Diageo reaches settlement with Major Brands

Diageo has paid a “substantial” sum as part of a settlement with US distributor Major Brands following allegations it had breached a franchise agreement.

Diageo has paid a “substantial” sum to Missouri-based distributor Major Brands as part of a lawsuit settlement

Missouri-based Major Brands filed a lawsuit against the British drinks giant in 2013 after its distribution agreement was terminated, claiming that Missouri’s franchise law prevents alcohol suppliers from terminating wholesalers without “good cause”.

In June 2013, a St. Louis judge ruled that the relationship between Major Brands and Diageo constituted a franchise, meaning Major Brands could file for damages. Diageo had ended its agreement with Major Brands to enlist Glazer’s as its new distributor.

Both parties have now reached a settlement where Major Brands received a “substantial payment” from Diageo. Specific terms of the settlement have not been disclosed.

According to KSDK.com, Major Brands’ attorney Rick Walsh told jurors there was evidence to show that the group had incurred damages worth nearly US$200 million.

A spokesperson for Diageo said: “Diageo is pleased to amicably resolve this regrettable dispute. Diageo continues to distribute our beer and Smirnoff Ice lines with Major Brands, recognising it as a well-run, family-owned business, which in the words of the late Todd Epsten, ‘uses its business to build the community.’

“We look forward to growing that business in Missouri with Major Brands.”

A spokesperson for the group said it is “happy to put this matter in the rearview mirror”.