The “100% Agave” Controversy: Legal and Strategic Lessons for the Premium Spirits Industry
Reading Time: 6 minutes
The tequila industry has become one of the fastest-growing segments of the global spirits market. Premium brands like Casamigos and Don Julio command high prices and enjoy strong consumer demand, built on a promise of authenticity and quality. That promise is now under intense legal scrutiny.
On May 5, 2025, plaintiffs filed a class-action complaint in the U.S. District Court for the Eastern District of New York. The lawsuit alleges that Casamigos and Don Julio were falsely marketed and sold as “100% agave” tequila when, in fact, they contained significant amounts of non-agave alcohol. Plaintiffs seek more than five million dollars in damages.
The case offers lessons that go far beyond tequila. It demonstrates how mislabeling can trigger multiple legal claims, how consumer protection laws operate in practice, and why authenticity must be the cornerstone of any premium brand.
Labeling is No Longer Just Marketing; It is Risk Management
According to the complaint, Diageo engaged in false advertising by labeling and promoting Casamigos and Don Julio as “100% agave” spirits. Plaintiffs argue this violates consumer protection statutes such as New York’s General Business Law, which prohibits deceptive acts and practices.
The complaint also includes claims for breach of express warranty. By placing “100% agave” on the label, the company allegedly created a warranty that the product would meet that standard. If independent testing proves otherwise, the warranty is breached.
Further, the plaintiffs argue that Diageo was unjustly enriched. Consumers paid premium prices under the belief that the tequila was pure agave, and Diageo retained profits that it would not have earned without those representations.
For SMBs, this illustrates that labels are more than marketing tools. They are legal representations that create enforceable rights. Misstatements can expose a company not just to disappointed customers but to statutory penalties, breach of contract claims, and restitution.
The Role of Science in Compliance
One of the most striking features of the Casamigos and Don Julio lawsuit is the reliance on isotope testing. This scientific method analyzes the chemical composition of a spirit to determine whether it is derived entirely from agave. The plaintiffs claim that isotope tests revealed significant dilution with other alcohol sources.
For the spirits industry, this shows how technology is raising the bar for accountability. For other industries, it sends the same message. Claims of authenticity, quality, or compliance are no longer protected by clever marketing. If a claim can be tested, it likely will be tested. Businesses must operate under the assumption that regulators, competitors, and even consumers now have the tools to verify or challenge product claims.
This shift means compliance is not something to be checked off once a year. It is an ongoing responsibility that requires continuous monitoring and documentation.
Certification and Oversight Under Scrutiny
The lawsuit also raises questions about the role of the Tequila Regulatory Council (CRT), the body in Mexico responsible for certifying whether tequila qualifies as “100% agave.” Critics suggest that large industry players may exert too much influence over certification processes, which could undermine the credibility of the certification itself.
This issue extends beyond tequila. Many industries rely on third-party certifications to demonstrate quality, safety, or sustainability. Whether it is organic food labels, fair-trade certifications, or building safety standards, the value of accreditation depends entirely on its credibility. If consumers or regulators lose trust in certifying bodies, the brands that rely on those certifications risk losing trust as well.
For small and mid-size businesses, the lesson is clear. Do not treat certification as a box to check. Treat it as a partnership. Audit the process, document the steps, and ensure that the certification you display is both legitimate and defensible.
Procedural Aspects of the Case
Because this is a class-action lawsuit, the plaintiffs must also seek class certification. That means the court must agree that the consumers who purchased Casamigos and Don Julio share common legal and factual issues that justify proceeding as a class.
If certified, the class could include thousands of consumers across multiple states, significantly increasing Diageo’s potential exposure. The plaintiffs are not only seeking monetary damages but also injunctive relief, which would prohibit Diageo from labeling or marketing the products as “100% agave” unless and until compliance is proven.
Class certification, injunctive relief, and statutory damages are especially powerful procedural tools in consumer protection cases. They can transform what might have been individual refund requests into multi million dollar corporate liability.
Lessons for Small and Mid-Size Businesses
- Accuracy in Marketing Claims
Premium pricing depends on authenticity. If you sell your product or service at a premium, you must deliver on that promise. Misrepresentation invites lawsuits and erodes consumer trust that can take years to rebuild. - Supply Chain Transparency
Today’s customers want to know what they are buying, where it comes from, and how it was made. A transparent supply chain protects against liability and strengthens consumer confidence. Document every step, from sourcing to delivery, to ensure accuracy in what you promise. - Authenticity Over Hype
Marketing campaigns can attract attention, but they cannot replace authenticity. Strong brands are built on delivering consistent value and honest messaging. Hype may sell once, but authenticity keeps customers coming back. - Plan for Legal Scrutiny
Regulators, competitors, and consumers are more willing than ever to scrutinize product claims. Building compliance into daily operations is less expensive and less damaging than defending a lawsuit. Preparation and documentation should be part of every company’s growth strategy.
The Bottom Line
The Casamigos and Don Julio lawsuit exemplifies the increasing overlap between marketing, compliance, and consumer protection law. By alleging false advertising, breach of warranty, unjust enrichment, and violations of state statutes, the plaintiffs have created a broad legal challenge that could reshape how premium spirits are marketed.
For small and mid-sized businesses, the case serves as a reminder that every label, slogan, and product claim carries legal weight. Accuracy, transparency, and authenticity are not optional. They are the foundation of trust and the best defense against costly litigation.
At Jimerson Birr, we help businesses navigate these risks, from drafting compliant contracts to defending against consumer protection claims.
Contact us to learn how to protect your brand and avoid the pitfalls now facing the tequila industry.
Source: diageo-suit.pdf