Liquor company Diageo and rapper Sean “Diddy” Combs joined forces in 2007 to market his Cîroc Ultra-Premium Vodka and extended the partnership in 2014 by purchasing his tequila brand, DeLeón.
However, the amicable relationship ended a few years later when in May 2023, Combs filed a lawsuit against Diageo for allegedly neglecting his two liquor brands, DeLeón and Cîroc. The rapper claimed the company treated his brands as inferior products, made racist remarks against him, and didn’t make promised investments.
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Less than a year later, Diageo and Combs reached an agreement to end their business relationship in January 2024. As part of this agreement, the rapper would dismiss his lawsuit and withdraw all allegations made against the liquor company. However, Diagio remained the sole owner of DeLeón tequila and Cîroc vodka at the time.
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Allegations of rape and abuse surfaced about Combs that same year, which tainted his image and reputation. This caused Diageo to receive continuous backlash and its sales to plummet due to the previous partnership.
Diageo forms joint venture to swap Cîroc Vodka.
Image source: Shareif Ziyadat/Getty Images
Diageo forms a joint venture to swap Cîroc Vodka for a new celebrity tequila brand
Diageo (DEO) announced it is forming a joint venture with the leading investment and advisory firm MainStreet Advisors to exchange its majority ownership of Cîroc Ultra-Premium Vodka’s brand rights in the U.S. for majority ownership in Lobos 1707 worldwide, which is NBA star LeBron James’ tequila brand.
Both companies will oversee the Cîroc brand in North America and the Lobos 1707 brand worldwide, according to the announcement.
However, Cîroc will not be included in Diageo’s North American financial results. Instead, it will be reported under income from the joint venture and associates, but classification will remain unchanged in all other markets.
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The companies claim this decision was made to maximize the value of Cîroc and Lobos 1707 brand rights worldwide.
“Cîroc and Lobos 1707 have incredible potential, and through this collaboration, we are unlocking new opportunities to accelerate their reach, resonance, and revenue growth in ways that traditional models cannot achieve,” said MainStreet Advisors CEO Paul Wachter.
However, the business move comes after the settlement of the ongoing legal battle to end its partnership with Combs and the surfacing of his recent controversies.
Diageo’s new acquisition of LeBron James’ tequila could flip sales declines
North America is Diageo’s largest market, accounting for 40% of its net sales and around 50% of its operating profit. As for its liquor categories, vodka’s market share in the region was 44% in 2024, and tequila’s was 34%.
Although the swap would mean that Diageo replaced a more consumed liquor with a slightly less popular one, Lobos 1707 has a better reputation than Cîroc due to LeBron James’ celebrity presence in the American market.
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Lobos 1707 launched in 2020, with LeBron James as an investor. Since then, the tequila brand has grown in popularity among the younger generations, making it a lucrative investment due to its huge growth potential. This is why Diageo wanted to obtain the worldwide rights of this brand.
Diageo and MainStreet Advisors appointed TikTok’s Former Global Head of Marketing, Nick Tran, as the joint venture’s President and Chief Marketing Officer.
“Nick has a reputation for transforming brands into cultural icons and developing consumer and digital strategies focused on Gen Z audiences. Within the JV, Cîroc vodka and Lobos 1707 tequila will each maintain their distinct identities and consumer appeal and leaders,” stated the announcement.
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