US court rules in favor of Constellation Brands in Corona brand name lawsuit

USA – Manhattan federal jury has found Constellation Brands not guilty of going contrary to the distribution agreement with AB InBev in using the Corona brand name with its hard seltzer brand.

In 2021, AB InBev’s Mexican division, Grupo Modelo, filed a lawsuit against Constellation Brands, accusing it of breaching a deal by using the Corona brand name with a non-beer product–namely its Corona Hard Seltzer.

Constellation Brands gained the right to use the Corona name in the US after InBev sold Grupo Modelo’s US business to Constellation in 2013. In the agreement, AB InBev would maintain the rights to the Corona name elsewhere.

Seven years later, The American producer and marketer of beer, wine, and spirits launched a 4.5% ABV Corona Hard Seltzer in the US, with hopes of propelling the launch with the use of the ‘unbelievably strong brand equity’ enjoyed by the brand Corona.

In the lawsuit, Modelo had claimed that Constellation only had gained the rights to use Corona with beer products.

The company also argued that the tequila-barrel beers break U.S. and Mexican laws governing the use of the word “tequila” and that the bourbon-barrel beers violate Constellation’s agreement to sell only “Mexican-style beers” under the Modelo name.

Constellation Brands, meanwhile, argued the launch of Corona Hard Seltzer complied with the license agreement: reacting in 2021 that the ‘insinuation that Corona Hard Seltzer should not be classified as beer or a version thereof, is complete without merit, a blatant attempt to restrain a strong and well-established competitor in a high growth segment of the US beer market’.

In giving its verdict, the jury sided with Constellation Brands, giving it the green light to use the brand name with its hard seltzer. The decision also means Constellation Brands can continue distribution of its Modelo Ranch Water, launched in 2022.

Maggie Bowman, Vice President, of Communications Constellation Brands Beer Division, said: “We are pleased with the outcome of this trial and remain committed to continuing to operate by the terms of our sub-license agreement as we work with our distributor and retailer partners to continue to build brands consumers love.”

However, A Grupo Modelo spokesperson said the company is “disappointed with the verdict and evaluating all options.”

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