Diageo Considers Sale of Cîroc Vodka

According to a report from Bloomberg, British spirits group Diageo (LON:DGE) Plc is contemplating the sale of Cîroc Vodka, a brand formerly linked to music mogul Sean “Diddy” Combs. The company has begun discussions with potential buyers, including beverage companies and buyout firms, to gauge interest; however, these talks are still in the preliminary stages and may not lead to a sale.

Diageo’s interest in selling Cîroc comes after a lawsuit with Combs was resolved in January. Combs had accused Diageo of ignoring Cîroc and another brand, DeLeón Tequila, citing racial bias. He ultimately withdrew his claims, leading to the termination of their business relationship.

While Diageo has yet to comment on the potential sale, the company, which owns Johnnie Walker whisky among other brands, has been divesting assets as part of strategic portfolio management. In July, they agreed to sell Pampero rum and Safari flavored liqueur.

The company has faced significant challenges over the past year, such as a slowdown in Chinese demand for premium spirits and weak sales across the Americas. This has created obstacles for Chief Executive Officer Debra Crew, who took the reins last year. For the fiscal year ending in June, Diageo reported a 1.4% decrease in net sales, and their shares have dropped around 12% in London this year.

The potential sale of Cîroc is complicated by its previous ties to Combs and declining revenue. Net sales of Cîroc in North America fell by 28% for the fiscal year ending in June, according to Diageo’s annual report. Nevertheless, the brand's strong presence in nightclubs may lure certain buyers who see turnaround possibilities.

In addition to Cîroc, Diageo also owns other vodka brands such as Smirnoff and Ketel One.

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