Diageo was recently targeted by a class action lawsuit from plaintiffs who assert that Tequila brands Casamigos and Don Julio don’t live up to their billing as 100% agave spirits. Beyond an initial statement noting that it will vigorously defend against the lawsuit, the spirits giant hasn’t spoken on the record about the situation. But in an interview with SND, Diageo’s president, U.S. Spirits, Stephen Rust hit back, calling the claims against the company’s brands unfounded and absurd.
“This is a deliberate attempt to hurt our brands, hurt our people, hurt our industry,” said Rust. “It’s fundamentally false and without merit.” Don Julio leads the luxury Tequila market in the U.S. with volume of 3.3 million cases, according to Impact Databank, while Casamigos ranks third in the luxury segment at just under 2 million cases.
The lawsuit, filed in U.S. District Court in New York, was brought by consumers Avi Pusateri and Chaim Mishulovin and New York restaurant Sushi Tokyo. Based on private testing, it accuses Diageo of using lesser ingredients in its Tequilas while marketing them as 100% agave. The plaintiffs also cite unverified reports of lapses at Tequila’s regulatory body the CRT as allowing big brands to substitute cane and other types of alcohol for agave. They’re seeking $5 million in damages plus attorneys fees.
Rust said the effort amounts to a challenge to drinks regulatory bodies in countries around the world, in its assertion that private individuals are better equipped to determine authenticity of products than duly appointed authorities.
“Our brands are rigorously tested by the CRT, and in order to get export certificates they need to meet all of the CRT’s criteria,” he said. “The CRT is the only body the Mexican government authorizes to do this. We are in compliance. That’s not in question.
“(The plaintiffs) claim they have new science,” Rust continued. “One thing I know is that science is open to peer review. If they have something to offer the CRT, I would encourage them to engage that body and bring their methods forward for peer review.”
Rust added that the hundreds of millions of dollars Diageo has poured into its Tequila operations and the communities where it operates over the years are investments undergirded by its confidence in the regulatory system that governs the agave category. “We believe deeply in this,” he said. “You will see us continue to invest, and not only for the opportunity in America. We want to bring agave spirits to the world.”—Daniel Marsteller
