DEO - Diageo is sued by Sean 'Diddy' Combs over neglect of Ciroc brand

2023-06-01 12:55:21 ET

Rapper and producer Sean "Diddy" Combs sued Diageo ( NYSE: DEO ) on Wednesday in a case filed with the New York Supreme Court in Manhattan.

The lawsuit made the allegation the spirits company did not make promised investments in Combs' vodka and tequila brands, while treated them as inferior "urban" products.

The legal filing claims that Diageo ( DEO ) leadership told Combs his race was one of the reasons the beverage company limited distribution to urban neighborhoods. In broad terms, Diageo ( DEO ) was accused of providing only the illusion of inclusion.

Combs' relationship with Diageo dates to 2007 when he was first approached about the Ciroc brand. approached Combs about Ciroc.

Combs is expected to take other legal action against Diageo ( DEO ) in looking for damages in the billions.

Diageo's ( DEO ) statement: "This is a business dispute, and we are saddened that Mr. Combs has chosen to recast this matter as anything other than that... While we respect 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."

Earlier this year, Diageo ( DEO ) execs discussed some slowdown with Ciroc demand on an earnings call ( full transcript ).

CFO Lavanya Chandrashekar: "We have seen a slowdown in consumption on Ciroc and shipments were lower than depletions on Ciroc as the slowdown has resulted in distributed. And with our allowed culture, wanting to make sure that we have the right levels of inventory, healthy levels of inventory in trade. In terms of -- and if I kind of look back at the brand itself, I mean the brand has performed really well over the last 3 years. I mean what you're seeing over here is a bit of an impact on what's happening with multicultural consumers in urban imports, but it's also the growth of tequila, the growth of U.S. whiskey, I mean, these categories don't -- it's not like people are drinking so much more, but you're getting that growth of tequila is the shift happening from one part of spirits to another. I mean that is a large part of what's contributing to that."

Shares of Diageo ( DEO ) rose 0.75% in mid-day trading on Thursday.

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