Sean 'Diddy' Combs' dispute with Diageo deepens as court unseals business details

Sean "Diddy" Combs appears at the premiere of "Can't Stop, Won't Stop: A Bad Boy Story" on June 21, 2017, in Beverly Hills, Calif. (Photo by Chris Pizzello/Invision/AP, File)

Rapper, producer and entrepreneur Sean "Diddy" Combs is asking the New York Supreme Court to enforce a 2021 agreement that requires spirits seller Diageo to treat his DeLeon tequila brand "at least as favourably" as its other tequila brands.

Combs signed an agreement with Diageo -- which owns more than 200 brands including Guinness beer and Tanqueray gin -- after what he says were years of neglect for DeLeon, a brand he established with the London company in 2013.

Combs' lawsuit against Diageo was filed in May. But many details, including the 2021 agreement, were redacted at the time. On Wednesday, those details were released after Judge Joel Cohen ruled that Diageo could keep only limited portions confidential.

Combs says Diageo's treatment of DeLeon worsened after it bought two competing tequila brands: Don Julio in 2014 and Casamigos in 2017. Combs, who is Black, says Diageo positioned his tequila as an inferior "urban" brand and limited its distribution.

Diageo has denied Combs' accusations. In late June, it asked the court to compel arbitration or dismiss the suit. It is also in the process of terminating a partnership between Combs and Ciroc vodka, a brand he had promoted since 2007.

The newly public documents detail what Combs says was Diageo's repeated disinvestment in DeLeon. As of last year, DeLeon was distributed in 3% of possible outlets, for example, while Don Julio was in 36%. DeLeon has been listed as "out of stock" in major markets at least 10 times in the past year, the lawsuit says.

In 2021, Combs said he was informed that all of Diageo's agave plants were allocated to other brands, forcing DeLeon to scramble to find suppliers in the more expensive spot market. Combs says Diageo also made unilateral decisions that harmed the brand, including discontinuing popular 375-millilitre "half bottles" and launching a redesigned bottle with no marketing support.

Combs claims Diageo's decisions were often tinged with racism. He said he was adamant that DeLeon not offer flavoured versions until customers had more time to learn about the brand. But Diageo went ahead and developed a watermelon flavour, even though Combs had previously warned the company to be careful about the racist history of watermelon in a brand aimed at Black consumers.

In response, Diageo pointed out that Combs supported and endorsed Ciroc Summer Watermelon for several years.

"His attempt to recast follow-up discussions regarding innovations for DeLeon is, as is his entire suit, disingenuous and self-serving," Diageo said Wednesday in a statement.

In his lawsuit, Combs said he only signed on to promote Ciroc Summer Watermelon after educating the company about watermelon and getting assurances from Diageo that it would be sensitive to any negative connotations. Combs also differentiated Ciroc -- which has more than a dozen flavours -- from DeLeon, which would have introduced watermelon as its first flavour.

Combs says internal Diageo documents also proposed downplaying Ciroc's connection to him with the goal of rolling back its "image of being an African-American brand."

In its own court filings, Diageo accuses Combs of resorting to "false and reckless" allegations in an effort to extract monetary damages. Diageo also says it has increased production of DeLeon and sales have doubled since the 2021 agreement.