Diddy should be a billionaire right now. With a net worth of $800 million, he's not terribly far off, but after three decades at the top of multiple major industries, it's a bit shocking that Diddy has still not joined the billionaire club. Diddy isn't even the richest rapper in the world today. That honor belongs to Jay-Z thanks to his $2 billion net worth.
Diddy very likely should have reached billionaire status, and maybe even multi-billionaire status thanks to his alcohol brands Cîroc and DeLeón, both of which are partnerships with Diageo. And while you're probably thinking Cîroc was his biggest chance for a massive payday, with the explosion of the tequila industry in the last decade, Diddy should be worth billions thanks to DeLeón. Consider the following –
In 2007 Sammy Hagar sold his tequila brand, Cabo Wabo, to Grupo Campari for around $100 million. A decade later George Clooney sold his tequila company, Casamigos, to Diageo for $1 billion. At the time it was acquired, Casamigos was selling 180,000 cases per year. Today it's selling more than 2 million cases annually, roughly a third of all tequila sold in the US every year.
In 2020, The Rock launched a tequila company called Teremana. Teremana is a portmanteau of the words "tere," which is the Latin word for "earth," and "mana," which is a Polynesian word for "spirt," so "Earth Spirit." Today Teremana is selling around 600,000 cases per year. That's three times the number of cases Casamigos was selling when it was acquired for $1 billion. Using Casamigos as a comp, there's a very strong argument that Teremana is worth $3-4 billion right now. The Rock owns 30% of Teremana. That is why The Rock will very likely be a billionaire in the near future, if he isn't one already.
So what about DeLeón? According to a lawsuit filed by Diddy today, DeLeón is in shambles with a minuscule market share percentage. As alleged by Diddy's lawsuit, Diageo has completely mismanaged DeLeón through a combination of fumbled distribution, neglect, a botched redesign and even racial discrimination.
As a result, Diageo has "sabotaged" the brand and, in our opinion, cost him his ticket to billionaire status.
(Photo by Prince Williams/FilmMagic)
From Cîroc to DeLeón
Diageo launched Cîroc vodka in 2003. The name is a portmanteau of the French words "cime," which means "peak," and "roche," which means "rock," when combined it means"peak rock."
Looking to expand the brand, in 2007 Diageo forged what was then a unique celebrity endorsement partnership. Instead of hiring a celebrity to simply be a paid spokesman, it agreed to re-structure Cîroc as a 50/50 partnership with rapper/entrepreneur Sean "Diddy" Combs. Diddy would handle all marketing/promotion for Cîroc and Diageo would handle production and distribution. All profits would be split 50/50 and Diageo would have the first option to buy Diddy out of the brand at various milestones.
The Diddy/Diageo/Cîroc partnership was a huge success by 2013 when Diddy had an important revelation. Diddy had recently noticed that drinkers at bars and clubs were requesting tequila over vodka. Not just for taking shots, but also for bottle service and even when ordering something to sip slowly on the rocks.
So at his urging, in December of 2013 Diddy and Diageo co-acquired the tequila brand DeLeón. Prior to their acquisition, DeLeón tequila was found pretty much exclusively in high-end bars and clubs in LA, New York and Miami. The brand sold around 10,000 cases a year.
Once again the plan was for Diddy to handle marketing/promotion, while Diageo handled production and distribution. Diageo already owned the tequila brand Don Julio, so it had all the knowledge and experience necessary to turn DeLeón into a massive success.
Casamigos
Another celebrity tequila brand was born in 2013.
In 2013 George Clooney and two partners (including Cindy Crawford's husband Rande Gerber) launched Casamigos. The name "Casamigos" is a portmanteau of the Spanish words "casa" which means "house," and "amigos," which means "friends." So, "house of friends."
By the middle of 2017 when Diageo paid George and his partners $1 billion to acquire full ownership of the brand, Casamigos was the fastest-growing tequila brand in the world. It is the #1 selling tequila brand in the United States, accounting for 12% of all sales. Casamigos can be found at roughly 1/3 of all liquor stores in the United States. In 2022 Casamigos sold 2.2 million cases.
Sabotaged by Diageo
According to Diddy's lawsuit, DeLeón's floundering success is a result of several factors, notably fumbled distribution, neglect, a botched redesign and even racial discrimination.
Diddy's lawsuit makes a number of eyebrow-raising complaints. The suit alleges Diageo did not allocate adequate agave to DeLeón in 2020 and 2021, when the plant was experiencing a global shortage, which led to "chronically out-of-stock products" and a "tiny distribution footprint."
The suit further alleges that in 2019 Diageo botched a bottle label redesign. The new labels were "prone to bubbling, which made the product look cheap." Also in 2019, Diddy claims a Diageo executive de-prioritized distribution of both Cîroc and DeLeón because they were urban brands. The executive reportedly told Diddy that if he was Martha Stewart, Cîroc and DeLeón and would be distributed more widely.
The following year, Diddy wrote a scathing letter to the CEO of Diageo in which he claimed:
"DeLeón continues to be sabotaged by Diageo management and neglect."
Lost Billions
As a reminder, Casamigos – which was started at the same time as DeLeón – was selling 180,000 cases a year when Diageo acquired full ownership for $1 billion. Today it is the #1 selling Tequila in the US with annual sales of 2.2 million cases. One could argue that if it were to be offered for sale today, Casamigos would easily be worth $10 billion. That's what is enraging Diddy.
From his point of view, Casamigos and DeLeón were started at the same time, both as celebrity partnerships with Diageo. Diageo poured resources into one, but not the other at least partly due to racism.
Had Diageo put the same effort into DeLeón and today it was the #1 tequila brand in the US, Diddy would own half of a $10 billion brand which on paper or upon acquisition would leave him with a fortune north of $5 billion.
Instead, DeLeón is the 28th best-selling tequila brand in the US, with a 0.4% market share. No wonder he's pissed off and suing.
