Melissa Allison of The Seattle Times writes that sounding a bit like Carly Simon accusing Starbucks of not sufficiently promoting her 2008 album, “This Kind of Love,” the Seattle-based chain has accused Kraft Foods of not doing enough to market its coffee.
Simon lost a lawsuit against Starbucks early this year, but filed an amended complaint in April.
Starbucks is trying to cut ties with Kraft, which has distributed its coffee beans to grocery stores for 12 years, saying the food giant eroded Starbucks’ brand in grocery stores. It plans to take over the packaged coffee business beginning March 1.
Kraft, whose brands include Maxwell House and Sanka, is fighting back by starting arbitration proceedings and issuing press releases about its position, which is that the contract between the companies lasts “indefinitely.” They also have an agreement that calls for Starbucks to pay Kraft for the fair market value of the business plus a premium of up to 35 percent, Kraft said in a press release Monday.
Analyst David Tarantino at Robert W. Baird & Co. in Milwaukee said Starbucks will have a hard time proving that Kraft did not sufficiently market Starbucks’ coffee beans, “given that sales have grown more than tenfold (to approximately $500 million) during the 12-year partnership,” Tarantino said in a note to investors Monday.
He estimates that Starbucks could pay $1 billion or more to end the agreement.
Read more at: The Seattle Times