Diageo (DEO, Financial) might be offloading Cîroc Vodka, once a nightlife staple and brand closely tied to music mogul Sean "Diddy" Combs. This potential move comes after a messy breakup earlier this year, where Combs accused Diageo of sidelining Cîroc and DeLeón Tequila, hinting at racial bias. Those allegations were later withdrawn, but the business relationship officially ended. Now, Diageo is chatting with potential buyers, including private equity firms and beverage companies, to see if there's interest in the vodka brand. Despite Cîroc's 28% drop in North American sales last year, its strong nightclub presence could make it a turnaround project for the right bidder.
This isn't just about Cîroc—it's a reflection of Diageo's struggle to stay on top in a challenging market. With slowing demand for luxury spirits in China and soft sales across the Americas, the spirits giant has been in damage-control mode. New CEO Debra Crew has inherited a rough ride, with the company's net sales slipping 1.4% in the last fiscal year and shares tanking 12% in London trading this year. Diageo has already started trimming the fat, selling off brands like Pampero rum and Safari liqueur, but Cîroc could be a tougher sell given its declining numbers and its history with Combs.
For investors, this is a moment to watch. Diageo's moves signal a shift in strategy—shedding underperformers while doubling down on big hitters like Johnnie Walker and Smirnoff. If they can pull off a decent sale of Cîroc, it could be a smart way to free up resources and refocus on their core business. But the stakes are high in a shaky global market, and the spirits industry isn't exactly overflowing with easy wins right now. Keep an eye on how this one plays out.
