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.
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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