Diageo Creates DeLeon Tequila Venture With Rapper Diddy Glamour

Diageo Plc (DGE), the world’s biggest distiller, will work with music mogul Sean “Diddy” Combs to sell DeLeon tequila in the U.S., following a 2007 deal with the Grammy Award-winning rapper to promote Ciroc vodka.

The maker of Smirnoff created a joint venture with Combs to buy DeLeon, London-based Diageo said today in a statement, without disclosing the purchase price. Each party will own half of the brand, which makes blue weber agave tequila that retails from a suggested $120 a bottle to more than $1,000. The liquor is distributed in 18 U.S. states and Washington, D.C.

The deal “is Diageo’s latest step towards returning to a leading position in tequila in North America,” said Larry Schwartz, Diageo president for the continent. “Ultra-premium and above tequila is a very exciting segment –- we already have a strong brand there with Don Julio.”

Diageo ended talks on a purchase of Cuervo tequila in December 2012 and started dissolving an agreement to distribute the tequila outside Mexico. Schwartz said at the time that Diageo would consider making high-end tequila, buying a small brand that sells at a higher price than Cuervo, or finding a partner. Tequila that retails at more than $40 a bottle is the second-fastest growing sector of the U.S. tequila market, Diageo said in the statement.

The distiller has had a separate partnership with Combs since 2007 to market Ciroc vodka. It has expanded in that time from 50,000 cases a year to almost 2 million cases, Diageo said, aided by Combs’s promotion of the drink.

“Expanding our relationship with Sean Combs into tequila was a natural choice given Sean’s ability to galvanize support for luxury brands,” Schwartz said in the statement.

Combs, who will hold the partnership through Combs Wine & Spirits, said that “celebration is a cornerstone of all my businesses.”

To contact the reporter on this story: Clementine Fletcher in London at cfletcher5@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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