Molson Coors must pay Stone USD 56 million over “Stone” misuse
USA | A San Diego federal jury said on 25 March 2022 that Molson Coors must pay craft brewer Stone USD 56 million for causing consumer confusion with ads for its Keystone brand.
Molson Coors’ branding infringes Stone Brewing’s “Stone” trademark, the jury said after a three-week long trial. It also found that Molson Coors did not infringe purposefully.
Stone’s attorney had asked the jury to award the craft brewer USD 216 million in damages.
Stone is sitting on a high debt pile
During the trial it came to light that San Diego’s craft brewer Stone owes its investor USD 464 million and even considered a sale, following years of declining sales.
The money needs to be paid back by June 2023, according to Maria Stipp, Stone’s CEO, who testified during the trial. But given the pandemic’s impact on the craft brewer’s already dwindling sales, private equity firm VMG/Hillhouse has given Stone some wiggle room to pay it back, Ms Stipp said.
Ms Stipp, who was CEO of craft brewer Lagunitas from 2015 until 2020, was introduced to Stone through the investment firm after Stone’s CEO Dominic Engels suddenly resigned in August 2020.
VMG joined Stone as a minority investor in 2016. Stone Brewing and Stone Distributing are both majority-owned by founders Greg Koch and Steve Wagner.
Making headline news
In light of Stone’s debt pile, we can understand why Stone has been flailing around in recent years, making headline news of the wrong kind and antagonising some of its fans.
It started with the legal battle against Molson Coors over trademark in 2018, which many thought an extreme move. In 2019, Stone sold its struggling Berlin location, which Greg Koch blamed on boorish German beer drinkers who did not get craft beer. In 2020, it suddenly exited Shanghai, where it had been operating a taproom since 2018, citing tariffs and covid as having negatively impacted its margins. This brought Stone’s overseas expansion to an end.
Over in the US, things did not look much better. In 2020, Stone had to lay off more than 300 workers, or 30 percent of its staff, because of the pandemic but did not re-hire them when covid restrictions were eased, media reported. This did not go down well with the commentariat. Nor did Stone’s going after a nano brewery in rural Kentucky – Sawstone – for trademark infringement.
In recent years, Stone has filed more than 125 trademark infringement complaints. They are directed against all manner of bars, restaurants, pizza shops, wineries and even a popular rock-climbing franchise for using “Stone” or “Bastard” as part of their monikers, US Patent and Trademark Office records show. Last but not least, in November 2021, Stone was evicted from its Napa taproom over unpaid rent.
Stone’s sales and profits decline
None of these headlines would have benefitted its sales, which declined nearly 20 percent since the Keystone rebrand. Since Stone sold about 400 000 barrels beer in 2018, its 2021 output would have been 320 000 hl. Its year-to-date sales are down 6 percent, Ms Stipp admitted.
In Stone’s view, the decline is due to Molson Coors’ revamp of its economy beer brand Keystone Light in 2017, which confused Stone’s consumers. Moreover, Keystone’s campaign “Own the Stone” has cost the craft brewer USD 174 million in lost profits over the years.
Stone tried various tactics to stem the decline. Per courthousenews.com, Ms Stipp said: “We tried price, a marketing campaign, incentives – everything we could think of to do to change from negative to positive and it’s not making a difference. I’m frankly not sure what else we can do.”
