UPDATE 3-Kraft--Starbucks hearing may take place in January

* Tentative date set for hearing on Starbucks injunction

* Parties must file court briefs by Jan. 21 (Adds Starbucks comment; updates share activity)

NEW YORK Dec 23 (Reuters) - Kraft Foods Inc (KFT.N) said on Thursday a federal judge may hear its request next month for an injunction to stop Starbucks Corp (SBUX.O) from taking grocery distribution of its own packaged coffee away from Kraft.

Judge Cathy Seibel, of the U.S. District Court for the Southern District of New York, gave the companies until Jan. 21 to file briefs with the court, according to a Kraft spokeswoman, who added that a hearing on the injunction is set tentatively for Jan. 27.

The ruling is the latest twist in their public battle for control of the 12-year-old partnership through which Kraft supplies bags of Starbucks coffee to supermarkets and other stores in the United States, Canada, Britain and other parts of Europe.

Starbucks has said it plans to end the partnership on March 1, due to alleged breaches by Kraft. It has announced plans to move forward with a new partner, privately held Acosta Inc.

Kraft filed its request for a preliminary injunction on Dec. 6. [ID:nN06237540] It argued in a filing last week that Starbucks' actions would cause "irreparable harm to both Kraft and its customers unless the injunction is issued by the end of January 2011."

Kraft said that Starbucks advised it that it would cease deliveries of coffee by Jan. 29. Kraft said that could result in empty shelves and lost sales for retailers by mid-February. Starbucks has called Kraft's statement inaccurate. [ID:nN22115617]

Starbucks repeatedly has alleged that Kraft breached the contract by mismanaging its products and neglecting its brand in the grocery aisle. [ID:nN28130393]

Kraft disputes any breach and the termination attempt. It says Starbucks must pay to end the deal. The business brings in annual revenue of $500 million, and analysts have valued a termination payment at as much as $1.5 billion.

"Kraft is confident in the strength of our position that Starbucks has no legal basis to assert a material breach of the agreement," spokeswoman Renee Zahery said on Thursday.

Kraft earlier said that Starbucks had offered it $750 million for the business, but that it refused. Starbucks has declined to comment on that detail.

"The core issue at stake is Kraft's poor performance and the materiality of that performance to business results," Starbucks spokesman Corey duBrowa told Reuters.

Starbucks said that its coffee has lost market share in the grocery aisle every year since 2004, despite growth in the premium coffee sector overall. Kraft has claimed that the brand has subsequently gained share in the first three quarters of 2010.

"If Starbucks demonstrates that Kraft did not live up to its obligations under the agreement, Starbucks would not owe Kraft any remuneration. The value of the dissolution of the agreement would be zero," duBrowa said.

Starbucks shares closed down 30 cents at $32.63, while Kraft's stock finished unchanged at $31.88.

Kraft's request for a preliminary injunction was filed Dec. 6 in U.S. District Court for the Southern District of New York. The case is Kraft Foods Global Inc v. Starbucks Corp, No. 10-09085. (Reporting by Martinne Geller in New York and Lisa Baertlein in Los Angeles; Editing by Steve Orlofsky, Gerald E. McCormick and Carol Bishopric)