Diageos co-purchase of DeLeon with Sean Combs: Give a damn?

Diageo's co-purchase of DeLeon with Sean Combs: Give a damn?

Even Diageo must have been surprised by the amount of headlines it garnered yesterday.

The company's purchase of the DeLeón Tequila brand, for an undisclosed amount, has been reported left right and centre. But the brand doesn't even sells 10,000 cases a year: Why the hoo-har?

Enter Sean 'Diddy' Combs.

The rapper, record producer and entrepreneur helped swing Diageo's name-check needle into the red yesterday and the drinks company must have been rubbing its hands in glee.

It certainly won't have been DeLeón that caught the eye for many: With such small volumes, I can't see the brand as a replacement for Jose Cuervo in any way, shape or form. Operating at the ultra-premium end of the Tequila market, DeLeón may give Diageo and Combs the opportunity to move down the price scale in the future. But, with five variants priced from US$120 to around $1,000 a bottle, the brand won't be stooping to a $19.99 price point any time soon, I'll wager.

And, if you want me to take a punt at how much DeLeón cost, consider this: In May 2007 – remember the cash-rich days of 2007? - Campari splurged $80m on an 80% stake in Cabo Wabo Tequila from rock star Sammy Hagar. At that time, Cabo Wabo's volumes ran to about 70,000 cases a year.

I don't see DeLeón going for much more than $20m.

Pocket change, huh?