Diageo is exchanging brand rights for vodka brand Ciroc for a majority stake in Tequila brand Lobos 1707.
The drinks giant has struck a deal with US investment firm Main Street Advisors for a joint venture covering the two brands.
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Diageo is swapping the majority ownership of Ciroc’s brand rights in North America for a majority stake in Lobos 1707 worldwide. The financial terms were not disclosed.
The UK group formed a marketing partnership with US musician Sean “Diddy” Combs in 2007 to promote Ciroc, a tie-up that ended in 2023 amid a legal dispute between the two sides. That was was settled in January 2024 when Diageo also announced full ownership of another Tequila brand, DeLeon, it had purchased with Combs in 2013.
Before Christmas, Bloomberg reported Diageo had contacted potential parties to gauge interest in acquiring Ciroc.
Diageo will retain the rights to Ciroc outside North America.
“The Main Street Advisors track record speaks for itself and, together, we will establish a strong platform to unleash the full potential of the Cîroc brand for new generations and to drive the next phase of growth for Lobos 1707,” Sally Grimes, the CEO of Diageo’s business in North America, said.
In the six months to 31 December, Ciroc’s net sales fell 32% on a reported and on an organic basis. Volumes fell 28% organically.
During the 12 months to 30 June last year, the brand’s net sales dropped 26% organically and on a reported basis. Volumes declined 23% on an organic basis.
Lobos 1707 Tequila was set up by in 2020 by Diego Osorio. US athlete LeBron James became an early investor in the company in the same year.
The business’ range of Tequilas includes a reposado, an añejo and an extra añejo. It also markets a mezcal.
The principal market for Lobos 1707 Tequila is in North America, although it entered the UK through Selfridges in late 2023 and its products are still available via the department store’s website.
Paul Wachter, Main Street Advisors’ founder and CEO, said: “Cîroc and Lobos 1707 have incredible potential and, through this collaboration, we are unlocking new opportunities to accelerate their reach, resonance and revenue growth in ways that traditional models cannot achieve.”
The companies have named former TikTok marketing executive Nick Tran the new venture’s president and CMO.
He said: “The way modern consumers engage with spirits continues to evolve. That requires brands to evolve at the same pace. Today, social experiences are more intentional, digital spaces drive discovery, and transparency matters more than ever. To grow brands, we must reimagine storytelling, rethink engagement and create experiences that are much bigger than just the liquid.”
Main Street Advisors’ portfolio also includes an investment in Gin & Juice, the RTD brand set up rappers Dr Dre and Snoop Dogg.
