NORTHFIELD, IL -- Kraft Foods was dealt a blow last on Jan. 28 when a U.S. District Court judge denied its request for a preliminary injunction that would have stopped Starbucks Coffee Co. from attempting to terminate its distribution agreement with the food company before the end of arbitration that is still under way. Kraft said it intends to appeal the decision.
The ruling reportedly does not affect the arbitration process. Kraft emphasized that the key question as to whether Starbucks can terminate the contract without compensating Kraft will be decided in arbitration.
Starbucks announced in November that it was ending its decade-old partnership with Kraft, which granted the food giant exclusive distribution rights to Starbucks coffee in supermarkets and other retail venues.
Kraft argued that, per the agreement, if Starbucks terminates its right to distribute its packaged coffee at retail, the Seattle coffee giant is bound to pay Kraft the fair market value of the business, along with a premium of up to 35%.
The companies began arbitration proceedings in late November to resolve the matter and Kraft requested the injunction a month later.
Starbucks said it will continue with its plans to take over distribution March 1.