AB InBev’s Mexican division, Grupo Modelo, filed a lawsuit against Constellation Brands in 2021: accusing it of breaching a deal by using the Corona brand name with a non-beer product – namely its Corona Hard Seltzer.
But the jury sided with Constellation Brands, giving it the green light to use the brand name with its hard seltzer. The decision also means Constellation Brands can continue distribution of its Modelo Ranch Water, launched in 2022.
What is 'beer'?
Constellation Brands launched 4.5% ABV Corona Hard Seltzer in the US at the beginning of 2020: hoping to propel the launch with the use of the ‘unbelievably strong brand equity’ enjoyed by brand Corona.
Constellation Brands gained the rights to the Corona name in the US when AB InBev sold Grupo Modelo’s US business to Constellation in 2013; while AB InBev maintains the rights to the Corona name elsewhere.
But in its lawsuit, AB InBev had claimed that Constellation only had gained the rights to use Corona with beer products.
Constellation Brands, meanwhile, argued the launch of Corona Hard Seltzer complied with the license agreement: reacting in 2021 that the ‘insinuation that Corona Hard Seltzer should not be classified as beer or a version thereof, is completely without merit, a blatant attempt to restrain a strong and well-established competitor in a high growth segment of the US beer market’.
Responding to Wednesday's decision in Constellation's favor, Maggie Bowman, Vice President, Communications Constellation Brands Beer Division, said: "We are pleased with the outcome of this trial and remain committed to continuing to operate in accordance with the terms of our sublicense agreement as we work with our distributor and retailer partners to continue to build brands consumers love."
A Grupo Modelo spokesperson said the company is "disappointed with the verdict and evaluating all options."
Both beer majors have pushed into the hard seltzer category: Constellation led by Corona Hard Seltzer and AB InBev with brands such as Bud Light Seltzer, Michelob Ultra Organic Hard Seltzer and Bon & Viv and Natty Light Seltzers.
