Grupo Modelo drags its partner Constellation to court

Mexican brewer Grupo Modelo announced on 15 December 2009 that it is suing its partner Constellation Beers in a New York court in a dispute over marketing expenses.

Constellation, the world’s number one wine company, is an equal partner with Grupo Modelo in Crown Imports. Crown Imports is the exclusive importer in the U.S. of Corona Extra, Modelo Especial, Corona Light, Pacifico, and Negra Modelo beers, among others.

Grupo Modelo alleges that Constellation and certain of its affiliates violated some terms of their contract.

Grupo Modelo argues that Constellation tried to impede certain marketing efforts by Crown Imports to force Grupo Modelo to cough up a disproportionate part of Crown’s expenses. Through the court action Grupo Modelo seeks to recover part of the expenses that should have been absorbed by Constellation.

For the time being, Grupo Modelo said it will put up part of Crown’s marketing expenses to maintain in 2010 the same level as in 2009.

Readers will remember that it was only in 2007 that Grupo Modelo and Constellation set up their joint venture – after the Mexican brewer had terminated its long standing distribution contract with privately-held importer Gambrinus Company under not-so-kosher circumstances.

Grupo Modelo is currently in arbitration with AB-InBev over InBev’s acquisition of Anheuser-Busch, which had a 50 percent non-controlling stake in Grupo Modelo. Grupo Modelo argues that Anheuser-Busch had no right under their agreement to transfer its stake. A ruling in this case is expected early next year.