Kraft Foods Announces Expanded Licensing Agreement With Starbucks Coffee Company; Terms Include National Distribution of Seattle's Best Coffee

Business Wire, July 26, 2004

TARRYTOWN, N.Y. -- Kraft Foods Global, Inc. (NYSE: KFT) and Starbucks Coffee Company (Nasdaq: SBUX) today announced an expansion of their supply, licensing and distribution agreement. The new agreement includes six additional Starbucks(R) coffees in ground and whole bean, three new distribution channels, and the national distribution of Seattle's Best Coffee(R) and Torrefazione Italia(R) brands. Specific terms of the agreement were not disclosed.

Kraft and Starbucks first came together in 1998 with a distribution agreement under which Starbucks coffee was expanded nationally in grocery stores, helping to establish and drive the specialty coffee category in grocery, mass merchandise and club stores.

The expanded agreement includes distribution rights for Starbucks, Seattle's Best Coffee and Torrefazione Italia coffee brands in several channels of distribution, including retail grocery stores, mass merchandise/super center stores, select drugstores, natural food stores and club stores.

"In light of Kraft's successful six-year partnership with Starbucks, we are now in a position to create further growth as a result of Starbucks high quality products and brand building expertise combined with our business acumen in marketing and distribution," said Liz Smith, group vice president, Kraft Foods and president, beverages, desserts and cereals. "The three outlet super premium coffee category is growing at a rate of approximately 15 percent a year, creating great opportunity for both companies. Not only has Kraft's agreement with Starbucks created category growth, but we have elevated people's expectations of coffee in grocery."

"We believe that through this agreement, new and current Seattle's Best Coffee and Torrefazione Italia customers will have much greater access to these exceptional coffees," said Jim Donald, president, Starbucks North America. "Starbucks and Kraft have helped to drive the specialty coffee category in supermarkets through broad distribution of the highest quality coffee, strong brand recognition and the availability of 12 Starbucks coffees."

In July 2003, Starbucks Corporation acquired Seattle Coffee Company, which includes both Seattle's Best Coffee and Torrefazione Italia coffee brands, from AFC Enterprises.

Seattle's Best Coffee LLC was founded in 1970 and retains a strong link to the Seattle coffee culture. Seattle's Best Coffee offers a broad product portfolio that will complement the existing Starbucks grocery offerings and help to satisfy the variety-seeking nature of coffee consumers. In total, Seattle's Best Coffee offers 31 coffees, including non-flavored and flavored coffees and organic coffees, available in both whole bean and ground.

Torrefazione Italia LLC, founded in 1986, mirrors the unique roasting preferences of various Italian regions. Although it is a relatively small business at present, the brand provides unique flavor profiles for coffee consumers.

Torrefazione Italia has eight blends, available in whole bean and ground, which are named after regions of Italy. These classic Italian coffees are known for their full bodied, highly aromatic and intense flavor.

Kraft Foods markets many of the world's leading food brands, including Kraft cheese, Nabisco cookies and crackers, Philadelphia cream cheese, Oscar Mayer meats, Post cereals and Milka chocolates, in more than 150 countries.