UK: Brown-Forman and Diageo to clash over rights to JD

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A legal battle is brewing over the rights to one of the world’s top spirits brands, Jack Daniel’s, in the UK market, between owners Brown-Forman and Diageo, who were distributing the brand.

Brown-Forman last week said in an SEC filing that it has filed a lawsuit against Diageo Great Britain seeking judicial confirmation that it had no obligation to renew its agreement with Diageo for the distribution of Jack Daniel's Tennessee Whiskey in the UK.

The distribution agreement came to an end on July 31st. And Brown-Forman said Diageo had an option to renew its exclusive distribution rights, provided it met certain performance criteria - as measured by the UK customs department import statistics - and made a renewal payment.

However, in the filing Brown-Forman says Diageo failed to meet either of these conditions. But according to the filing, Diageo is hitting back with a counterclaim asserting its right to renew the agreement. It is making a claim against Brown-Forman for lost profits of US$54m to US$66m from the distribution of Jack Daniel's whiskey during the renewal period.

Brown-Forman, however, believes its interpretation of the contract is correct and that Diageo Great Britain has no right to renew the agreement. It said that according to its legal advice, the case will not hurt its financial position.

Meanwhile, the filing went on to announce that senior vice president of Brown-Forman Beverages Worldwide and director of spirits sales for the US open states, W.L. Lyons Brown III, had resigned from the company for personal reasons.

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