Through the years, Starbucks has established themselves in the coffee industry, their reputation has allowed them to succeed like never before. People all over the world enjoy Starbucks coffee, whether its freshly made or from the bags. Coffee has become a part of people’s daily routines, without Starbucks in the morning, it is almost impossible to function. However

“An arbitrator on Tuesday concluded that Starbucks must pay $2.23 billion in damages plus $527 million in prejudgment interest and attorney’s fees, following the coffee giant’s early termination of a bagged coffee grocery deal between Starbucks and Kraft Foods.”

In March of 2011, Starbucks had prematurely scratched a contract established in 1998 with Kraft that allowed Kraft to sell bagged Starbucks coffee at supermarkets and grocery stores. Starbucks scrapping the contract led to a huge dispute between the two companies. Starbucks claimed that Kraft had “mismanaged the brand and had breached the contract” whereas Kraft denied Starbucks’ charges and demanded Starbucks to pay a fair value for the business. I do agree with the decision that Starbucks should pay a fair value for the business, since they were the ones who prematurely scrapped the contract. According to their CFO, ‘Starbucks at-home coffee portfolio is significantly healthier than it was before we assumed direct control from Kraft.” Directly, implying that ever since Kraft took control of Starbucks in a bag, their quality of product declined.

Works Cited:

Horovitz, Bruce. “Dispute with Kraft Costs Starbucks $2.7 Billion.” USA Today. Gannett, 13 Nov. 2013. Web. 16 Nov. 2013.