Bloomberg News

Modelo Sues Constellation on Marketing Funds Dispute

December 15, 2009

Grupo Modelo SAB (GMODELOC), Mexico’s largest beermaker, said it sued a unit of Constellation Brands Inc. (STZ:US) in New York, alleging the company breached its obligations in their U.S. distribution partnership.

Constellation Beers Ltd. attempted to reduce the “marketing effort” at Crown Imports LLC, a U.S. joint venture that sells Modelo’s Corona beer and other brands, forcing Modelo to pay more to maintain spending in 2010 at this year’s level, the Mexican company alleged in a statement. The complaint was filed today in U.S. District Court in Manhattan.

“The lawsuit seeks, among other things, to recover the portion of expenditures that should be absorbed by Constellation,” Modelo said in the statement today to the Mexican stock exchange.

Angie Blackwell, a spokeswoman for Constellation, said the company is aware of the lawsuit and hasn’t been served yet. She declined to comment further.

Grupo Modelo began operating Crown with Victor, New York- based Constellation in 2007 to gain more direct control over its beer sales in the U.S. and to reduce its distributors to one from two. Before the joint venture, Constellation had been Modelo’s distributor in the western half of the U.S. and San Antonio-based Gambrinus Co. sold Modelo brands in the eastern U.S.

Modelo said management of Crown recommended setting marketing spending at the same level as 2010. Modelo committed to funding part of the marketing budget to “prevent any damage to the business.”

Corona is the best-selling imported beer in the U.S.

The case is GModelo Corp. v. Constellation Beers Ltd., 09- cv-10176, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Andres Martinez at amartinez28@bloomberg.net; Thomas Black in Monterrey, Mexico, at tblack@bloomberg.net.

To contact the editors responsible for this story: David E. Rovella at drovella@bloomberg.net.


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Companies Mentioned

  • STZ
    (Constellation Brands Inc)
    • $96.9 USD
    • 2.10
    • 2.17%
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