Starbucks forced to pay Mondelez 2.1 billion euro

Starbucks forced to pay Mondelez 2.1 billion euro

Starbucks has to pay Mondelez (former Kraft) 2.1 billion euro in damages because of a breach of contract. In November 2010, Starbucks revoked Kraft's permission to sell Starbucks coffee in supermarkets.

"Invalid due to insufficient efforts from Kraft"

From November 2010 onwards, Starbucks decided to do its own distribution, as it felt that Kraft was not performing adequately in the commercialization of the brand. Starbucks felt it had the right to terminate the license agreement, dating back from 1998.

 

Kraft obviously disagreed, claiming it had managed a serious increase in turnover, from 50 million dollars (37 million euro) to 500 million dollars (375 million euro).

 

Both parties agreed to settle

A mediator has now judged that Starbucks needs to pay 1.66 billion euro in damages, augmented with another 400 million euro in interests and attorneys’ fees. The amount is somewhere in between what Starbucks was willing to pay to get rid of the claim (559 million euro) and Mondelez’ demands (2.1 billion euro plus lawyer fees).

 

Starbucks’ Chief Financial Officer, Troy Alstead, has stated the company has adequate liquidity to pay the fine. “Business has been better than when Kraft was in charge”, he stated. Mondelez was pleased with the decision and has decided to use the funds to purchase back its own stock.

 

Mondelez has already found a new partner for coffee sales: starting next year, it will start selling McCafé coffee from McDonald’s in American supermarkets.

 

 

(Translated by Gary Peeters)

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