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Diageo will end its business relationship with Sean Combs, better known as Diddy, after the businessman and rapper alleged racial discrimination by the drinks group, which she “categorically denies”.
In a legal suit filed by Combs last month, the rapper claimed that Diageo “dressed up” the jointly owned DeLeón tequila brand, as well as the Cîroc vodka he collaborated on with the company, and treated them as “black brands” they should be. Targeting “urban” consumers.
In its response filed in a New York court on Tuesday, the company said Combs made “false and reckless allegations, including numerous defamatory and offensive accusations of racism, on the part of Diageo and some of its senior executives.”
The company said in a statement that Combs “left us no choice but to act to dismiss his unfounded complaint and to terminate our business relationship.”
Combs alleged that Diageo CEO Stephen Rust told him in late 2019 that “if he had been Martha Stewart, his brands would have been more mainstream”.
In the lawsuit, he said Diageo has not invested enough in brands associated with the rapper compared to other brands owned by the conglomerate, such as Casamigos tequila, previously owned by actor George Clooney.
This latest filing has intensified the war of words between the two parties, setting the stage for a protracted legal battle as Diageo seeks to break up its DeLeón joint venture, calling Combs an “unreliable and unreliable business partner”.
Diageo also alleged that Combs, formerly known as P Diddy and Puff Daddy, threatened the group with racial allegations to force the company to “accept numerous outrageous and non-contractual demands, including supposed billions of dollars in damages.”
The company said in a filing on Tuesday that Combs had failed in his duty as a 50 percent owner, alleging he invested only $1,000, while Diageo had invested more than $100 million. The company said the rapper earned nearly $1 billion through their partnership.
This “created a contentious relationship, severely damaged the DeLeón brand at a critical juncture, and halted its promise and growth potential for several years.”
Diageo announced this month the death of its outgoing CEO, Ivan Menezes. Debra Crew, who previously managed Diageo’s North American operations, is now starting in that role.
Diageo and Combs first partnered in 2007 when the beverage group hired him to promote and market its Cîroc vodka brand. The two sides entered into a joint venture in 2013 to purchase DeLeón tequila.
Combs alleged in his suit, filed in Manhattan in late May, that the two brands were being cut off from production, distribution and sales resources as other celebrity-backed brands thrived.
Diageo’s Don Julio tequila is distributed in 36 percent of its outlets in the United States while Casamigos is in 34 percent, according to filings in May. The lawsuit, filed by Combs, states that DeLeón is present at 3 percent.
In its response, Diageo said that it had tried “for years” to salvage its partnership with Combs and that it remained committed to the success of the Cîroc and DeLeón brands.
The company described the allegations as “opportunistic attempts to attract press attention”.
In response to Diageo’s decision, Combs’ attorney said, “The company’s attempt to end its deals with Mr. Combs is a whistleblower dismissal of wrongdoing that invites racism. It is a cynical and transparent attempt to deflect attention from multiple allegations of discrimination.”
They added: “Over the years, he has repeatedly raised his concerns as senior executives have made racially insensitive comments and made biased decisions based on that point of view… This lawsuit and Mr. Combs will not get away.”
