The Diageo Lawsuit, CRT Standards, and the Future of Additive-Free SpiritsMay 8

The CRT and Tequila Labeling Standards

The Tequila Regulatory Council (Consejo Regulador del Tequila or CRT) was established in 1994 to safeguard tequila production by enforcing the official NOM standards. These rules dictate that only products made from Blue Weber Agave in designated regions may be called tequila. Initially, tequila was expected to be produced from 100% agave, as defined in 1949, but over time, economic and industrial pressures led to the introduction of “mixto” tequila. In this category, up to 49% of fermentable sugars may originate from non agave sources (typically cane sugar), meaning that even bottles labeled “100% de agave” might contain only 51% agave-derived sugars.

Complicating matters further is the allowance for additives. Under current CRT NOM standards, even tequila marketed as “100% agave” may include up to 1% of substances—such as caramel coloring, oak extract, glycerin, or sugar syrups—without explicit disclosure on the label. While these additives help ensure consistency in mass production, they place smaller, artisanal producers at a disadvantage because they cannot tout an “additive free” claim. In August 2024, Mexican authorities confirmed that labels cannot use such a “clean” claim, even when producers truly refrain from additives, cementing an imbalance in marketing and consumer transparency.

The Diageo Lawsuit and Its Industry Implications

In early May 2025, a lawsuit was filed against Diageo, targeting its flagship premium tequilas—Don Julio and Casamigos—for allegedly misrepresenting their purity. Plaintiffs contend that these brands, despite carrying the “100% agave” label, are adulterated with cheaper alcohols such as cane spirit. If proven, the legal fallout could force a court injunction compelling Diageo either to reformulate its products or to remove the “100% agave” claim from packaging and advertising. This outcome would mark a significant change, setting a precedent that such claims must reflect a product in which 100% of fermentable sugars truly originate from agave.

The controversy uncovers longstanding regulatory concessions that favor large, industrial producers. The CRT’s stance, by permitting undisclosed additives and preventing independent “additive-free” certifications, has effectively limited the marketing advantages of craft producers. With independent quality initiatives (such as those launched by the Tequila Matchmaker website) running afoul of regulators, the lawsuit intensifies debates over transparency. Furthermore, any discovery that adulterated tequila has been certified and exported under CRT oversight risks not only legal liabilities but also a major reputational crisis for the denomination of origin, especially in international markets that expect the veracity of labels similar to Champagne or Cognac.

Diageo’s Defense Strategy: Regulatory Compliance and Scientific Scrutiny

Diageo is preparing a vigorous legal defense. At the heart of its argument is strict compliance with existing regulations: both Don Julio and Casamigos display the official NOM identifier and adhere to CRT guidelines. According to Diageo, these certifications confirm that the tequilas are produced solely from agave sugars (with only legally permissible additive use) and processed under mandated protocols. The company insists that regulatory bodies in both Mexico and the United States endorse their product specifications, thus providing strong evidence against claims of mislabeling.

A key component of Diageo’s likely defense will be a challenge to the scientific evidence offered by plaintiffs. The lawsuit cites nuclear magnetic resonance (NMR) testing to detect non agave alcohol traces. Diageo, however, is expected to counter that such tests may lack definitive proof due to methodological issues such as sample variability, the potential for natural fermentation byproducts to mimic cane spirit markers, and questions over test controls and contamination. By asserting that “100% agave” as defined by industry standards can legally incorporate minor additives, Diageo frames any alleged adulteration as within regulatory norms rather than intentional misrepresentation. In addition, the company strongly refutes any claims of collusion with the CRT and stresses that no authorities have sanctioned their practices.

Public messaging from Diageo emphasizes brand heritage and quality, highlighting, for instance, the legacy of Don Julio and the celebrity association with Casamigos, while insisting that the lawsuit is politically and commercially motivated rather than evidence based. This strategy aims to preserve consumer confidence by casting doubt on the independent tests and the motivations behind the lawsuit.

Potential Outcomes and Long Term Impact on the Industry

The legal battle may conclude in one of three ways, each with its own implications for producers, consumers, and regulators:

Outcome 1: Plaintiffs Succeed

A victory for the plaintiffs would symbolize a landmark shift toward transparency. Should the court find that Diageo’s products are indeed adulterated:

• For Producers: There would be a mandate to either reformulate tequilas or remove misrepresentative labeling. This move could trigger a market-wide reformulation race, with brands striving to prove that every molecule of fermentable sugar comes strictly from agave. It would also empower craft producers who eschew additives, enabling them to differentiate themselves.

• For Consumers: A ruling in favor of the plaintiffs would validate suspicions about misrepresented purity, encouraging more cautious purchasing behavior. This may spur the adoption of independent additive free certifications and lead to more detailed ingredient disclosures.

• For Regulators: Regulators would likely face intense pressure to overhaul their standards. Enhanced oversight—such as regular chemical testing, surprise inspections, and the allowance (or even encouragement) of independent third party certifications—might become necessary to restore international trust in the tequila denomination.

Outcome 2: Diageo Prevails

If Diageo successfully defends its practices:

• For Producers: Although current practices would remain legal, consumer skepticism may still prompt many companies to adopt even higher standards voluntarily. Increased transparency could become a competitive differentiator, even if not legally compelled.

• For Consumers: While a Diageo win might ease regulatory fears, many consumers may still harbor doubts about the purity of “100% agave” labels. Over time, passion-driven tequila enthusiasts may rely on community sourced data and independent reviews to guide their choices.

• For Regulators: A legal victory might bolster the CRT’s existing standards, yet the burgeoning demand for ingredient transparency means that even a win for Diageo won’t entirely quell calls for updated, stricter labeling regulations. This may eventually nudge regulators into implementing more liberal disclosure policies or even revising the 1% additive rule.

Outcome 3: Settlement or Mixed Verdict

A settlement or mixed verdict could compel Diageo to introduce minor changes—such as enhanced monitoring, minor label adjustments, or voluntary disclosures—without admitting fault.

• For Producers: Even a non decisive outcome signals that industry practices are under close scrutiny. This result is likely to encourage proactive reforms, as companies strive to avoid litigation and maintain consumer trust.

• For Consumers and Regulators: The industry-wide dialogue will persist, driving incremental reforms and more transparent labeling practices. Independent watchdogs and consumer advocacy groups may continue to pressure both producers and regulators for greater honesty in product representations.

Takeaways

The Diageo lawsuit represents a critical juncture for the tequila industry. Its core issues—transparency, authenticity, and regulatory adequacy—resonate not only with consumers but also with a sector keen to preserve its global reputation. Regardless of the outcome, the legal challenge compels a reevaluation of long established practices:

• For producers, genuine quality and truthful marketing are becoming paramount. The premium tequila market may soon witness brands that proudly adopt independent verification, leverage transparent production methods, and use authenticity as a competitive edge.

• For consumers, the case reinforces the need for vigilance. Understanding that “100% agave” may legally include minimal additives, knowledgeable consumers will likely begin to demand clearer labeling and more trustworthy certification standards.

• For regulators, whether spurred by a court ruling or not, the CRT and related agencies face a vital lesson in modernizing their practices. Embracing independent testing and permitting credible additive free certifications could restore consumer confidence and ensure that the tequila denomination remains a mark of quality on the global stage.

  
  

In essence, this lawsuit is not merely a dispute over label semantics. It is a turning point that challenges the industry to reconcile its storied traditions with modern demands for transparency. As artisanal producers, big brands, and regulators navigate this evolving landscape, the long term success of tequila as a premium spirit will depend on its ability to live up to the authentic promise its heritage reflects.