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• Diageo is trading its ownership of Cîroc Ultra-Premium Vodka in North America for a majority stake in Lobos 1707 Tequila, a brand backed by NBA star LeBron James. The transaction is the first from the company’s newly formed joint venture with financial investment firm Main Street Advisors. Terms of the deal were not disclosed.

• The Guinness owner said the joint venture will combine its supply chain expertise with Main Street’s success in accelerating the growth of “culturally disruptive consumer businesses.” Diageo will retain ownership rights for Cîroc outside of the U.S.

• The move comes a year after Diageo settled a legal dispute and cut ties with rapper Sean “Diddy” Combs. The entertainer partnered with the liquor maker to market Cîroc vodka in 2007, but the brand has experienced a decline in sales because of the controversies surrounding Combs. Diageo has been looking to sell Cîroc.

Diageo’s joint venture with an outside investor group provides a way for the company to better market brands it sees potential in while offloading its U.S. ownership of a spirit that has weighed on the company.

The track record for Main Street Advisors “speaks for itself and together, we will establish a strong platform to unleash the full potential of the Cîroc brand for new generations and to drive the next phase of growth for Lobos 1707,” Sally Grimes, Diageo’s CEO, said in a statement.

Diageo added that the joint venture could help it grow its brands among the lucrative Gen Z demographic. Diageo hired Nick Tran, who previously led marketing at TikTok, to serve as president and chief marketing officer of the joint venture.

Tequila is growing in popularity among Gen Z, as younger drinkers crave real spirits. Lobos 1707, which launched in 2020, ages its tequila and mezcal products in oak and sherry wine barrels. James features heavily in its promotional campaigns.

Diageo is positioning its business to minimize the sales impact of President Donald Trump’s tariffs. It’s also leaning more heavily into luxury spirits, announcing last fall a new business unit dedicated to higher-end liquor.

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