Starbucks has been told to pay $2.76bn (£1.74bn) in damages to Kraft Foods in a dispute over packaged coffee. An independent US arbitrator ruled that Starbucks breached a deal that was originally setup with Kraft in 1998 to allow the sale of bags of Starbucks branded coffee that was due to run until March 2014. However, Starbucks ended the contract in 2010, accusing Kraft of breaking the terms of their deal. Kraft then challenged Starbucks by starting arbitration proceedings saying it had built a business worth $500m a year.On Tuesday the arbitrator ruled that Starbucks must pay $2.23bn in damages plus $527m in interest and legal costs. Kraft Foods has now been spun off by Mondelez International, as of last year, so the payments from the case will go to Mondelez. Mondelez said “We’re pleased that the arbitrator validated our position that Starbucks breached our successful and long-standing contractual relationship without proper compensation.”
Despite the outcome, Starbucks said it “strongly disagreed” with the conclusions of the arbitrator. “We believe Kraft did not deliver on its responsibilities to our brand under the agreement, the performance of the business suffered as a result, and that we had a right to terminate the agreement without payment to Kraft,”
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