Early this month, we reported on the nasty breakup of Starbucks and its former distributor, Kraft Foods, which involved a series of he-said-she-said public statements about how they never loved the other company anyway. Now, it seems that drama is only getting worse, and looks to be headed toward a final resolution inside a courtroom.
Kraft Foods announced today that it has started an arbitration proceeding against the Seattle-based coffee giant after it pulled out of its distribution contract that made Kraft responsible for delivering products to grocery stores nationwide.
Essentially, Kraft is arguing that when it first met Starbucks, it was a wayward little company that barely cleared $50 million in annual revenue and couldn't even do its own laundry. It's only because of Kraft's patience and nurturing of its products that Starbucks became the $500 million-a-year corporation that it is today.
That, and the contract between Starbucks and Kraft was more of a blood oath than a legal contract that was ended well within its written terms.
Per Marc Firestone, Kraft executive vice president and head lawyer:
"Starbucks unilaterally and unjustifiably declared in public statements the agreement's termination, needlessly risking confusion among customers about the agreement's status. In effect, Starbucks is trying to walk away from a 12-year strategic partnership, from which it has greatly benefited, without abiding by contractual conditions. Kraft reasonably expected Starbucks to honor the contract. We are confident in our position and look forward to presenting the facts before the arbitrator."
"Kraft's failure to meet its responsibilities resulted in the erosion of brand equity and experience at grocery that Starbucks customers have come to expect through their experience in Starbucks stores. In light of Kraft's failure to cure its breaches of the agreement, Starbucks has exercised its right to end the relationship."
Not being corporate lawyers, we're not sure who's right in terms of whether the distribution contract was violated in the breakup (or not). But as expert corporate-gossip followers, we're thrilled that both companies are still of the mind that bitching about each other through competing public statements is the best way to remind customers who's more mature.