Constellation Brands wins Corona Hard Seltzer battle against AB InBev
Constellation Brands gained the rights to the Corona name within 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 that agreement was created before hard seltzers shot to fame. AB InBev claimed Constellation only had gained the rights to use Corona with beer products: arguing the 2020 launch of the 4.5% ABV Corona Hard Seltzer in the US breached this license agreement. The same issue applies to Constellation's Modelo Ranch Water, whose launch followed in 2022.
The case has been rumbling on since AB InBev's Mexican division Grupo Modelo filed a lawsuit against Constellation Brands in 2021. But this week, a US appeals court upheld last year’s jury verdict that Constellation Brands did not violate the trademark rights of Grupo Modelo.
In 2013, Modelo granted Constellation a perpetual license to use the Corona and Modelo trademarks to produce and sell ‘beer’ in the US: defining beer as ‘beer, ale, porter, stout, malt beverages and any other versions of combinations of the foregoing, including non-alcoholic versions of the foregoing’.
Modelo argued this definition of ‘beer’ was unambiguous as a matter of law: saying sugar-based hard seltzers are plainly not ‘beer’ or ‘malt beverages’.
But Constellation Brands argued the contract permits ‘any other versions’ (pointing out that the licence covered non-alcoholic products, whereas Modelo’s definition defines beer as containing alcohol).
The Second Circuit deemed both parties’ readings of the term ‘versions’ are plausible: meaning the definition was ambiguous enough that it was down to the jury to resolve the question.
"We are pleased with the continued affirmation that Constellation acted within its rights under our sublicense agreement. We look forward to putting this issue behind us and focusing on driving the continued success of our business," a spokesperson for Constellation Brands told us (AB InBev did not respond).
Like other beer majors, both Constellation Brands and AB InBev have been pushing 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.
