Starbucks must pay US$2.76 billion to settle a dispute with Kraft


ricohflex

Senior Member
Feb 24, 2005
3,353
8
38
sing
#1
Big amount.
Because Starbucks is big, it is not fatal. Just a bad bruise.
Mondelez International Inc., which spun off Kraft Foods Group in October 2012, will get the money.

Starbucks had a renegotiated contract with Kraft in 2004, where Kraft would market Starbucks roasted and grounded coffee in stores from 2004 to 2014. But in 2010 Starbucks terminated the contract. Kraft sued for breach.

So why?
No one wants to lose such a big sum. US$2.23 billion in damages and US$527 million in (Kraft's) attorney fees.
The lawyers are the winners - imagine earning US$527 million in 3 years.
Oh, the sum that Starbucks must pay its own lawyers is not known - maybe another US$500 Million.

• If Starbucks wanted to terminate the contract like that, it should have built up its case until it is bullet proof with lots of strong evidence that Kraft is in the wrong and deserves to have the contract terminated.

• Maybe Starbucks was poorly advised and the inner circle or consultants told the CEO what he wanted to hear before they did what they did.

• Even if Starbucks was not happy, it could have sat out the remaining 4 years till 2014, let the contract expire and then never have anything to do with Kraft again.

So what's the impact?

• Some has to pay for this >>> You. Coffee may be more expensive? Don't know yet.

• Is it good for Kraft / Mondelez ? NO. It is bad repute. Though they got the money, other business partners will be wary of them. They may not get new deals with good business partners for a long time.
 

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Yutaka Go

Senior Member
May 22, 2010
983
7
18
SG
#2
• Some has to pay for this >>> You. Coffee may be more expensive? Don't know yet.
:bsmilie: You should only go there when someone else is paying the bill :bsmilie:
 

hanzohattori

Senior Member
Apr 16, 2010
999
5
18
#3
Coffee in those fancy cafe is already expensive anyway due to exorbitant rental price
You can do uncles and aunties in hawker center a favor with $1 coffee
 

Shizuma

Senior Member
Mar 19, 2012
2,557
25
0
#4
Big amount.
Because Starbucks is big, it is not fatal. Just a bad bruise.
Mondelez International Inc., which spun off Kraft Foods Group in October 2012, will get the money.

Starbucks had a renegotiated contract with Kraft in 2004, where Kraft would market Starbucks roasted and grounded coffee in stores from 2004 to 2014. But in 2010 Starbucks terminated the contract. Kraft sued for breach.

So why?
No one wants to lose such a big sum. US$2.23 billion in damages and US$527 million in (Kraft's) attorney fees.
The lawyers are the winners - imagine earning US$527 million in 3 years.
Oh, the sum that Starbucks must pay its own lawyers is not known - maybe another US$500 Million.

• If Starbucks wanted to terminate the contract like that, it should have built up its case until it is bullet proof with lots of strong evidence that Kraft is in the wrong and deserves to have the contract terminated.

• Maybe Starbucks was poorly advised and the inner circle or consultants told the CEO what he wanted to hear before they did what they did.

• Even if Starbucks was not happy, it could have sat out the remaining 4 years till 2014, let the contract expire and then never have anything to do with Kraft again.

So what's the impact?

• Some has to pay for this >>> You. Coffee may be more expensive? Don't know yet.

• Is it good for Kraft / Mondelez ? NO. It is bad repute. Though they got the money, other business partners will be wary of them. They may not get new deals with good business partners for a long time.
Did you stardee very hard to become a lawyer? I wish I did!
 

ricohflex

Senior Member
Feb 24, 2005
3,353
8
38
sing
#8
Perhaps in June 2013, Starbucks sensed that the outcome was not going to be in their favour.
Hence:
http://online.wsj.com/news/articles/SB10001424127887323893504578559553701906588



What is the take-away lesson from this?

If Starbucks is going to pay US$527 Million to the opposing party's lawyers if the latter wins, and perhaps another US$500 Million to pay Starbuck's own lawyers, in addition to $2.23 Billion damages.......

then fight it out in a law court.



Don't opt for arbitration.



Based on the rules of binding arbitration, Starbucks cannot appeal the decision.

Arbitration is only seemingly nice (oh, they don't sue each other in Court, they choose the less combative sounding arbitration).

The outcome (US$2.76 Billion loss in this case) is anything but nice.
 

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Foxshade

New Member
Jun 26, 2009
849
3
0
46
In cat's stomach
#9
Just ask Kei to go to Kraft board meeting and do strip tease. Confirm they'll drop the case....
Fear is the best weapon.... :bsmilie:
 

d2xpeter

Deregistered
Dec 6, 2012
1,283
4
0
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singapore
#11
Just ask Kei to go to Kraft board meeting and do strip tease. Confirm they'll drop the case....
Fear is the best weapon.... :bsmilie:
LOL.....just like ancient china emperor sending a princess to a foreign land?
 

keithwee

Moderator
Staff member
Aug 20, 2010
7,994
46
48
LittleRedDot
#12
no wonder today i saw Starbucks "giving away" an organizer with every $120 purchase of its stored value card =.= ......
 

Yutaka Go

Senior Member
May 22, 2010
983
7
18
SG
#13
Just ask Kei to go to Kraft board meeting and do strip tease. Confirm they'll drop the case....
Fear is the best weapon.... :bsmilie:
Fear ????

using long armpit hair ???

 

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