diff --git a/pkg/api/labels.go b/pkg/api/labels.go
index ba110c831..086ae9cae 100644
--- a/pkg/api/labels.go
+++ b/pkg/api/labels.go
@@ -17,8 +17,6 @@
 package api
 
 import (
-	"fmt"
-
 	"github.com/hashicorp/go-version"
 
 	"github.com/docker/compose/v2/internal"
@@ -65,9 +63,7 @@ var ComposeVersion string
 func init() {
 	v, err := version.NewVersion(internal.Version)
 	if err == nil {
-		segments := v.Segments()
-		if len(segments) > 2 {
-			ComposeVersion = fmt.Sprintf("%d.%d.%d", segments[0], segments[1], segments[2])
-		}
+		// We are only interested in the core version (e.g., "1.2.3") from the version string.
+		ComposeVersion = v.Core().String()
 	}
 }
diff --git a/pkg/api/labels_test.go b/pkg/api/labels_test.go
new file mode 100644
index 000000000..1b7f686de
--- /dev/null
+++ b/pkg/api/labels_test.go
@@ -0,0 +1,35 @@
+/*
+   Copyright 2020 Docker Compose CLI authors
+
+   Licensed under the Apache License, Version 2.0 (the "License");
+   you may not use this file except in compliance with the License.
+   You may obtain a copy of the License at
+
+       http://www.apache.org/licenses/LICENSE-2.0
+
+   Unless required by applicable law or agreed to in writing, software
+   distributed under the License is distributed on an "AS IS" BASIS,
+   WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+   See the License for the specific language governing permissions and
+   limitations under the License.
+*/
+
+package api
+
+import (
+	"testing"
+
+	"github.com/docker/compose/v2/internal"
+	"github.com/hashicorp/go-version"
+	"gotest.tools/v3/assert"
+)
+
+func TestComposeVersionInitialization(t *testing.T) {
+	v, err := version.NewVersion(internal.Version)
+	if err != nil {
+		assert.Equal(t, "", ComposeVersion, "ComposeVersion should be empty for a non-semver internal version (e.g. 'devel')")
+	} else {
+		expected := v.Core().String()
+		assert.Equal(t, expected, ComposeVersion, "ComposeVersion should be the core of internal.Version")
+	}
+}
\ No newline at end of file