Global Processing

Kraft Seeks Injunction Against Starbucks

December 6, 2010
The Associated Press reports, Kraft Foods Inc. is seeking a preliminary injunction against Starbucks Corp., saying that the coffee chain violated terms of a distribution deal. The two businesses began arbitration proceedings late last month as Kraft tried to prevent Starbucks from ending an agreement to distribute and promote its packaged coffee in stores. The arbitration proceedings are continuing and are separate from the injunction being sought, according to Kraft. Kraft said that Starbucks was using an aggressive strategy that threatens its business. Starbucks said in early November that it wanted to end the agreement, which began in 1998. Starbucks says Kraft Foods Inc. has not done what was mandated under the contract, failing to work closely with the company on marketing decisions and customer contacts. Starbucks said its decision to sever relations with the food maker is consistent with the contract''s terms. Starbucks wants to take back the business on March 1. Kraft, however, says that if Starbucks goes ahead with those plans, it needs more transition time and that the company should be compensated for the fair market value of the business, plus a premium of up to 35 percent. Kraft says it has grown Starbucks'' packaged coffee business from $50 million to $500 million in revenue. The contract between the two companies automatically renews for successive 10-year terms and has no end date.