A judge ordered Starbucks to pay over $2 billion in damages to Mondelez International, Inc., the company that handles Starbuck’s bagged coffee production. The lawsuit stems from attempts made by Starbucks to have complete control over its bagged coffee sector, which has seen major growth in recent years due in part to the invention of K-cups.
Starbucks initially filed a lawsuit in 2010 in hopes of ending its partnership with both Mondelez International and Kraft Foods, which was responsible for the distribution of the bagged coffee. Kraft rejected the offer to terminate their contract, but Starbucks continued to pursue control of the entire sector, claiming that Kraft mismanaged its brand and breached the contract.
While the payout to Mondelez is no small amount of money, Starbucks now has complete control over the production and distribution of their bagged coffee and will likely see continued growth in that sector. According to a Bloomberg report, Starbucks’ bagged coffee profit increased from $50 million to $500 million between the contract’s inception in 1998 through the year 2010 and has grown even larger since.
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