Kraft Sues Starbucks Over Deal to Sell Branded Coffee

Kraft Foods Inc. sued Starbucks Corp. seeking to enforce an agreement the foodmaker claims gives it exclusive rights to sell Starbucks coffee in grocery stores through 2014.

Kraft, based in Northfield, Illinois, claims in its complaint that Starbucks has decided to take over the business of selling roasted whole bean and ground coffee to grocery stores. The company asked a federal court in White Plains, New York, to stop the world’s biggest coffee-shop chain from breaking the agreement until its case can be heard.

In 12 years, “Kraft has grown the sales of Starbucks consumer packaged goods products tenfold, increasing annual revenue from approximately $50 million to approximately $500 million,” according to the complaint.

Starbucks, with $10.7 billion in sales last fiscal year, plans to buy companies to build up its grocery business, Chief Executive Officer Howard Schultz said Dec. 1.

“Starbucks has repeatedly said that we have terminated our agreement with Kraft and we continue to look forward to assuming full responsibility for the sales” as of March 1, the company said in a statement. Seattle-based Starbucks called the lawsuit a “delaying tactic.”

The case is Kraft Foods Global Inc. v. Starbucks Corp., 10- cv-09085, U.S. District Court, Southern District of New York (White Plains).

To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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