Diageo and the Flavored Malt Beverage Coalition have filed a suit against California's Board of Equalization challenging regulations that will reclassify flavoured beer as a distilled spirit, increasing the taxes on these products by more than 1600%.

Flavoured beers are malt based, not spirit based, Diageo argues.

The complaint seeks to invalidate the BOE regulations as illegal on a number of grounds, including that the BOE does not have the authority to classify alcohol beverages for taxation purposes and that flavoured beer is beer, not distilled spirits, as a matter of law, and has been taxed as beer by the BOE for decades, a statement said.

"The Board of Equalization has the authority to tax within existing classifications, but it does not have the authority to reclassify alcohol beverages for the purpose of taxation. The power to reclassify lies solely with the Department of Alcohol Beverage Control," said Kellye Walker, general counsel, Diageo North America. "The BOE has completely overstepped its jurisdiction," Walker said.

The complaint was filed in California Superior Court in Sacramento County.