Chris Mercer

Comment - Crown Imports on the rocks?

By Chris Mercer | 16 December 2009

News that Grupo Modelo is suing Constellation Brands must raise questions about the two firms' ability to work together in the Crown Imports venture.

Modelo has filed a lawsuit against Constellation in the US, accusing it of failing to share the load on marketing expenses for the firms' 50-50 joint venture, Crown Imports.

While Mexico-based Modelo insisted in a statement last night that it remains "fully committed" to Crown, the news has left some of us wondering what lies in store for the venture.

Analsyst group Stifel Nicolaus today lowered its rating on Constellation stock from buy to hold, specifically citing the lawsuit.

Among other things, it noted - as we have - that "suing one's business partner is generally a bad precedent for ongoing business relations".

Under the current contract agreement, Nicolaus said, Modelo cannot terminate the deal with Constellation until 2016.

At the same time, Modelo is facing arbitration proceedings with A-B InBev to determine a 50% non-controlling stake in the brewer previously held by A-B. Modelo says this stake cannot automatically pass to the new InBev-run brewer.

A further source of speculation around Modelo could be buyout talks over its Mexican rival, Femsa Cerveza. If Femsa hooks up with a multinational brewer in 2010, there will be pressure on Modelo to take a similar route in order to compete.

The next few weeks and months are certainly shaping up to be an interesting time for the Mexican brewer.

Sectors: Beer & cider

Companies: Modelo, Constellation, InBev

View next/previous articles

Currently reading -

Comment - Crown Imports on the rocks?

There are currently no comments on this article

Be the first to comment on this article

Related articles

Focus - The World Cup and South Africa's wine industry

Starting tomorrow (11 June), the FIFA World Cup football tournament has finally arrived in South Africa. In our last feature on the biggest sporting event in the world, Olly Wehring takes a look at how the country's winelands are gearing up for the football-fest.

GLOBAL: Alcohol giants create responsible drinking website

Some of the world's leading alcoholic drinks firms have joined forces to set up a website that highlights their efforts to reduce harmful drinking.

US: Foster's Wine Estates realigns sales teams

The US-based wine unit of Foster's Group has confirmed details behind its new leadership team for distributor management and off-trade accounts.

just-drinks tagline

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page