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Starbucks To Pay Kraft $2.7 Billion For Early Contract Termination

Posted On: 11/19/2013

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TAGS: Starbucks pays Kraft Foods Group, Starbucks $2.7 billion settlement, Starbucks-Kraft contract dispute, Mondelez International, coffee news

NORTHFIELD, IL -- An arbitrator ruled that Starbucks must pay Kraft Foods Group more than $2.7 billion for its early termination of the packaged coffee contract between the two companies.

In March 2011, Starbucks announced that it was ending a long-term contract inked in 1998 with Kraft that allowed Kraft to sell bagged Starbucks coffee in grocery stores. | SEE STORY

Starbucks claimed Kraft mismanaged the brand and had breached the contract. Kraft denied the Seattle coffee giant's charges and demanded that Starbucks pay it a fair value for the business, which reportedly brought in annual revenues of about $500 million for Kraft.

The restitution includes $2.23 billion in damages plus $527 million in prejudgment interest and attorney's fees. The award will go to Mondelez International, which spun off Kraft Foods in 2012.