The Los Angeles Times reports that when corporate partnerships implode, it’s usually ugly. But a dispute over ground coffee promises to be particularly bitter.
Starbucks Corp. and Kraft Foods Global Inc. have been snarling at each other since last month, when Starbucks announced that it was terminating the long-standing deal that has Kraft distributing its whole-bean and ground coffee in the U.S., Canada and the EU.
Starbucks complained — in court documents and public statements — that although coffee sales have boomed globally, Kraft’s sales of its coffee at grocery stores and other retail outlets have been less than stellar. Now the coffee giant plans to go off on its own.
So last month, Starbucks declared the agreement dead and announced that it would take over the sales and distribution of its packaged coffee as of March 1. It also has reportedly said it will pair up with privately held Acosta Inc. for future retail distribution.
Kraft, though, is fighting back. The world’s largest food manufacturer filed a preliminary injunction motion this month with the U.S. District Court for the Southern District of New York and is challenging the legality of Starbucks’ ending the contract.
If Starbucks wants to get out of the contract, Kraft argued, the company needs to buy its way out — and pay a premium for that right.
According to Kraft, the business draws an estimated $500 million in annual revenue. Analysts say the distribution deal’s value is much higher.
Read More at: The Los Angeles Times