In a fight between alcoholic beverage giants, a court may decide whether the definition of beer includes hard seltzer
The famous “beach beer” Corona is owned by the international beer behemoth Anheuser-Busch InBev. But thanks to an anti-trust settlement and a licensing agreement, in the United States the rights to the Corona brand are owned by Constellation Brands, a beer, wine, and spirits portfolio company.
Constellation Brands has marketed Corona Hard Seltzer in the U.S. and claims that its licensing agreement allows it to do so. Not so, says A-B InBev. A-B InBev has sued Constellation for breaching the licensing agreement, arguing that the agreement allows Constellation Brands to sell Corona beer in the U.S., but not Corona hard seltzer.
According to A-B InBev’s legal Complaint, the license to Constellation allows the latter to sell “Beer,” and defines beer as “beer, ale, porter, stout, malt beverages, and any other versions or combinations of the foregoing.”
Beer is made by the fermentation of sugar from the grain known as barley. Hard seltzer can be made by (a) fermenting sugar from barley (like beer), or by (b) just fermenting sugar, or (c) just by adding alcohol to seltzer. Corona Hard Seltzer is brewed from fermented sugar. Does that make Corona Hard Seltzer a form of beer?
Constellation has moved to dismiss A-B-InBev’s Complaint, arguing that Corona Hard Seltzer is a form of beer because of the way that it is brewed. It notes that U.S. federal regulations define beer as including alcoholic beverages brewed from fermenting sugar, which is how Corona Hard Seltzer is made. Constellation also argues that A-B InBev refers to its own line of hard seltzers as “beer.” Federally, hard seltzer is also taxed as a form of beer.
So, should A-B InBev’s lawsuit against Constellation succeed? Should A-B InBev be able to stop Constellation from selling Corona Hard Seltzer in the U.S. because hard seltzer is not “beer”? Or should A-B InBev be hoisted on its own petard: A-B InBev markets its hard seltzer as beer, so it cannot argue that Constellation’s hard seltzer is not beer?
I personally do not believe hard seltzer is beer. But I also do not believe A-B InBev can have it both ways on the definition of beer!