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Starbucks, which announced a couple of weeks ago that it was ending the partnership with Kraft Foods that distributed its packaged products to supermarkets and other retail outlets, reportedly feels that Kraft mismanaged the sales effort and is guilty of “material breaches” of their contract.

According to Reuters, Starbucks charges that “Kraft mismanaged store displays and marketing and failed to take ‘commercially reasonable measures to address the erosion of Starbucks market share,’ according to an October 5 letter from Starbucks' attorney Aaron Panner to Deanie Elsner, president of North American beverages at Kraft.

“Unless Kraft fixed the breaches within 30 days, the letter said, their deal -- whereby Kraft sells Starbucks and Seattle's Best bagged coffees at grocery stores and other chains like Target Corp and Costco Wholesale Corp -- would end on March 1, 2011.”

Kraft has denied the charges and replied, “"If Starbucks wants to terminate in order to pursue an alternative arrangement, it needs to give Kraft sufficient time to execute an orderly transition and compensate Kraft for the fair market value of the business, plus a premium.”
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