USA: Constellation Brands Emerges Victorious in Legal Clash with Modelo

A federal jury in Manhattan concluded on Wednesday that Constellation Brands did not breach a U.S. distribution agreement with Grupo Modelo, the Mexican arm of AB InBev, by selling hard seltzers under the Modelo and Corona labels.

In 2021, Modelo sued Constellation, alleging that the launch of Corona Hard Seltzer in 2020 violated a sub-licensing arrangement for the Corona brand, which was granted as part of the antitrust regulations after AB InBev took full control of Grupo Modelo in 2013. (, 15.2.2021)

In December 2022, US District Judge Lewis Kaplan dismissed the lawsuit, ruling that the contract's definition of "beer" was too vague to make a decision before trial, despite acknowledging that Modelo appeared to have more support from dictionaries in the debate. (, 14.12.2022)

Modelo expanded its lawsuit last year to include Modelo Ranch Water after Constellation introduced the alcoholic sparkling water. Constellation argued in court that these drinks fell under a part of their license allowing them to sell "other versions" of beer or malt beverages under the Modelo brand names.

The jury ultimately accepted Constellation's argument that its license to distribute beer under Modelo's brand names also covers the sale of alcoholic beverages like Corona Hard Seltzer and Modelo Ranch Water.

A spokesperson for Grupo Modelo expressed disappointment with the verdict and stated that the company is exploring all available options.

Conversely, a Constellation spokesperson expressed satisfaction with the verdict and affirmed the company's commitment to abide by the terms of their sublicense agreement.

Modelo has also sued Constellation separately over its tequila- and bourbon-barrel aged Modelo Reserva beers, which is currently in mediation. Modelo claims that the tequila-barrel beers violate U.S. and Mexican laws regarding the use of the term "tequila," while the bourbon-barrel beers allegedly breach Constellation's agreement to only sell "Mexican-style beers" under the Modelo name. (, 3.9.2021)

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