A-B InBev Files Lawsuit Against Constellation Brands Over Corona Hard Seltzer
Grupo Modelo, the Mexican business division of Anheuser-Busch InBev, has filed a lawsuit against Constellation Brands, alleging that the company is “misusing and misappropriating” the Corona trademark with Corona Hard Seltzer.
“Constellation cannot use the Corona trademarks for Corona Hard Seltzer because it is outside of the sublicense’s express limitation to ‘beer,’” Modelo wrote in its complaint. “Corona Hard Seltzer is not a beer, ale, porter, stout, or malt beverage, or a version or combination of any of those beverages, nor is it a non-alcoholic version of a beer, ale, porter, stout, or malt beverage.”
Constellation produces and imports Corona, Modelo and Pacifico to sell in the U.S. and Guam under a 2013 licensing agreement that followed A-B’s 2012 acquisition of Grupo Modelo. In the agreement, beer is defined as “beer, ale, porter, stout, malt beverages, and any other versions or combinations of the foregoing, including non-alcoholic versions of any of the foregoing.”
Corona Hard Seltzer launched in early 2020 and has become the fourth best selling hard seltzer in the country, with 3.9% of the market, behind A-B’s Bud Light Seltzer, which has 10.3% of the market, according to wholesaler data firm Fintech.
“Constellation’s newest product in the U.S. – Corona Hard Seltzer – improperly uses our Corona name for a spiked sparkling water featuring flavors like cherry and blackberry lime,” a Grupo Modelo spokesperson told Brewbound.
“We never agreed that Constellation could use our Corona name for products such as hard seltzer,” the spokesperson continued. “Corona has a rich history and authentic Mexican heritage, and we are filing this lawsuit to protect our rights to this iconic brand.”
Constellation launched Corona Refresca, a flavored malt beverage, in spring 2019. The two companies communicated throughout that product’s 18-month development process, but did not discuss plans for Corona Hard Seltzer, according to the complaint.
“We previously entered into a confidential alternative dispute resolution process with Constellation,” an A-B spokesperson told Brewbound. “Unfortunately, that process did not resolve the dispute and we are filing this lawsuit to protect our rights to this iconic brand.”
Hard seltzers entered the market in the mid-2010s, after the licensing agreement was penned, and reached $4.1 billion in off-premise retail sales last year, according to market research firm NielsenIQ. Their meteoric rise has outpaced hard seltzers’ ability to be defined neatly for tax and legal purposes, as in Oregon, where the Oregon Liquor Control Commission sorts them into wine or spirited, depending on their ingredients.
At the federal level, hard seltzers are in the same category as beer for tax purposes. The Internal Revenue Code of 1986, which classifies products for tax purposes, includes sugar as a substitute for malt in malt beverages, which are included in the Constellation/Grupo Modelo licensing agreement.
Constellation Brands expressed surprise by the lawsuit in a statement shared with Brewbound.
“We find these claims, including the insinuation that Corona Hard Seltzer should not be classified as beer or a version thereof, to be completely without merit, a blatant attempt to restrain a strong and well-established competitor in a high growth segment of the U.S. beer market, and completely misaligned with general industry and legal standards,” the statement continued. “We have fully and completely complied with the terms of our sublicense agreement, including the sublicense agreement’s dispute resolution procedures. We will vigorously defend our rights under our sublicense agreement and applicable law, and we look forward to continuing to build momentum for the Corona Hard Seltzer brand for many years to come.”
Corona Hard Seltzer sold $166.6 million at off-premise retailers in 2020, according to market research firm IRI.
Great Divide Brewing and Yeti Coolers Spar Over ‘Yeti’ Trademark on Glassware
Great Divide Brewing Company has filed an opposition to Yeti Coolers’ application to trademark the use of “Yeti” on “beer glasses, drinking glasses and mugs,” according to a document filed with the U.S. Patent and Trademark Office.
The Denver craft brewery opposes Yeti’s application on the basis of “priority and likelihood of confusion.”
Great Divide has produced beer glasses to promote its Yeti Imperial Stout since 2006 and “has developed extremely valuable goodwill with respect to the Yeti mark by virtue of its longevity of usage in commerce, promotional activities and the excellence of its products,” the brewery wrote in its complaint.
Yeti Coolers filed a trademark application on June 22, 2020, and Great Divide had to file its opposition by January 27, 2021, which it did. However, Yeti Coolers applied to trademark the Yeti name for “beverageware, cups, drinking glasses” on January 9, 2014, and was denied due to likelihood of confusion with Great Divide’s Yeti trademark.
“The examining attorney in that application presented evidence of significant overlap in the marketplace between breweries and beverageware,” Great Divide’s complaint reads. “The refusal is maintained as of this date and the application is suspended.”
Great Divide holds trademarks in the USPTO’s beer and ale class for Yeti (registered May 31, 2005), Chocolate Oak Aged Yeti (registered April 19, 2016) and Velvet Yeti (registered December 19, 2017), and in the distilled spirits class for Yeti (registered October 2, 2018), according to its opposition filing.
Stone Opposes Preppy Bastard Trademark Application
Stone Brewing has filed an opposition to the trademark application of Preppy Bastard, a New Jersey-based LLC attempting to register its trademark in the “beer, beer-based cocktail and craft beer” class.
The Escondido, California-headquartered craft brewery is opposing the application on grounds of “priority and likelihood of confusion” and “dilution by blurring.” Stone registered its trademark for Arrogant Bastard in 1997. The company’s track record of defending its trademarks is well-documented.
Preppy Bastard filed an application for its mark on an intent-to-use basis on July 14, 2020, and the window for opposition to the trademark opened on December 1, 2020. Stone filed its opposition on February 1, 2021.
As of February 12, Preppy Bastard does not appear to have any internet presence.
Stone argued that it “has senior use of the mark across the entire United States.” Its prayer for relief is that Preppy Bastard be granted no registrations.
Suzie’s Brewery Awarded Temporary Restraining Order Against Michelob Ultra Seltzer
Oregon-based Suzie’s Brewery, maker of Suzie’s Organic Hard Seltzer, scored an early victory last week in its lawsuit against Anheuser-Busch InBev in the U.S. District Court for the District of Oregon.
District Judge Michael H. Simon issued a temporary restraining order against the world’s largest beer manufacturer, which is barred from advertising Michelob Ultra Organic Seltzer as the first or only national USDA certified organic hard seltzer for 28 days.
“The court finds that Anheuser-Busch’s challenged statements are not truthful,” Simon wrote. “They are false and deceptive.”
Suzie’s filed its complaint against A-B on February 2, alleging the company was “using the bully-pulpit its massive national advertising budget allowed” to convince “health-conscious drinkers that its new organic hard seltzer is a unique, one-of-a-kind of product.”
“To be clear, it is not,” Suzie’s wrote. “Anheuser-Busch will continue to pursue its strategy of unfairly squeezing out its smaller competitors in the organic hard seltzer market (like Suzie’s Brewery) unless this court puts a stop to its misconduct.”
Suzie’s received its organic certification from the U.S. Department of Agriculture in June 2020, and brought its hard seltzer to five states the following month.
A-B launched Michelob Ultra Hard Seltzer in January 2021, leaning heavily on its USDA organic certification as a point of differentiation. In television commercials, the company called it “the only national USDA certified organic hard seltzer,” which Suzie’s said caused confusion among consumers and distributors.
“Many expressed confusion about Anheuser-Busch’s statements that Ultra Seltzer was the ‘first’ or ‘only’ USDA organic certified hard seltzer,” the company wrote in its complaint. “Others questioned the veracity of Suzie’s Brewery’s statement that it was USDA organic certified after hearing Anheuser-Busch (a large and trusted company) state that Ultra Seltzer was the ‘only’ organic hard seltzer on the market.”
A-B has maintained that the difference between its brand and Suzie’s is that Michelob Ultra Organic Hard Seltzer is the first nationally distributed certified organic hard seltzer, while Suzie’s is not available nationwide.
Judge Simon pointed to the Lanham Act, which prohibits false statements in advertising, as his reason to grant a temporary restraining order to Suzie’s.
“In short, the public has an interest in receiving accurate information and avoiding confusion in the marketplace,” he wrote.
To eliminate confusion and clarify Michelob Ultra Organic Seltzer’s status, Simon proposed the company reword its advertising to read that “Michelob Ultra Hard Seltzer is the only (or the first) USDA certified organic organic hard seltzer distributed nationally.”
A-B told the court it would cost $37,900 to edit its advertising, which cost $590,000 in total. The court instructed Suzie’s to post a $5,000 security bond, which it did on February 11.
“Further, if Anheuser-Busch prefers, because it is less expensive, it may simply delete the words ‘only’ and ‘first,’” Simon wrote. “There is nothing false about describing Michelob ULTRA organic hard seltzers as a ‘national USDA certified organic hard seltzer.’ That would appear to be even less expensive. The choice will be for Anheuser-Busch to make.”
The companies were ordered to confer to propose a schedule to the court by February 15.