Starbucks to Pay Almost $3B for Terminating Grocery Deal

Mondelez International will get the payment

   

Starbucks to Pay Almost $3B for Terminating Grocery Deal

Coffee Starbucks3 150x150 Starbucks to Pay Almost $3B for Terminating Grocery DealThe decision to break an agreement with Kraft Foods (KRFT) will cost Starbucks (SBUX) a ton of money.

In 2011, the coffee shop chain walked away from a deal under which Kraft sold packages of Starbucks-branded coffee in supermarkets. Starbucks ended the agreement about three years before it was slated to expire. Now an arbitrator says Starbucks will have to pay $2.8 billion in damages, interest and legal fees to Kraft, Forbes notes.

Starbucks 200x200 Starbucks to Pay Almost $3B for Terminating Grocery Deal
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In a statement, a Starbucks executive said that the coffee shop chain “had a right to terminate the agreement without payment to Kraft” because the food company wasn’t performing as required by the agreement.

The award will be paid to Mondelez International (MDLZ), which split from Kraft last year. Mondelez retains Kraft’s supermarket distribution business.

Starbucks coffee is now sold in grocery stores though Acosta. It will take a charge to fiscal 2013 operating expenses to cover the award.

Shares of Starbucks slipped slightly in Wednesday morning trading.

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