One of the biggest mistakes Anheuser-Busch InBev has made in recent years was transferring the right to distribute Grupo Modelo beers in the U.S. to Constellation Brands Inc. ABI has endured month after month of market share losses while the Corona and Modelo brands have powered CBrands growth.
So, when CBrands introduced Corona Hard Seltzer and Modelo Ranch Water, ABI moved swiftly to stop it, asserting that Constellion didn't have the right to distribute anything other than traditional beer with the Corona and Modelo names.
The matter quickly ended up in federal court, and a jury accepted Constellation's argument that it's license to distribute beer bearing Modelo's brand names also allows it to "other versions" of beer or malt beverages under the Modelo brand names. like Corona Hard Seltzer and Modelo Ranch Water.
Needless to say, CBrands is quite pleased with the jury verdict, but tried not to gloat as it declared it was "committed to operating in accordance with the terms of our sublicense agreement."
Grupo Modelo, now an ABI subsidiary, pouted that it was considering all options. It has separately sued CBrands over its tequila- and bourbon-barrel aged Modelo Reserva beers. Modelo says those products break U.S. and Mexican laws governing used of the word "tequila" and the CBrands is allowed to sell only Mexican-style beers under the Modelo name. That case is currently being mediated.