Arbitration proceeding brewing between Kraft, Starbucks

NORTHFIELD, Ill. — Kraft filed an arbitration proceeding against Starbucks on Monday after the java giant attempted to end an agreement with the company.

Kraft claimed that it boosted Starbucks' retail grocery coffee business since 1998, which has garnered approximately $500 million in annual revenues. Kraft also is demanding that Starbucks compensate the company for the fair market value of the business, plus a premium of up to 35% of that value.

Kraft's EVP corporate and legal affairs and general counsel Marc Firestone said, "Starbucks is trying to walk away from a 12-year strategic partnership, from which it has greatly benefited, without abiding by contractual conditions."

Kraft said it is continuing to conduct business under the terms of its contractual arrangements with Starbucks.

Starbucks also released a statement regarding the deal, stating "Kraft did not meet its responsibilities" under the agreement, which required Kraft actively protect and promote the Starbucks Coffee and Seattle’s Best Coffee brands and to work closely with Starbucks, to maintain Starbucks involvement in significant marketing decisions and customer contacts.