Starbucks denies Kraft did well in coffee sales

A mug bearing a Starbucks logo is pictured next to coffee beans during a news conference in Tokyo April 13, 2010.

BANGALORE (Reuters) - Starbucks Corp (SBUX.O) denied Kraft Foods Inc's (KFT.N) claim that the packaged food maker performed "exceptionally well" under an agreement to sell Starbucks' packaged coffee, court documents showed.

Starbucks said late last month that it wanted to end its relationship with Kraft as the world's largest coffee shop chain seeks to boost sales outside its own stores through having a greater role in the distribution of its packaged goods.

The business generates $500 million in annual sales for Kraft and has high profit margins. Kraft pays Starbucks a royalty fee based in part on the performance of the business.

Following Starbucks' decision to end the agreement, Kraft escalated the battle by asking a federal court to stop the coffee chain from trying to sell its packaged coffee through a different distributor.

However, Starbucks said it denies that Kraft's distribution of its products is performing extremely well, court documents showed.

"Starbucks denies that it has repeatedly praised Kraft for the quality and effectiveness of its performance under the agreement," the company said in its response to Kraft's filing.

The Seattle coffee company also asked the court to deny Kraft's request to prevent Starbucks from trying to sell its packaged coffee through a different distributor.

The case is in re: Kraft Foods Global Inc v. Starbucks Corp, Case No. 10-09085, U.S. District Court for the Southern District of New York.

(Reporting by Sakthi Prasad in Bangalore; Editing by Louise Heavens)