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10 March 2021

AB-InBev drags Constellation to court over use of Corona name

USA | Grupo Modelo, the Mexican arm of AB-InBev, has accused Constellation Brands in a lawsuit of breaching a deal on the use of the Corona brand name by applying it to a product other than beer, it was reported in February 2021.

When AB-InBev took full control of the Mexican brewer in 2013, it agreed with US antitrust regulators to sell Grupo Modelo’s business in the US to Constellation, including the Corona brand. AB-InBev retained rights to Corona and other Modelo brands in Mexico and in the rest of the world.

Since 2020, Constellation has used the name for its Corona Hard Seltzer.

Per media reports, AB-InBev confirmed the filing and said that it had failed to settle the matter with Constellation directly. Modelo believes that the original licensing arrangement for Corona only extended to beer and did not include hard seltzer.

Are hard seltzers a beer-like product?

Constellation, for its part, said it was “very surprised” by the development and argued that AB-InBev’s claims, including that its seltzer should not be classified as a beer, were without merit and were an attempt to restrain a strong competitor.

Constellation may have a point here: hard seltzers are included in US beer sales, because they are fermented like a beer and therefore enjoy a lower tax rate than spirits-based drinks.

Constellation added that it had “fully and completely” complied with the terms of the sub-licence agreement and would vigorously defend its rights.

Constellation launched Corona Hard Seltzer in February 2020 and reported in October that the brand had a 6 percent share of the US seltzer market, making it the fourth-biggest brand in the segment. The top spots are held by Mark Anthony Brands’ White Claw, Boston Beer’s Truly and AB-InBev’s Bud Light Seltzer.

 

Hard seltzers could capture a 15 percent share of the US beer market in 2021.