Welcome back to the BevNET spirits newsletter. This week I’m digging into the lawsuits alleging Diageo’s major tequila brands aren’t really tequila, and what that means for the wider bev-alc industry.

What insiders are reading: Check out exclusive alc data from NIQ and how one Bachelor contestant found love (in canned cocktails).

Thanks for reading.

-BevNET spirits editor, Ferron Salniker

Rumors that have long-circled major tequila companies – that their 100% tequila is not really tequila – have finally made their way from the cantina to the American court system. A class-action lawsuit filed last week claims to have independent lab results as evidence, marking the third lawsuit accusing Diageo’s Casamigos and Don Julio of false advertising to more serious fraud and corruption charges. 

So what does the scrutiny mean for Diageo and the wider spirits industry? 

The most recent case alleges that Diageo, with the help of the the body that regulates the tequila industry, is engaging in “fraudulent scheming” and “racketeering,” under RICO violations (the Racketeer Influenced and Corrupt Organizations Act) – when we hear RICO, think the mob. That means the lawyers will basically “need to show through a lot of evidence that there's a conspiracy between the two to defraud citizens,” said liquor lawyer Sean O’Leary. It would be a huge scandal, a blow to the category’s reputation, and tough to prove. 

What will be key to watch is if the plaintiffs’ lawyers can get these cases past Diageo’s motions to dismiss, at which point Diageo will likely settle. If the case does get to that point, you can bet more class-action lawyers will smell blood in the water – or in this case, cane sugar in other tequila brands. 

Meanwhile, what can we expect from Diageo? Denial, as we’ve already seen. They also won’t get into a public debate about specific test results, suspects Robbie Vorhaus, a crisis and reputation expert. This isn’t just a legal battle, it’s a test of whether brand authenticity extends beyond mere marketing, he added. 

But the larger question is are agave spirits the harbingers of transparency in spirits? Or is this just another instance of Americans treating Mexico like its backyard, and demanding certain standards they aren’t asking of their own spirit industries or agencies? Additive-free conversations haven’t exactly transferred to whiskey yet and new TTB labeling is a long way off. It’ll be interesting to see if the concerns over tequila, plus the MAHA-moves of other F&B companies, spark a wider conversation in spirits or if this stays within agave geeks. I’ll be sipping my 100% agave, small-batch mezcal in the meantime (said this agave geek). 

Dust off your old trucker hats — Von Dutch is back. The brand name should create instant flashbacks for those who remember its brief but memorable ascent to the top of the pop fashion zeitgeist in the early to mid 2000s. But now revived as a licensed property, Von Dutch is hoping nostalgic consumers will embrace its venture into tequila, spiked seltzers, cafes and more, as vaguely outlined in a press release issued Tuesday. Get ready for rhinestones and get the scoop.

Diageo CEO Debra Crew has stepped down after two tough years on the job, as the spirits giant struggles with slowing alcohol consumption and tariff uncertainty. Crew steered the company through the challenging post-pandemic slump, but her tenure was marked by pressure from investors after a shock profit warning in Latin America and general sales slowdown. Read the full story on BevNET for more.

Limoncello, once your nonna's after-dinner delight, is bubbling up on cocktail menus and in RTD form on shelves. U.S. limoncello makers are riding the spritz wave to get more menu placements: as of fall 2024, about 11% of cocktail drinkers said they'd ordered a spritz and 4% of cocktail drinkers ordered a spritz without Aperol. We chatted with two producers taking different approaches and how they are leveraging new trends to sell a traditional spirit, insiders can read the full article.

Republic National Distributing Company (RNDC) is laying off more than 1,700 employees as it withdraws from California. The distributor's departure has left more than 2,000 wine and spirits brands in search of new wholesalers to reach the country’s largest spirits market. Paperwork was filed July 1 to layoff 1,756 employees across eight California locations, making it one of the biggest slashings the middle-tier or spirits industry has seen in years. Read the full story for more on the layoffs.

We’re tracking all the distribution shakeups too post RNDC’s California. After moving top-selling ready-to-drink (RTD) High Noon over from RNDC to Reyes Beverage in April, Gallo is making the same move with its spirits portfolio and select wines. Read more.

NA spirits/wine company, Undone, and global number-two mixer brand, Thomas Henry, are making their way to the U.S., and we talk how they’re aiming to make a zero-proof splash. The spirits & wine portfolio arrives as a value option compared to leaders on the market, will we begin to see a downshift in pricing in ANA spirits?  Read more.

Adult non-alcoholic beverage retailer Boisson appointed two new individuals to lead its now e-commerce-based business. Holly Berrigan has been named CEO and Hannah Delaney as president. The two leaders take over as the retailer charts a path forward after a tumultuous 2024 where it closed all retail locations, filed for bankruptcy and was restarted after being auctioned off. Read all about it.

How are you handling thorny issues like definition, pricing, and style in adult non-alc (ANA)? We asked former sommeliers at The French Laundry, Ian and Carly Blessing. The duo applied their hospitality expertise to a new concept: a non-alcoholic tasting lounge that combines on-site production of the couple’s bitters line, educational tours, a full zero-proof bar, and a curated NA bottle shop. The cocktail flight is the top-seller at the bar so far. As for what the Blessings and their customers are excited about? Insiders can access the full interview to find out (hint: there’s a hefty dose of functional ingredients ahead).