Following a decision from an arbitrator, Starbucks must pay $2.8 billion to Kraft Foods for opting from a deal USA Today reported Wednesday.
"We are pleased the arbitration has ended," Troy Alstead Starbucks chief financial officer said 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. We strongly disagree with the arbitrator's conclusion. 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."
According to USA Today, the coffee chain must also pay $2.23 billion in damages, and $527 million in interest and attorney fees as part of the settlement to Mondolez International, a food and beverage company which branched off of Kraft in 2012.
The conflict started in March 2011 when Starbucks decided to end the agreement, which would have allowed Kraft to put bagged Starbucks coffee in grocery store. The arrangement began in 1998.
Starbucks claims Kraft did not manage the brand very well, and had broken the contract. Kraft did not agree with the accusations and commanded it fund an appropriate value for the service, which raked in $500 million a year.
"We're pleased that the arbitrator validated our position that Starbucks breached our successful and long-standing contractual relationship without proper compensation," Gerd Pleuh General Counsel at Mondelez International told Forbes.
Starbucks shares saw a decrease of 1.4 percent to $79.50. Mondelez's shares showed a 3.3 percent increase to $33.52. Kraft's shares also pointed upward .6 percent to $52.25 Forbes reported.
