The story is as follows. Kraft began selling bags of Starbucks coffee in grocery stores at the beginning of September 1998. Starbucks prematurely ended the contract in March 2011 and gave the business to privately held Acosta Inc.
Starbucks then accused Kraft of multiple material breaches of contract, including mismanagement of the Starbuck brand. Kraft vehemently denied any such a breach, stating that if Starbucks wanted out of the deal, it needs to pay Kraft fair value for the business, estimated at $500 million a year in revenue. Obviously, the arbiter agreed with Kraft.
Gerd Pleuhs, general counsel for Mondelez (formally Kraft), said in a statement: "We're pleased that the arbitrator validated our position that Starbucks breached our successful and long-standing contractual relationship without proper compensation."
The original agrrement was supposed to expire in March 2014, and renew automatically for successive 10-year terms unless it is terminated sooner per the agreement.
The two companies have been fighting since Starbucks Corp. fired Kraft as its distributor of packaged coffee to grocery chains.
Mondelez, whose brands include Cadbury, Oreo and Tang, said that it plans to use the money left after expenses and taxes to buy back stock.
"We strongly disagree with the arbitrator's conclusion," Starbucks said in a statement. Starbucks is however able to meet this financial commitment without any problems.
