Starbucks To Pay $2.8 billion In Damages To Kraft Foods

By James Brown | Nov 13, 2013 02:29 PM EST

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Giant coffee company Starbucks will pay $2.23 billion in damages plus $527 million in prejudgement interest and attorney's fees for prematurely terminating a deal with Kraft Foods Group.

Back in 2011, Starbucks unilaterally ended a 13-year-old deal in which Kraft sold bags of Starbucks in grocery stores. The original contract would have expired in March of 2012, but now Acosta is selling Starbucks in stores.

"We strongly disagree with the arbitrator's conclusion," Troy Alstead, Starbucks Chief Financial Officer, said in a statement. "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."

Alstead said Starbucks has enough cash in hand as it is borrowing capacity to complete the payment as a charge to its fiscal 2013 operating expenses.

According to Kraft, in 2010 the company had grown Starbucks' packaged coffee business to $500 million in sales from $50 million.

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