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The Americas

17 September 2021

Take two: AB-InBev sues Constellation over barrel-aged Modelo beers

USA | More work for corporate lawyers. Even before AB-InBev’s lawsuit against Constellation Brands over a breach of their Corona licencing agreement has been settled, the Mexican arm of AB-InBev has accused Constellation Brands of a second breach of their deal, this time concerning the Modelo brand.

AB-InBev’s Mexican unit Grupo Modelo filed a suit in New York over Constellation’s launch of two Modelo Reserva beers, one aged on tequila and another on bourbon barrels. This was reported on 1 September 2021.

Per Grupo Modelo’s suit, the tequila barrel-aged Modelo Reserva is in breach of American and Mexican laws that strictly limit the use of the word “tequila”. The second beer breaches Constellation’s sub-licence to sell a “Mexican-style beer” because bourbon has nothing to do with Mexico. The sub-licence does not allow this type of spirit branding, the suit says.

Constellation claims innocence

Meanwhile Constellation retorted that Grupo Modelo’s claims were without merit and that it had fully complied with the sub-licence terms.

The spat refers to 2013, when AB-InBev sold Grupo Modelo’s US business to rival Constellation in order to appease US antitrust regulators. AB-InBev retained the rights to the Modelo brands.

The filing says Grupo Modelo notified Constellation of the issue in June and that Constellation refused to stop selling the product.

AB-InBev claims further that Mexico’s Tequila Regulatory Council (CRT) had also approached Constellation and told it to cease its use of the word tequila in marketing.

In February this year, Grupo Modelo filed a legal challenge in the same court over Constellation’s Corona Hard Seltzer, arguing that the 2013 licensing agreement only allowed Constellation to apply the Corona brand name to beer. Constellation said at the time that Modelo’s claims were without merit and an attempt to restrain a strong competitor.

The new case is the latest in an increasingly litigious beer market. In July, the CRT settled a four-year legal dispute with Heineken over the latter’s tequila-flavoured beer Desperados. Details were not disclosed.