UK: Constellation Europe threatened with lawsuit
Constellation Brands' European unit has said it is “disappointed” that a marketing agency has threatened it with legal action in the UK.
The row, over Constellation's recently-divested Gaymer Cider Company, blew up late last week when Ocean Events accused Constellation of “not honouring a performance related agreement to pay commissions” and “sacking” the agency “weeks before the announcement of the sale”.
Constellation Europe engaged Ocean Events, a UK-based music sponsorship and experiential marketing agency, in 2008 to “create a music festival marketing experience for Gaymers”, Ocean Events said late last week.
In March of that year, Gaymer launched a GBP4m (US$7.9m) festival-focused promotional push in the UK.
Last November, however, Constellation announced the sale of Gaymer to Ireland-based C&C Group for GBP45m.
“Instead of rewarding Oceans Events for taking Gaymers Cider from festival novice to brand leader in only two years, Constellation sacked Oceans Events just weeks before the announcement of the sale,” a spokesperson for Ocean Events said last week.
"Oceans Events are not in any way claiming that Constellation have breached the contractual agreement ... in respect of the termination, only that they have breached the agreed terms of remuneration due to Oceans Events for the incredible successes they achieved for Gaymers.
"The point also is that Oceans Events negotiated ongoing three-year deals for Gaymers pourings at festivals and music venues, so Oceans Events are due remuneration for 2010, 2011 and 2012 - but don't know who pays - Constellation or C&C?
"Since Constellation has not yet paid what is due for 2008 and 2009, that question is still in abeyance.
“The current legal wrangles, including possible damages for breach of contract, interest and legal costs, could stack up to an overall claim of GBP4m.”
When contacted by just-drinks today (6 April), however, James Lousada, SVP of sales and marketing at Constellation Europe, said: “We work with a number of creative agencies to achieve (impactful and memorable consumer activity). We review these agencies on an ongoing basis. Prior to the sale of Gaymer Cider Company, a review took place with Ocean Events and we took the decision to cease working with them.
“We are disappointed that Ocean Events has chosen to dispute the termination in such a public manner.”
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