Diageo and Diddy in DeLeón tequila JV

Diageo has bought “prestige” tequila brand DeLeón and formed a second joint venture with hip-hop star and luxury goods marketer Sean 'Diddy' Combs in attempt to “reclaim leadership position” in tequila in the US.

Contrary to industry speculation that Diageo would seek a replacement for volume brand Jose Cuervo, which it distributed until last year, the drinks group has opted for a second high-end tequila, to sit alongside “ultra-premium” stable-mate Don Julio.

Diageo acquired the Guanajuato-produced DeLeón from founder Brent Hocking, but the terms of the agreement have not been disclosed.

DeLeón is a 100% blue weber agave tequila from the Tequila Highlands. According to Diageo it has a "loyal following in Hollywood and the US music industry” and “ has a strong appeal with status-conscious consumers”.

DeLeón has five variants with suggested retail prices ranging from $120 to over $1,000 and will continue to have a US focus, with Diageo hoping to “build DeLeón’s brand identity and trademark in North America” in the near term.

DI understands a global roll-out would be considered if there is requisite demand. 

The 50/50 global partnership between Diageo and Combs Wine & Spirits builds on the the alliance formed by Diageo and Combs Enterprises to develop and grow the Cîroc vodka brand, which has risen from 50,000 case sales a year to 2 million cases frpm 2007-2012.

Larry Schwartz, president, Diageo North America said: “The joint venture with Combs Wine & Spirits and its purchase of DeLeón is Diageo’s latest step towards returning to a leading position in tequila in North America.”

“Expanding our relationship with Sean Combs into tequila was a natural choice given Sean’s ability to galvanise support for luxury brands, as we’ve seen with our work together on Cîroc.  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 DeLeón.”

Sean 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. DeLeón is an outstanding brand that appeals to those who love exceptional tequila in a distinctive bottle. Together with Diageo, we will take DeLeón to new heights."

Brent Hocking, founder of DeLeón tequila, said: “In creating DeLeón, I brought the skills of fine wine-making and natural barrel aging to the art of tequila. The result was a spirit unparalleled in purity and taste. I am entrusting DeLeón 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 DeLeón brand.”  

Julio Bermejo, tequila commentator and owner of Tommy's tequila bar in San Franciso, added: "DeLeón is a cool marketing story. Started by Mr Hocking, its claim to fame was the bottle, the top and the expensive price tag. The Tequila is very good too - we used to sell the original Reserva de Mexico brand owned by the family that owns the distillery. That stuff wholesaled for $20-$40 - not expensive at all."