June 16, 2008

Diageo and the Flavored Malt Beverage Coalition File Suit Against California’s Board of Equalization

NORWALK, Conn., June 16 /PRNewswire/ -- Diageo-Guinness USA, a division of Diageo, the worlds leading spirits, wine and beer company, and the Flavored Malt Beverage Coalition filed suit yesterday against California's Board of Equalization (BOE) challenging regulations that will reclassify flavored beer -- which is malt based -- as a distilled spirit, increasing the taxes on these products by more than 1600 percent.

The complaint seeks to invalidate the BOE regulations as illegal on a number of grounds, including that the BOE does not have the authority to classify alcohol beverages for taxation purposes and that flavored beer is beer, not distilled spirits, as a matter of law, and has been taxed as beer by the BOE for decades.

"The Board of Equalization has the authority to tax within existing classifications, but it does not have the authority to reclassify alcohol beverages for the purpose of taxation. The power to reclassify lies solely with the Department of Alcohol Beverage Control," said Kellye Walker, General Counsel, Diageo North America. "The BOE has completely overstepped its jurisdiction," Walker said today.

   The complaint was filed in California Superior Court in Sacramento County.    About Diageo  

Diageo (Dee-AH-Gee-O) is the world's leading premium drinks business with an outstanding collection of beverage alcohol brands across spirits, wines, and beer categories. These brands include Johnnie Walker, Guinness, Smirnoff, J&B, Baileys, Cuervo, Tanqueray, Captain Morgan, Crown Royal, Beaulieu Vineyard and Sterling Vineyards wines.

Diageo is a global company, trading in more than 180 countries around the world. The company is listed on both the New York Stock Exchange (DEO) and the London Stock Exchange (DGE). For more information about Diageo, its people, brands, and performance, visit us at http://www.diageo.com/ .

Celebrating life, every day, everywhere, responsibly.


CONTACT: Zsoka McDonald, Diageo, +1-203-229-4730; or Rachel Rosenblatt,FD, +1-212-850-5697

Web site: http://www.diageo.com/