A lengthy dispute between Starbucks and Kraft Foods Group over the
coffee giant’s premature termination of a deal has ended with an arbitrator
deciding that Kraft is eligible for compensation of US$2.8bn.
The spat between the two
companies dates back to March 2011, when Starbucks unilaterally ended a 13
year-old agreement under which Kraft sold bags of Starbucks coffee in grocery
stores and gave the business to privately-held sales and marketing group Acosta.
The contract, although due to expire in March 2014, would have automatically
renewed for a further 10 years unless terminated.
The award, which includes US$2.23bn
in damages plus US$527m in pre-judgment interest and attorneys’ fees, will be
directed to Mondelez International which took Kraft’s grocery operation when it
spun off from the company. Mondelez claimed that it helped expand the Starbucks
grocery business from a valued of around US$50m business in 1998 to US$500m in
“We are pleased the
arbitration has ended,” said Starbucks’ chief financial officer (CFO), Troy
Alstead, in a statement. “We believe Kraft did not deliver on its
responsibilities to our brand under the agreement, the performance of the
business suffered as a result, and that we had a right to terminate the
agreement without payment to Kraft.
“Taking our packaged coffee
business back from Kraft was the right decision for Starbucks, our brand and
our shareholders. The results over the past two and a half years clearly
demonstrate that Starbucks at-home coffee portfolio is significantly healthier
than it was before we assumed direct control from Kraft.”
He added that the company has sufficient
cash on hand and borrowing capacity to complete the payment. Starbucks will
book the payment as a charge to its fiscal 2013 operating expenses and will
issue US$750m in new debt within the next three months.
The US money market fund reforms came into effect in 2016 and are already dramatically shaping US fund industry with investors flooding out of prime funds and into government securities. While the reforms are similar, they are not the same. GTNews interviews Yeng Bulter, global head of the cash business at State Street Global Advisors on the differences.
The top five sectors Asian fintech investors are interested in are data analytics, blockchain, lending, payments and regtech, according to Gary Hwa, EY regional managing partner.
On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.
Kicking off day two of the Singapore Fintech Festival, Deloitte Chairman David Cruikshank said that fintech is significant for three reasons. First, customer expectations of services are higher than ever. Second, barriers to entry are lower than before. And finally, financial institutions (FIs) face a threat of what a competitor might do.