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Fri, Feb 18, 2005 - Page 12 News List

Starbucks teams up with Jim Beam to offer liqueur

NY TIMES NEWS SERVICE , NEW YORK

The Starbucks Corp's latest attempt to create a beverage that is not just for breakfast was set to start yesterday with the introduction of an alcoholic coffee drink in the US. It will market the drink, Starbucks Coffee Liqueur, through a partnership with Jim Beam Brands, a unit of Fortune Brands.

The liqueur will be sold in bars, liquor stores and restaurants in 750-milliliter bottles for US$22.99. It will not be available at Starbucks coffee outlets. Neither company would disclose financial details of the agreement.

The expansion into spirits is part of a diversification strategy by Starbucks, of Seattle. It is experimenting with bacon-and-egg breakfast sandwiches, adding to its lunch menu and installing stations in many of its stores that let customers make music CDs.

The liqueur is not the first stand-alone product the company has introduced. Starbucks joined with PepsiCo to bottle and distribute its Frappuccino drinks, and sells coffee ice cream through an agreement with Dreyer's Grand.

The Pepsi and Dreyer's partnerships will represent a projected US$86 million in income for the company this year, and liqueur sales will be a fraction of that, said Glenn Guard, a restaurant analyst with Legg Mason.

"This is a company that I'm estimating will have systemwide sales of over US$8 billion this year," he said. "To move the needle, you have to have a pretty large operation."

The notion of a Starbucks-brand liqueur was conceived nearly a decade ago.

"It all goes back to the research we did showing that 50 percent of our consumers are liqueur drinkers," said James Donald, who is to succeed Orin Smith as chief executive in March.

Thomas Flocco, the chief executive of Jim Beam, said his company had concocted a dozen cocktail starter recipes using the liqueur, including a "Seattle manhattan." Thirty more cocktails have been devised by bartenders.

The product has already caused some controversy. Zach Mann, the owner of a pizza restaurant in Peoria, Colorado, and some friends organized a protest, placing 2,500 white crosses in an empty lot to represent the 15- to 20-year-olds killed each year while driving drunk.

The group also created a Web site called Stardrunks.com, which it later shut down.

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