AB InBev’s Mexican arm Grupo Modelo has filed a lawsuit against Constellation Brands, accusing the US company of breaching its Corona brand licensing agreement with the launch of Corona Hard Seltzer.

Grupo Modelo filed the lawsuit in the US district court of the southern district of New York.

Constellation Brands acquired the rights to the Corona name and trademark in the US in 2013, after it bought Grupo Modelo’s US beer business. Following the divestiture, AB InBev retained the rights to Modelo’s brands elsewhere.

In February last year, Constellation Brands launched Corona Hard Seltzer and according to Reuters, said in October that the brand had a 6% share in the US seltzer market, making it the fourth-biggest in the sector after White Claw, Truly and Bud Light.

Grupo Modelo claims the new product breaches its licensing arrangement for Corona, which only extended to beer and did not include hard seltzer.

A Grupo Modelo spokesperson told FoodBev in an emailed statement: “Constellation’s newest product in the US – Corona Hard Seltzer – improperly uses our Corona name for a spiked sparkling water featuring flavors like cherry and blackberry lime.

“We never agreed that Constellation could use our Corona name for products such as hard seltzer. Corona has a rich history and authentic Mexican heritage, and we are filing this lawsuit to protect our rights to this iconic brand.”

Meanwhile, Constellation Brands told FoodBev that it had “fully and completely complied with the terms of our sublicense agreement” and that it will “vigorously defend” its rights.

In an emailed statement to FoodBev, a company spokesperson added: “We find these claims, including the insinuation that Corona Hard Seltzer should not be classified as beer or a version thereof, to be completely without merit, a blatant attempt to restrain a strong and well-established competitor in a high growth segment of the US beer category, and completely misaligned with general industry and legal standards.”

The case marks the latest in an increasingly competitive US brewing market and comes after an Oregon-based brewer sued Anheuser-Busch over marketing its Michelob Ultra Organic Seltzer as the first and only seltzer certified as organic by the USDA.