(Photo: Chi-Chi's)
Spirits giant Sazerac has been hit with a deceptive labeling suit alleging that its Chi-Chi's "Original Margarita"— made with malt-based alcohol — is virtually identical to a different product made with real tequila. The suit follows in the footsteps of similar complaints against Fireball, Southern Comfort and Parrot Bay, three Sazerac-owned brands simultaneously fighting for their authenticity in court.
On Friday, plaintiffs in Brooklyn accused Sazerac Company Inc. of playing an "awful trick" on consumers. While one version of its Chi-Chi's Margarita is made with tequila and triple sec, another version "manufactured and designed to look and taste like its higher valued counterpart" is made with malt liquor, the same you'd find inside a beer or hard seltzer.
Plaintiffs argue that the intentional misdirection goads consumers to buy an inferior product under false pretenses. If the suit is successful, it will pay out to New Yorkers who bought malt-based Chi-Chi's products during a set period.
"To boost sales, Defendant decided to not just compete against other mini bottles of mixed drinks based on distilled spirits, by developing and marketing a 'pseudo cocktail' version of Chi-Chi’s Original Margarita," the complaint alleges.
Not mentioned by the suit is the existence of a third similarly packaged variation made with grape wine.
Lawsuits against malt-based products allegedly masquerading as real cocktails have become commonplace over the past few years. In 2022, Anheuser-Busch was forced to pay out $6 million due to the lack of tequila in its popular Lime-A-Rita range of mixed drinks. Just last week, Molson Coors was hit with a suit against Vizzy Mimosa Hard Seltzer for its lack of Champagne.
Sazerac, however, has repeatedly been accused of a specific and particularly widespread form of deceptive labeling.
The most famous of the bunch comes courtesy of Fireball, Sazerac's ever-popular cinnamon whisky brand. Similar to Chi-Chi's, plaintiffs accused the company of producing two confusingly indistinguishable variations: "Fireball Cinnamon," made with malt-based alcohol, and "Fireball Cinnamon Whisky" made with real Canadian whisky.
[caption id="attachment_69752" align="aligncenter" width="450"] (Photos: ClassAction.org)[/caption]
A month later, Sazerac was dragged back into court over Southern Comfort, a different whiskey imprint with a similar two-product packaging strategy. A few months after that, a class action was filed against Parrot Bay Rum; while one version is made with liquor, plaintiffs said the other is "decidedly, not rum."
Sazerac's strategy hits upon a lucrative blindspot in the market. In states like New York (where the suit against Chi-Chi's was filed), alcoholic products made with spirits cannot be sold at convenience stores or gas stations. In contrast, beers, hard seltzers and teas are all fair game. By selling a cocktail-adjacent beverage made with malt-based alcohol, Sazerac massively expands its footprint to consumers who — occasionally — don't know the difference.
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(Photos: ClassAction.org)[/caption]
A month later, Sazerac was dragged back into court over Southern Comfort, a different whiskey imprint with a similar two-product packaging strategy. A few months after that, a class action was filed against Parrot Bay Rum; while one version is made with liquor, plaintiffs said the other is "decidedly, not rum."
Sazerac's strategy hits upon a lucrative blindspot in the market. In states like New York (where the suit against Chi-Chi's was filed), alcoholic products made with spirits cannot be sold at convenience stores or gas stations. In contrast, beers, hard seltzers and teas are all fair game. By selling a cocktail-adjacent beverage made with malt-based alcohol, Sazerac massively expands its footprint to consumers who — occasionally — don't know the difference.
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