Sean 'Diddy' Combs sues spirits company for billions, claiming it was racist

The lawsuit, filed on behalf of plaintiff Combs Wines and Spirits LLC, claims Diageo, the U.K. company behind Guinness beer and Johnnie Walker scotch, “treated Mr. Combs and his brands worse than others because he is Black.”

Both Diageo and chief executive Ivan Menezes, according to the entrepreneur, “have put their feet on the neck of Mr. Combs’ brands”. The hip-hop artist is seeking billions of dollars in damages over the alleged breach.

“While Diageo has undoubtedly violated its contractual obligations and unfairly lined its own pockets, this case is not an ordinary contract dispute in which a party chooses to disregard its contractual promises due to greed and profit,” it asserted. “Rather, and similar to the realities experienced by many people of color in the United States, Diageo’s treatment of its business relationship with Mr. Combs was tainted by racial prejudices.”

Shares in the beverages group, the sixth largest in the world by value with a market cap of about $96 billion, rose marginally in London trading on Thursday.

In a statement provided to Fortune, the company rejected the claims in the strongest possible terms, “categorically” denying his allegations and pledging to vigorously defend itself against the meritless lawsuit.

“This is a business dispute, and we are saddened that Mr. Combs has chosen to recast this matter as anything other than that,” the company said, adding the music industry magnate ignored its attempts to resolve the issue amicably. “While we respect Mr. Combs as an artist and entrepreneur, his allegations lack merit, and we are confident the facts will show that he has been treated fairly.” 

The founder of Bad Boy Records is a legend in the music scene, with author and music industry expert Zack O’Malley Greenburg estimating in October Comb’s wealth at $1 billion, making him only the third hip-hop artist to be minted a billionaire after Jay-Z and Kanye West. 

In 2007, Combs agreed to use his name and influence to help Diageo market its Ciroc brand, promoting the vodka in exchange for a portion of the revenue.

The partnership proved so successful the two sides later teamed up in 2013 to acquire DeLeon tequila in a joint venture that gave Combs a greater role. 

According to the entrepreneur, however, Diageo withheld resources from the brand in particular after the U.K. company purchased two new luxury tequila brands for a combined $1.4 billion in the following four years. One of them, Casamigos, was co-founded by white celebrity George Clooney, Combs’ lawyers pointed out.

“Following its acquisition of these competing brands, Diageo effectively abandoned DeLeo,” the claim stated. 

Combs claims Diageo leadership resented him for ‘making too much money’

The core of the argument seems to rest with a belief that Diageo mainly was motivated by a desire to appear as if it supported diversity and inclusion, but behind closed doors treated DeLeon as an “ethnic brand” to be marketed primarily to black inner-city consumers. 

This led to the spirit being distributed to just 3.3% of all possible outlets as of last year versus 34% and 36% for Diageo’s wholly-owned Casamigos and Don Julio brands. 

Combs said Diageo intentionally starved retailers of inventory and even neglected to provide DeLeon the agave needed for distilling tequila amid a 2020 shortage.  

Moreover the complaint cited an apparent admission made to him by Stephen Rust, Diageo’s president in charge of new business as well as the group’s luxury portfolio dubbed Reserve.

“Rust directly acknowledged the company’s racist undertones in 2019, telling Mr. Combs that some within Diageo’s leadership resented him for making too much money,” it asserted. 

The complaint also said Rust “admitted” that Comb’s race was part of the reason Diageo limited the neighborhoods where the products were sold.

“If Mr. Combs were [white celebrity] ‘Martha Stewart’, Mr. Rust said, things would be different,” the lawsuit alleged, adding “cloaking itself in the language of diversity and equality is good for Diageo’s business, but it is a lie.”

The U.K. company disputed that portrayal, claiming it had made significant investments in their joint business ventures amid the group’s “steadfast commitment to diversity”.