Kraft vs. Starbucks: The Beginning To The End

Kraft Foods filed a complaint and motion for preliminary injunction relief against Starbucks in attempt to protect its twelve-year relationship with the Coffee Company and to provisionally restrain Starbucks from acting on its purported termination of the contract with Kraft. Kraft Foods Global, Inc. v. Starbucks Corporation, Case Number 7:10-cv-09085 S.D.N.Y.).

Under the contract, Starbucks manufactured and supplied the Starbucks branded products to Kraft, and Kraft owned the exclusive right to sell, market and distribute certain packaged Starbucks roasted whole bean and ground coffee to Kraft’s customer base of grocery stores and other retail food outlets. This contract between the parties had an initial term that would expire in 2014 and an automatic renewal for successive ten-year terms.

In 2010, Starbucks decided that it wanted to take over Kraft’s portion of the business and sought to terminate its contract with Kraft. Pursuant to the contract, Starbucks had the express right to terminate its relationship with Kraft as long as it 1) provided 180 days’ advance notice, and 2) compensated Kraft for the loss of its rights under the contract in an amount tied to fair market value of the business. Starbucks gave notice to Kraft and offered $750 million in exchange for a consensual termination of the contract to which Kraft declined alleging that $750 was not the fair market value of its business. (Agreement, ¶ 5).

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