Kraft Foods Inc. is starting an arbitration proceeding against Starbucks Corp.'s move to end its agreement with Kraft to distribute and promote its packaged coffee in stores.

Earlier this month, Starbucks said it would end the companies' agreement, which began in 1998.

Kraft says the business grew from $50 million to $500 million in revenue during the partnership.

But Starbucks says Kraft did not meet its responsibilities to work closely with Starbucks on marketing decisions and customer contacts.

Kraft says if Starbucks takes over the business, it needs to give Kraft time for a transition and must compensate Kraft for the fair market value of the business plus a premium of up to 35 percent.

Starbucks says it plans to take back the business on March 1, 2011.