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Diageo Creates DeLeon Tequila Venture With Rapper Diddy Glamour

Jan. 8 (Bloomberg) -- Diageo Plc, 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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