Beer Giants Clash as Anheuser-Busch Moves Forward With Branding Lawsuit Against Corona Hard Seltzer

Constellation Brands, maker of popular Mexican beers Corona, Modello and Pacifico. (Photo: Justin Sullivan/Getty Images)

On Thursday a Manhattan federal court ruled that the lawsuit against Constellation Brands will move forward. The lawsuit claims that the sale of Corona Hard Seltzer violates the licensing agreement between Constellation Brands and Anheuser-Busch InBev-owned Grupo Modelo. Corona Hard Seltzer was launched in February 2020 and the lawsuit was initially filed in February 2021.

In 2013, AB InBev, the company most famously behind Budweiser, acquired Grupo Modelo. However, US antitrust regulations required the company to license Grupo Modelo’s business in the US to another firm. Constellation Brands entered an agreement with Grupo Modelo and this deal included Corona along with the Modelo and Pacifico brands.

One of the main points is whether seltzer can be classified as beer. The terms of the agreement strictly said Constellation Brands had the right to use the Corona trademarks on certain beers. Therefore, it is being argued that when these marks were applied to hard seltzer a violation occurred. 

Grupo Modelo argues that the licensing arrangement to use the Corona branding only extended to beer. It did not include hard seltzer. 

According to Reuter, Constellation Brands in response has said it “fully and completely” compiled with the agreement terms. The firm is arguing that hard seltzer products are beer within the meaning of the sublicense. 

US District Judge Lewis Kaplan said, “[Constellation Brands] regulatory definition argument fails because the parties quite obviously were well aware of the varying regulatory definition of “beer” but elected to negotiate their own, different definition for purposes of the sublicense. And its remaining argument raise genuine issues of material fact.” 

Modelo is seeking damages, an injunction and other relief for the alleged infringement of Model’s Corona branding. 

The Alcohol and Tobacco Tax and Trade Bureau (TTB) places hard seltzer made from malt or sugar bases under the umbrella term ‘malt beverages’ which also includes beer. Therefore, beer and hard seltzer are often regulated the same. The case could set a precedent for the definition of beer and of hard seltzer in the eyes of contractual law.

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