Diageo has decided not to purchase the Jose Cuervo tequila brand after failing to agree on a deal with Mexican owners Beckmann family.
The decision resulted in ending a 26-year relationship between the two companies, where Diageo served as sole distributor for Jose Cuervo brand outside Mexico. The distribution deal is set to expire in June 2013.
According to Diageo, Jose Cuervo generated £300m of net sales in 2011 that accounts to about 3% of its revenue and 2% of profit. Its major markets are Canada, Spain, Greece, the UK and the US.
To make up for the loss of a major tequila brand, Diageo may now look to Beam, which owns the Sauza tequila brand.
Diageo said it will rely on innovation, acquisitions and partnerships to fill up the gap.
Due to economic slowdown in the European region, the company is eyeing developing markets of Africa, Asia and Latin America, where it plans to generate half of its net sales by 2015.
