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Norwalk, Conn.-based Diageo will expand its relationship with rap artist and entrepreneur Sean “Diddy” Combs to acquire the luxury tequila brand DeLeon. The 50/50 joint venture between Diageo and Combs’ New York-based Combs Wine & Spirits company builds on a 2007 strategic alliance formed by Diageo and Combs Enterprises to develop and grow the Ciroc ultra-premium vodka brand.
The DeLeon joint venture will benefit from Diageo's strong distribution network, supply chain and marketing capabilities as well as Combs' access to influencers and proven track record of marketing luxury lifestyle brands, the companies say. The acquisition of DeLeon will accelerate Diageo's share of ultra-premium and above tequila, which is the second-fastest growing tequila segment in the United States, according to Nielsen, New York.
"The joint venture with Combs Wine & Spirits and its purchase of DeLeon is Diageo's latest step toward returning to a leading position in tequila in North America," said Larry Schwartz, president of Diageo North America, in a statement. "Expanding our relationship with Sean Combs into tequila was a natural choice given Sean's ability to galvanize support for luxury brands, as we've seen with our work together on Ciroc. Ultra-premium and above tequila is a very exciting segment — we already have a strong brand there with Don Julio and are pleased to complement that offering with DeLeon."
Combs, chairman of Combs Wine & Spirits, added: "Celebration is a cornerstone of all my businesses, and this joint venture is a natural extension of that portfolio. DeLeon is an outstanding brand that appeals to those who love exceptional tequila in a distinctive bottle. Together with Diageo, we will take DeLeon to new heights."
DeLeon is a 100 percent blue weber agave boutique tequila brand with a loyal following in Hollywood and the U.S. music industry, the companies say. The brand appeals to an audience of status-conscious consumers who choose spirit brands as part of their luxury lifestyles, they add.
"In creating DeLeon, I brought the skills of fine wine-making and natural barrel aging to the art of tequila,” said Brent Hocking, founder of DeLeon tequila, in a statement. “The result was a spirit unparalleled in purity and taste. I am entrusting DeLeon tequila to the capable hands of Diageo and Sean Combs, as both have demonstrated a commitment to luxury and quality which reflects my own commitment to the DeLeon brand."
DeLeon has five variants with current suggested retail prices that range from $120 to more than $1,000 per bottle. The brand currently is distributed in 18 U.S. states and Washington, D.C.