeLeón during an ingredient shortage.

Diageo called for the suit to be dismissed in a Tuesday filing and cut the deal with Combs. A Diageo spokesperson has also released a statement to The Source:

We are saddened that Mr. Combs has chosen to recast a business dispute as anything other than that and chosen to damage a productive and valued partnership. Mr. Combs’ bad-faith actions have clearly breached his contracts and left us no choice but to move to dismiss his baseless complaint and end our business relationship. Mr. Combs has repeatedly undermined our partnerships and threatened to publicly defame Diageo if we did not meet his unreasonable financial demands.

Diageo believes strongly in the CIRÔC and DeLeón brands and remains committed to their success, which is why we tried for years to salvage the broken relationship with Mr. Combs. 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.

We have exhausted every reasonable remedy and see no other path forward.

In the filing, Diageo states, “In an effort to extract additional billions from Diageo, Combs has resorted to false and reckless allegations, including numerous defamatory and disparaging accusations…”

The filing also reads, “Notably, the Combs Parties have not sued Diageo for discrimination, nor could they…”

Speaking on the partnership, the filing reads, “Unfortunately, Combs has proven himself once and for all to be an unreliable and untrustworthy business partner. Despite DeLeón’s recent growth and progress, and in disregard of multiple provisions of the DeLeón Agreement, earlier this year Combs again began to threaten Diageo…”

Diageo also positions for the case to be dismissed, calling it “self-serving” and attempting to press the company into early settlement while leaning the public in Diddy’s support by laying claims that don’t have “legal or factual basis.”

The post Combs Global President on Diageo Cutting Ties with Diddy: ‘He will always fight to be treated fairly’ appeared first on The Source.

Liquor titan Diageo PLC has severed ties with Sean “Diddy” Combs after the Bad Boy mogul filed a lawsuit stating the company ignored his DeLeon tequila brand. Diageo also houses Diddy’s Ciroc.

According to The Wall Street Journal, Diageo has directed its attention to two other tequila brands, one of which is the George Clooney-led Casamigos. Included in the suit, Diddy notes Diageo exhibits racial discrimination by placing DeLeón in the “urban” category and also referring to the tequila as a “Black brand.”

According to court filings, Diddy and his company are seeking Diageo to comply with the terms of their 2013 joint agreement and additional statements to develop written agreements on further business.

The court docs also highlight a history of Diddy having complaints to Diageo, including out-of-stock products, limited distribution, and botched redesign. Additionally, in 2010 and 2021, Diageo allegedly did not provide agave to DeLeón during an ingredient shortage.

Diageo called for the suit to be dismissed in a Tuesday filing and cut the deal with Combs. A Diageo spokesperson has also released a statement to The Source:

We are saddened that Mr. Combs has chosen to recast a business dispute as anything other than that and chosen to damage a productive and valued partnership. Mr. Combs’ bad-faith actions have clearly breached his contracts and left us no choice but to move to dismiss his baseless complaint and end our business relationship. Mr. Combs has repeatedly undermined our partnerships and threatened to publicly defame Diageo if we did not meet his unreasonable financial demands.

Diageo believes strongly in the CIRÔC and DeLeón brands and remains committed to their success, which is why we tried for years to salvage the broken relationship with Mr. Combs. 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.

We have exhausted every reasonable remedy and see no other path forward.

In the filing, Diageo states, “In an effort to extract additional billions from Diageo, Combs has resorted to false and reckless allegations, including numerous defamatory and disparaging accusations…”

The filing also reads, “Notably, the Combs Parties have not sued Diageo for discrimination, nor could they…”

Speaking on the partnership, the filing reads, “Unfortunately, Combs has proven himself once and for all to be an unreliable and untrustworthy business partner. Despite DeLeón’s recent growth and progress, and in disregard of multiple provisions of the DeLeón Agreement, earlier this year Combs again began to threaten Diageo…”

Diageo also positions for the case to be dismissed, calling it “self-serving” and attempting to press the company into early settlement while leaning the public in Diddy’s support by laying claims that don’t have “legal or factual basis.”

In response, Diddy’s attorney, John C. Hueston, said to TMZ, the attempt to end the relationship is like “firing a whistleblower who calls out racism. It’s a cynical and transparent attempt to distract from multiple allegations of discrimination.”

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