Diageo and P.Diddy fancy shot at $1000+ per bottle tequila brand

09-Jan-2014 - Last updated on 09-Jan-2014 at 12:11 GMT

Diageo says its purchase of $1000+ per bottle ultra-premium brand DeLeón with rapper P.Diddy will accelerate its share of a fast-growing tequila market segment.

The JV - a 50/50 global deal between Diageo and Combs Wine & Spirits (chaired by Sean Combs) builds on separate strategic alliance to develop ultra-premium vodka brand Cîroc - and Diageo says the DeLeón has a loyal following among Hollywood celebrities and musicians.

Since this alliance began in 2007, Diageo said Cîroc has grown from just 50,000 cases a year into a nearly 2m case brand.

Diageo said the Deleón acquisition will allow the brand to benefit from its strong distribution network, supply chain, and marketing capability, while Sean Combs has access to influencers and a "proven track record of marketing luxury lifestyle brands".

The spirits giant said the DeLeón purchase (it joins Don Julio in Diageo's portfolio) will accelerate its share of ultra-premium and above ($40+) tequila, as the second-fastest growing segment of the US tequila category, with 15% CAGR (Nielsen) for the 52 weeks ending December 2010 to December 2013.

DeLeón has five variants with suggested retail prices ranging from $120 to over $1000 and is distributed in 18 US states and Washington DC.