Hard seltzer first hit the marketplace about five years ago and rapidly grew in popularity with sales exceeding $4.5 billion in 2020. Wanting to ride the wave of success, many companies have introduced hard seltzers into this now crowded space. But what is a hard seltzer? Is it a form of beer or something else? Based on its popularity, most would say, “Who cares whether hard seltzer is beer, just give me one.” However, Modelo Grupo (“Modelo”) and Constellation Brands (“Constellation”) would say there is a lot riding on the answer.
Modelo, whose parent is Anheuser-Busch InBev (“AB”), created the Corona brand. In 2013, Constellation acquired perpetual, irrevocable, and exclusive license rights in the Corona marks, which gave Constellation the right to sell products under the Corona trademark. Then in 2020, Constellation introduced Corona Hard Seltzer, which is a sugar-based, fermented beverage produced in Coahuila, Mexico. Corona Hard Seltzer is now the fourth most popular hard seltzer in the United States, competing directly with Bud Light Seltzer and other AB hard seltzers.
Modelo sued Constellation in the U.S. District Court for the Southern District of New York over the use of the Corona trademark for Corona Hard Seltzer and for breach of contract, alleging that Constellation only has the right to sell beer products, not hard seltzer, under the Corona brand. According to Modelo, hard seltzer is not one of the allowable beer beverages.
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