Illinois Company Sour Over Fayetteville Distributor's Lack of Sugar Rush

by Arkansas Business Staff  on Monday, Jul. 7, 2014 12:00 am  

An Illinois company that was expecting nearly 35 million pounds of sugar by the end of 2015 was shocked when the Fayetteville supplier canceled the contract in April.

Compact Industries of St. Charles, Illinois, a contract manufacturer of dry food products, now is suing Blackhive Corp. for breach of contract in U.S. District Court in Fayetteville.

Compact said on its website that its clients include “many Fortune 500 food & beverage companies with widely recognized national brands.” Products range from instant cappuccinos and coffees to hot cocoas and drink mixes.

Compact said in the lawsuit that when it signed the contract in January, the terms called for Blackhive to either deliver an extra-fine grain sourced in Mexico or beet sugar from the United States. Compact was going to pay $.2925 per pound of sugar for a total of $10.2 million.

In April, Blackhive told Compact it was canceling the contract because a consortium of sugar manufacturers, called the American Sugar Coalition, filed a complaint under various anti-dumping laws against Mexican sugar importers, the lawsuit said.

Blackhive claimed its “ability to obtain a consistent and ongoing supply of sugar from Mexico has become irreparably impaired,” according to the letter that was attached to the complaint.

Compact said that Blackhive could have used domestic sugar to fulfill the terms of the contract. Still, Blackhive has canceled the agreement.

Compact is suing for breach of contract and wants a judge to force Blackhive to comply with the terms of the contract. It is seeking unspecified damages.

A representative for Blackhive didn’t immediately return a call for comment.



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