High maintenance Starbucks is seeking a divorce from sugar-daddy/older man, Kraft, and the reason cited is that Kraft has not been keeping up his end of the bargain by spending enough money on advertising how wonderful Starbucks is. Besides, Starbucks wants to be independent now. She doesn’t need a sugar daddy anymore.
According to Reuters:
Starbucks Corp and Kraft Foods Inc began airing a messy divorce on Monday, fighting over who gets what in the dissolution of a partnership through which Kraft sells bags of Starbucks coffee to supermarkets and other retailers.Starbucks wants to end its 12-year deal with Kraft, saying it breached their contract. Kraft denies any breach and contends that if Starbucks wants to back out, it must pay Kraft the fair market value of the business plus a premium of as much as 35 percent, based on how Starbucks carries the business forward.
At stake for Kraft is $500 million in annual sales with strong profit margins. Kraft does not discuss individual brands’ profits, but analysts have estimated the Starbucks coffee’s operating margin at 20 percent or more.
Starbucks could have to pay more than $1 billion to buy back the business and run it, said Baird analyst David Tarantino, a risky move for a company that specializes in operating coffee shops. Sources familiar with the business say the figure could be more than $1.5 billion.
So in a way, while Starbucks is playing hard to keep and is obviously high maintenance, it seems that Kraft is also a bit of a monster who is trying to keep his wife “chained” or as they say in Jewish parlance, Starbucks is an agunot(?) of Kraft’s; and to get a divorce, the little missus, Starbucks, will have to cough up about a billion dollars in pay off money. Call it extortion if you want, but it may be worth it for the coffee giant cutie over the long run. Short term, this is bound to take a bite out of her liquid buns cash on hand, but eventually, once she takes back her brand and contiues to develop it, she’s gonna be better off without Kraft and she will be able to wash him right outta her hair, I daresay. Which will be exciting.
Oh, and btw, they are not going to trial with this thing. It’s going to arbitration.
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