Starbucks to Pay Almost $3B for Terminating Grocery Deal

by Christopher Freeburn | November 13, 2013 10:11 am

Coffee Starbucks3 150x150 Starbucks to Pay Almost $3B for Terminating Grocery Deal[1]The decision to break an agreement with Kraft Foods (KRFT[2]) will cost Starbucks (SBUX[3]) a ton of money[4].

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.

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[5]), which split[6] from Kraft last year[7]. 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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  7.  from Kraft last year:
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