By Lisa Baertlein and Martinne Geller
LOS ANGELES/NEW YORK, Nov 28 (Reuters) - Starbucks Corp has accused Kraft Foods Inc of bungling sales of its packaged coffee in grocery stores and wants to end their 12-year partnership due to 'material breaches' of their contract.
According to documents obtained by Reuters, Kraft has disputed Starbucks' claims, adding fuel to a fight that is sure to take center stage when Starbucks hosts its biennial investor conference in New York on Wednesday.
The Seattle-based coffee giant charged, among other things, that Kraft mismanaged store displays and marketing and failed to take 'commercially reasonable measures to address the erosion of Starbucks market share,' according to an Oct. 5 letter from Starbucks' attorney Aaron Panner to Deanie Elsner, president of North American beverages at Kraft.
Unless Kraft fixed the breaches within 30 days, the letter said, their deal -- whereby Kraft sells Starbucks and Seattle's Best bagged coffees at grocery stores -- would end on March 1, 2011.
A second letter from Panner, dated Nov. 5, said Kraft disputed Starbucks' claims and had 'made no effort' to cure any of the breaches. So, it said, the deal would end, along with another one governing Starbucks' supply of coffee disks for Kraft's Tassimo one-cup brewer.
Kraft, which has said the bagged coffee business does $500 million a year in sales, said in a statement that 'the success of the business and its performance over the last 12 years are clear.'
'If Starbucks wants to terminate in order to pursue an alternative arrangement, it needs to give Kraft sufficient time to execute an orderly transition and compensate Kraft for the fair market value of the business, plus a premium,' Kraft said.
Starbucks declined comment. Panner, at the Washington law firm Kellogg, Huber, Hansen, Todd, Evans & Figel, did not return calls seeking comment.
(Reporting by Martinne Geller, editing by Matthew Lewis) Keywords: STARBUCKS KRAFT/ (martinne.geller@thomsonreuters.com; +1 646 223-6023; Reuters Messaging: martinne.geller.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LOS ANGELES/NEW YORK, Nov 28 (Reuters) - Starbucks Corp has accused Kraft Foods Inc of bungling sales of its packaged coffee in grocery stores and wants to end their 12-year partnership due to 'material breaches' of their contract.
According to documents obtained by Reuters, Kraft has disputed Starbucks' claims, adding fuel to a fight that is sure to take center stage when Starbucks hosts its biennial investor conference in New York on Wednesday.
The Seattle-based coffee giant charged, among other things, that Kraft mismanaged store displays and marketing and failed to take 'commercially reasonable measures to address the erosion of Starbucks market share,' according to an Oct. 5 letter from Starbucks' attorney Aaron Panner to Deanie Elsner, president of North American beverages at Kraft.
Unless Kraft fixed the breaches within 30 days, the letter said, their deal -- whereby Kraft sells Starbucks and Seattle's Best bagged coffees at grocery stores -- would end on March 1, 2011.
A second letter from Panner, dated Nov. 5, said Kraft disputed Starbucks' claims and had 'made no effort' to cure any of the breaches. So, it said, the deal would end, along with another one governing Starbucks' supply of coffee disks for Kraft's Tassimo one-cup brewer.
Kraft, which has said the bagged coffee business does $500 million a year in sales, said in a statement that 'the success of the business and its performance over the last 12 years are clear.'
'If Starbucks wants to terminate in order to pursue an alternative arrangement, it needs to give Kraft sufficient time to execute an orderly transition and compensate Kraft for the fair market value of the business, plus a premium,' Kraft said.
Starbucks declined comment. Panner, at the Washington law firm Kellogg, Huber, Hansen, Todd, Evans & Figel, did not return calls seeking comment.
(Reporting by Martinne Geller, editing by Matthew Lewis) Keywords: STARBUCKS KRAFT/ (martinne.geller@thomsonreuters.com; +1 646 223-6023; Reuters Messaging: martinne.geller.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.