Starbucks-Kraft rift dates back to January

   Date:2010/12/21     Source:
A FEUD between Starbucks Corp and Kraft Foods Inc over supermarket coffee sales has been brewing since at least January - far longer than Kraft has acknowledged - according to email exchanges between their top executives provided by Starbucks. The rift became public last month, when the Seattle coffee company said it wanted to end its 12-year-old distribution deal with Kraft, which sells bags of Starbucks coffee in supermarkets and other stores. Since November, Kraft repeatedly has said it was blindsided by Starbucks' "overt hostility" and its "sudden" change in opinion about Kraft's performance selling coffee by the bag. But emails dated on January 17, released by Starbucks on Tuesday, show that top executives at both companies privately discussed their troubled partnership nearly a year ago. "We cannot accept the continued share erosion and lack of progress we are experiencing down the grocery aisle," Starbucks Chief Executive Howard Schultz wrote in an email to Kraft Chief Executive Irene Rosenfeld. Starbucks has accused Kraft of breaching their contract by mismanaging its grocery coffee business and failing to take reasonable steps to counter market-share losses. It wants to terminate the supermarket agreement in March 2011. Kraft denies any breach and says that if Starbucks wants out, it would have to pay Kraft the fair value of the business plus a premium.
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