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Diageo, one of the world’s largest alcoholic beverage companies, faces two class action lawsuits, claiming they deemed popular Tequila Brands Casamigos and Don Julio “100% Algave,” but it is said that the product contains unreleased alcohol.
The lawsuit filed in federal courts in New York and California alleges that independent lab testing revealed that both Casamigo and Don Giulio contained less than 100% agave ethanol despite labelling and marketing.
The plaintiffs in the New York case allege that Casamigos Blanco contains only 33% agave-derived ethanol, while Casamigos Reposade contains 42%. The California lawsuit filed earlier this year makes similar claims regarding Don Giulio Oblanco and Don Giulio 1942.
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In both lawsuits, Diageo misunderstood the consumer and decides to pay a premium price for a product that does not meet the criteria implied by the labeling. A New York complaint filed on behalf of a mixology instructor, social media bartender and kosher sushi restaurant calls for at least $5 million in damages and an injunction to prevent Diageo from continuing his deceptive marketing practices.
Under both Mexican and US labelling laws, tequila labelled “100% agave” must be made entirely from blue Weber agaves and cannot add sugar or alcohol from other sources. The lawsuit argues that Diageo could be violating those regulations if the lab findings are accurate. They also question the oversight of Consejo Regulador Del Tequila (CRT), the regulatory body responsible for certifying the production and export of tequila. Plaintiffs suggest that the CRT certification process has failed or that there is a lack of proper enforcement.
Diageo denied the allegations and said it was “decisively denies” any misrepresentation or violations of US or Mexican laws and regulations. In a statement, the company said it was behind the quality and credibility of tequila, and considers the lawsuit unfounded.
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Founded in 2013 by George Clooney, Rande Gerber and Mike Meldman, Casamigos was acquired by Diageo in 2017 for a maximum of $1 billion deal, including performance-based payments. Don Julio is another flagship tequila brand under Diageo’s portfolio, sold as a premium product. Casamigos sold over 3 million 9-liter cases in 2023, making it one of the Tequila brands that sells worldwide.
The lawsuit reflects growing concern over the integrity of labeling in the rapidly growing premium tequila market. Advocates in some industry are calling for the broader use of nuclear magnetic resonance testing to ensure label accuracy, especially with products that have no additives or are claimed to be made exclusively from agave.
Case outcomes can affect both Diageo’s brand reputation and broader industry practices. If the claim is upheld in court, they could cause regulatory reviews, financial penalties, or changes to the way premium tequila is sold.
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