n a letter dated Oct. 5, Starbucks accused Kraft of failing to properly market packaged-coffee products. For example, the coffee company says Kraft hasn’t maintained appropriate displays inside grocery stores where Starbucks merchandise is sold. Starbucks also said Kraft hasn’t involved it in sales planning and conversations with retailers. On Nov. 5, Starbucks sent a second letter saying Kraft had failed to remedy the breaches and that the agreement would end next March.
Undercutting Starbucks’s claim is the fact that the business has grown to $500 million in annual sales, from just $50 million in 1998. Certainly, Kraft owes some of that to growth in the Starbucks brand. But even Starbucks has given Kraft credit for running the business well. In April, Starbucks Chief Financial Officer Troy Alstead praised Kraft for its “world-class” capabilities in manufacturing, research and distribution.