Anheuser-Busch InBev has filed a pair of lawsuits this week, including one accusing the company’s Texas-based energy supplier of price gouging during Winter Storm Uri in February.
Symmetry Energy Solutions, which supplies natural gas to A-B’s brewery and glass manufacturing plant in Houston, billed the world’s largest beer manufacturer $4.85 million for its energy use in February 2021, due to Texas’ spot energy market.
In its complaint, A-B said its bill should have been $233,298.74, based on its agreed-upon rate of $4.79 per metric million British thermal unit (MMBtu) for its overtake usage, not the $402.26 per MMBtu charged by Symmetry. A-B also said Symmetry billed it for more overtake usage than it actually used. During the storm, Texas gas suppliers made $11.1 billion due to increased demand while much of the state was without power, according to a report in Fortune.
“Winter Storm Uri caused untold harm and suffering to thousands of people across Texas and the United States in February 2021,” A-B wrote in the complaint filed on Tuesday in the district court of Harris County, Texas.
“By all accounts, it was the worst winter storm to hit this state in the last half century and precipitated a catastrophic failure of its energy markets,” A-B continued. “Nonetheless, Symmetry, an energy supplier, seeks to use the storm to obtain a windfall through the improper manipulation of the February volume commitment and overtake pricing formula.”
During the storm, which plunged Texas and much of the south into a deep freeze in mid-February, Symmetry’s pipeline company issued a curtailment notice that included the Houston brewery and glass manufacturing facility. A-B reduced its usage at both during the affected days, but could not stop usage completely, particularly at the glass plant, because “stopping the supply of natural gas would ruin the furnace, which could take millions of dollars and several months to rebuild.”
A-B is seeking a jury trial and a declaration that its February 2021 bill is “no more than $233,298.74.”
A-B Challenges Constellation’s Modelo Reserva Brand
Also this week, A-B’s Mexican business unit Cevercería Modelo de México (Modelo) filed a lawsuit against Constellation Brands in the U.S. District Court Southern District of New York alleging that the plaintiff’s production of spirits barrel-aged Modelo Reserva violates the companies’ sublicense agreement.
The 2013 agreement, which was necessitated by A-B’s 2012 acquisition of Grupo Modelo, gives A-B’s business unit in Mexico “the right to make the brand-critical decisions of whether (and when) to extend the Modelo brand by affiliating it with spirits,” according to the complaint.
The Modelo Reserva line, which is only available in a few test markets according to a Constellation spokesperson, includes two lagers, one aged on wood from bourbon barrels and one aged on wood from tequila barrels.
Both Modelo and Constellation received cease-and-desist letters from the Consejo Regulador del Tequila (CRT), a private organization that enforces tequila’s appellation of origin on behalf of the Mexican government, according to the court filing.
“Constellation’s attempt to associate the Tequila Barrels Beer with ‘Tequila,’ despite lacking the requisite authorizations from the Mexican government, is likely to confuse consumers by suggesting (falsely) that Constellation’s product complies with the requirements and standards governing the use of the term ‘Tequila,’” according to the complaint.
Grupo Modelo also opposed Constellation’s use of bourbon barrels in the production of Modelo Reserva, citing that the 2013 agreement “only allows Constellation to produce ‘Mexican-style’ and prohibits Constellation from using visual cues in the naming, labeling and trade dress that indicate any origin other than Mexico.”
“Bourbon is a distinctive product of the United States and has nothing whatsoever to do with Mexico or Mexican beer,” the complaint adds.
Grupo Modelo is seeking a declaration that Constellation “has no authorization” to produce, import or sell either of the Modelo Reserva offerings and that Constellation has breached the 2013 agreement.
“We believe these claims are without merit,” a Constellation spokesperson told Brewbound. “We have fully complied with the terms set forth in our sublicense agreement and will continue to vigorously defend our rights under the agreement and applicable law.”
