Kraft Foods said Starbucks will have to pay if it wants to back out of a partnership in which Kraft distributes the coffee company's packaged coffee and other products to grocery stores.

Their corporate agreement is "perpetual," Kraft said in a release Thursday, and requires Starbucks to pay fair market value and possibly a premium if it backs away. The business has grown to $500 million in annual sales from $50 million 12 years ago, Tim McLevish, Kraft's chief financial officer, told investors during a quarterly conference call with investors, AP reported.

Kraft was responding to Starbucks CEO Howard Schultz's announcement earlier in the day that the coffee chain is ending its 12-year partnership with Kraft.

"A month ago, we informed Kraft that we plan to discontinue our distribution arrangement," Schultz told analysts during its call with analysts regarding strong fourth-quarter profits (which some take as another sign of economic recovery).

After Kraft's volley, Starbucks issued a release saying Kraft mischaracterized the agreement, including its term. "It has been, and continues to be, our intention to keep these conversations private. There is a specific mechanism within the agreement for the resolution of disputes. As we said in our earnings call, we will ensure that our mutual customers remain well-served," Starbucks said.

In other coffee news, before I disappear on assignment until Thanksgiving:

• Starbucks opened its first Central American coffee shop this week, in El Salvador.
• Synesso said its digital shot timer was a big hit at Coffee Fest. Most cafes use a free-standing timer if their machines don't have a shot-timing system, Synesso's Sandy Schneiter explained to me. A timer that's integrated into the machine, like Synesso's starts and stops when the shot is being pulled.
• Dillanos Coffee Roasters was named macro roaster of the year by Roast Magazine. The Sumner-based company, owned by David Morris, Chris Heyer and Howard Heyer, has 68 employees and roasts more than 3.2 million pounds a year. (Conscious Coffees in Boulder was named micro roaster of the year.)
• Watertown Coffee closed, but no one seems to know the details and I haven't reached the owners. Can anyone shed light on that sad event? They were apparently at Coffee Fest (per this Sprudge.com post), but I missed them. And I miss them.