USA: AB InBev loses appeal in legal battle with Constellation Brands over the definition of beer

The years-long saga between Anheuser-Busch InBev and Constellation over the definition of beer continues, VinePair reported on March 26.

On March 25, the United States Court of Appeals for the Second Circuit upheld a jury’s March 2023 ruling that hard seltzer is beer. That decision dictates that Constellation — which exclusively owns the licensing rights to distribute Corona and Modelo in the U.S. — did not violate the 2012 licensing agreements outlined by ABI-owned Grupo Modelo with its releases of Corona Hard Seltzer and Modelo Ranch Water.

After the three-judge panel affirmed the ruling, a spokesperson for Grupo Modelo told Brewbound that they will continue to defend their brands and “enforce [their] commercial agreements.” Grupo Modelo maintains the rights to produce and distribute Corona and Modelo beers outside of the U.S.

“For almost 100 years, Grupo Modelo has invested in and built Corona and Modelo to become leading brands in Mexico and in markets around the world,” the spokesperson said. “When Grupo Modelo provided Constellation with a license to sell those beer brands in the U.S., Grupo Modelo never agreed that Constellation had the right to use our iconic Corona and Modelo brands for sugar-based seltzers that are clearly not Mexican cervezas.”

The legal battle between the two beverage giants started in 2021 when Grupo Modelo initiated a lawsuit against Constellation Brands, claiming that company violated their right to use the Corona label when they debuted the Corona Hard Seltzer line in 2020, and again in 2022 when they released Modelo Ranch Water. The suit alleged that the usage of the Corona and Modelo labels in the states can only apply to beer, sparking intense debate surrounding the legal definition “beer.”

As writer Dave Infante pointed out in Dec. 2022, there’s legally no such thing as hard seltzer in the U.S., as the Alcohol and Tobacco Tax and Trade Bureau (TTB) has yet to define the term. With the lack of a legal framework, retailers, distributors, and even consumers have largely treated hard seltzer as a beer product.

Over the course of the two-week trial in early 2023, Constellation Brands and ABI argued two different definitions of what falls under the scope of the beer category. After just an hour of deliberation, the eight-person jury sided with Constellation, determining that no licensing breach occurred regarding the production and distribution of Corona Hard Seltzer and Modelo Ranch Water.

Following the appeal’s ruling, Constellation maintains that they did not infringe on any trademark or licensing agreements.

“We are pleased with the continued affirmation that Constellation acted within its rights under our sublicense agreement,” a Constellation spokesperson told Brewbound. “We look forward to putting this issue behind us and focusing on driving the continued success of our business.”

27 March, 2024