Following leaked rumors two weeks ago, that musician/businessman Sean "Diddy" Combs had partnered with the high-priced tequila label DeLeon, spirits giant Diageo announced in a release on January 8 that it had acquired the independent brand in a joint venture with Combs.
DeLeon tequila, produced in Guanajuato, Mexico, under the guidance of founder Brent Hocking, had staked a place in the industry as an ultra-luxe product, with expressions priced between about $200 and $1,000. The acquisition, which reflects a similar business model Diageo and Combs have for Ciroc Vodka, reflects Diageo's goal of expanding into upscale tequilas, following the loss of its distribution partnership with mainstream brand Jose Cuervo last year. According to a Bloomberg.com report last June, Diageo's North American president Larry Schwartz told investors in December 2012 that any tequila replacing Cuervo in the company's portfolio would have to be a premium label.
DeLeon tequilas currently include a blanco, reposado, añejo, extra-añejo and "Leona," a limited "Reserva" release. The aged tequilas are "finished" with a few months' aging in barrels that previously held wine (often sweet wines like Sauternes), and are often aged longer than other labels in the same category. The packaging and presentation are elaborate, with a heavy sterling silver stopper designed by rock jewelry designer Bill Wall. Over the past three years that the tequila has been on the market, the focus has been on aligning it with rock musicians and fashion icons.
Schwartz was quoted in Diageo's release as saying, "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. 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." Under the Ciroc partnership, that label grew from a barely-known French grape-based vodka to a $100 million annual business offering a range of flavored expressions.
In the same release, Hocking is quoted as saying, "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." It was unclear from the release whether Hocking would have any additional role in the new venture, whether Diageo would adjust the ultra-high price points of the brand, or if the brand's limited edition series would continue it's planned Reserva releases beyond Leona. Financial details of the acquisition were also not discussed in the announcement.
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FTC Disclaimer: The author sometimes receives product samples for review, which carry no cash value and cannot be re-sold, and sometimes attends press events such as lunches or cocktail parties, designed to promote a given product. The author is not paid by any alcohol manufacturer, retailer or distributor, or provided compensation apart from revenue from an assigning publishing company for editorial publication. Opinions are the author's own. By the way, you should be 21 or older to read this page. Author received no additional compensation or samples in connection with this article, though he has sampled all the DeLeon expressions and is doggedly holding on to his sample of Leona, mourning the day the last drop is drunk.