Starbucks Will Pay Kraft Over $2 Billion

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Michael Nagle / Bloomberg via Getty Images

Starbucks coffee for sale at a grocery store in New York on Nov. 30, 2010

Starbucks announced on Tuesday that an arbitrator said the company must pay Kraft Foods $2.23 billion in damages for cutting short its grocery-store deal with Kraft, Reuters reports.

Kraft started selling bags of Starbucks coffee in grocery stores in September 1998. Starbucks terminated the contract in March 2011 — three years early — accusing Kraft of multiple material breaches of contract (including mismanaging the brand). Kraft denied any breach of contract and said Starbucks must pay Kraft a fair value for the grocery-store-sold coffee, which brought in $500 million per year in revenue.

[Reuters]

6 comments
MariaPhotos
MariaPhotos

Starbucks agreed to a contract for a specific number of years. They breached the contract. Kraft showed how much income they made during the initial part of the contract and asked for damages to make up for the loss of the contract. True, they are both enormous companies with huge profits on both sides; but they had a valid contract, which one side decided to breach.

AkiladeAyotunde
AkiladeAyotunde

They were in a hurry and have paid a high price for impatience. After all, the returns weren't that bad. 

MikeHogan
MikeHogan

Sorry to see so many people buying into the class warfare crap. Fact is they breached the contract and must pay damages.

MyCatKiggy1
MyCatKiggy1

ok so let's get real on this.  Boo hoo you lost profits. The only people this helps are the rich stockholders. Did we miss the stories this past week about how since the recession BEGAN billionaires doubled their wealth?  If Kraft gets this blackmail money for having done nothing to earn it, they should be forced to hire say 5000 people permanent full time since they have done nothing but lay off store workers. I wonder how much of a kickback the judge got for this.   

zelskid1
zelskid1

How can that be reasonable?

JayDan
JayDan

@MyCatKiggy1 


I was unaware that Kraft owned and operated it's own retail stores.


They must be on the west coast or something...