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CONSTELLATION BRANDS, INC.

(STZ)
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AB InBev sues Constellation again, this time over Modelo beer

09/01/2021 | 09:14am EDT
abFILE PHOTO: The logo of AB InBev is pictured inside the brewer's headquarters in Leuven

BRUSSELS (Reuters) -The Mexican arm of Anheuser-Busch InBev has accused Constellation Brands in a lawsuit of a second breach of their deal allowing Constellation to sell Mexican beers in the United States.

Grupo Modelo filed a suit in the U.S. district court of the southern district of New York on Tuesday, according to a court document, over Constellation's launch of two Modelo Reserva beers, one aged on tequila and another on bourbon barrels.

It says the first breaches U.S. and Mexican laws that strictly limit the use of the word tequila, and the second breaches Constellation's sub-licence to sell "Mexican-style beer" because bourbon has nothing to do with Mexico.

The sub-licence also does not allow this type of spirit branding, the suit says.

Constellation said Grupo Modelo's claims were without merit and that it had fully complied with the sub-licence terms.

When AB InBev took full control of Grupo Modelo in 2013, it agreed with U.S. antitrust regulators to sell Grupo Modelo's business in the United States to Constellation. The world's largest brewer retained rights to Modelo brands.

The filing says Grupo Modelo notified Constellation of the issue in June and that Constellation had refused to stop selling the product.

AB InBev, which confirmed the filing, said Mexico's Tequila Regulatory Council (CRT) had also demanded Constellation cease its use of the word tequila in marketing.

In February, Modelo filed a legal challenge in the same court over Constellation's Corona Hard Seltzer, a sparkling water with alcohol flavouring, one of several seltzer drinks that have become very popular in the United States.

The AB InBev subsidiary said the 2013 deal only allowed Constellation to apply the Corona brand name to beer.

Constellation said at the time that Modelo's claims were without merit and an attempt to restrain a strong competitor.

The new case is the latest in an increasingly litigious brewing market. In July, the CRT settled a four-year legal dispute with Heineken over the latter's tequila-flavoured beer Desperados.

(Reporting by Philip BlenkinsopEditing by Mark Potter)

By Philip Blenkinsop


ę Reuters 2021
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Financials (USD)
Sales 2022 8 703 M - -
Net income 2022 36,5 M - -
Net Debt 2022 10 606 M - -
P/E ratio 2022 569x
Yield 2022 1,39%
Capitalization 40 798 M 40 798 M -
EV / Sales 2022 5,91x
EV / Sales 2023 5,51x
Nbr of Employees 9 300
Free-Float 73,0%
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Number of Analysts 24
Last Close Price 217,69 $
Average target price 262,35 $
Spread / Average Target 20,5%
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Managers and Directors
William A. Newlands President, Chief Executive Officer & Director
Garth Hankinson Chief Financial Officer & Executive Vice President
Robert S. Sands Executive Chairman
Lee Tussing Chief Information Officer & Senior Vice President
Tiffanie de Liberty Chief Compliance Officer, SVP-Wine & Spirits
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