Diageo ends its 15-year partnership with Diddy following lawsuit

By Jordan Valinsky, CNN Business

New York (CNN) — Spirits maker Diageo has cut ties with Sean “Diddy” Combs, ending a lucrative 15-year partnership that recently culminated in a racial discrimination lawsuit.

The music mogul charged that Diageo had neglected and underpromoted his DeLeón tequila, dismissing it as an “urban” product in its marketing, in a suit filed last month.

The London-based Diageo, which makes well-known liquor brands like Smirnoff vodka and Johnnie Walker whisky, countered that this was a “baseless complaint.” In a statement obtained by CNN, Diageo said Diddy’s “bad-faith actions have clearly breached his contracts and left us no choice but to… end our business relationship.”

Diageo also filed a motion to dismiss his lawsuit.

Diddy accused Diageo of failing to market his spirits, which also include Ciroc vodka, in a similar manner with its other brands, including Don Julio and the George Clooney-founded Casamigos brands. Diageo responded that he has “amassed nearly $1 billion dollars” from the partnership.

Diageo and Combs have partnered on Ciroc vodka since 2007. In 2013, Combs bought DeLeón and formed a joint venture with Diageo for the high-end tequila.

Diddy said in the lawsuit that Diageo “kneecapped DeLeon’s sales growth for nearly a decade” because the company considered it a “Black” brand and marketed it to only “urban customers.” He also claimed that a Diageo executive told him that if Combs were Martha Stewart then “his brands would be more widespread.” Diageo has denied the accusations.

Diageo (DEO) said Tuesday that Diddy has “repeatedly undermined our partnerships and threatened to publicly defame Diageo (DEO) if we did not meet his unreasonable financial demands.” The company also said that they’ve invested more than $100 million to help grow his tequila and accused of him only contributing $1,000.

In response, Diddy’s attorney John Hueston said in a statement that Diageo “attempting to end its deals with Mr. Combs is like firing a whistleblower who calls out racism” and that the company’s decision is a “cynical and transparent attempt to distract from multiple allegations of discrimination.”

“This lawsuit and Mr. Combs are not going away,” Hueston said.

Attorney Josh Gerben told CNN that it’s “not surprising” that Diageo wanted to end its agreement with Combs because “whenever a lawsuit gets filed that makes such strong allegations of wrongdoing, it is a sign of an irreparable break in a business relationship.”

“At the moment we are left to wonder what, if any, of the allegations made by either party are factually accurate. And, depending on how the case resolves, we may never know the answer to that question,” Gerben said.

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