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Talk of the bay

Starbucks' deal with Jim Beam leaves investors with bad taste

By HELEN HUNTLEY
Published March 28, 2005

A Starbucks partnership with whiskeymaker Jim Beam looks too much like a deal with the devil for one mutual fund company specializing in "socially responsible" investing.

Pax World Funds in Portsmouth, N.H., said it sold 375,000 shares of Starbucks Coffee Co. worth $23.4-million solely because the coffee company plans to sell Starbucks Coffee Liqueur through restaurants, bars and stores with liquor licenses. The 40-proof drink won't be available at Starbucks.

"While we continue to admire and respect many aspects of Starbucks' business and corporate citizenship activities, the company essentially forced our hand in this matter," said Pax vice president Anita Green. "Investors in Pax World Funds expect us to do what we say we will do about avoiding companies that produce liquor."

Starbucks shares represented 1.6 percent of the portfolio of the Pax World Balanced Fund. Pax wrote Starbucks last month asking it to reconsider its decision to collaborate with Jim Beam Brands on the liqueur, but says it didn't get a reply.

Starbucks issued a statement saying it was disappointed in the decision but understood the policy that produced it.

Socially responsible funds held more than $100-million in assets at the end of last year, but make up only a small part of the $8-trillion fund industry. Most have some type of restriction on investing in companies that produce or sell alcohol.

[Last modified March 25, 2005, 19:07:02]