A new kind of jolt from your coffee
Starbucks, Jim Beam team up to develop liqueur
April 8, 2004
SEATTLE - Starbucks Corp.'s extensive coffee-based beverage lineup is about to get a different kind of jolt.
The Seattle-based coffee shop chain, along with the Jim Beam unit of Fortune Brands Inc., is developing a premium coffee liqueur to be sold in bars, restaurants and liquor stores — but not in Starbucks' 7,800 retail locations, the companies said Thursday.
The liqueur will be tested in two undisclosed U.S. markets later this year in Starbucks' first attempt to tap into the alcohol business.
"It has been our intention since the mid '90s to build a very strong brand at retail and then to leverage into other product categories and channels of distribution," Starbucks Chief Executive Orin Smith told Reuters in a telephone interview.
Starbucks plans to announce similar product deals with other companies in the next three to six months, Smith said, declining to elaborate.
On Wednesday, however, Tazo Tea Co., a Starbucks unit, reached an agreement with Kraft Foods Inc. to bring Tazo's tea products to more U.S. grocery stores.
A new taste for coffee fiends
The companies have yet to name the new liqueur, but the Starbucks name will be featured prominently, executives said. Financial terms of the deal were not disclosed.
A Starbucks-branded liqueur has a built-in audience, Smith said, noting the company's best customers are also regular drinkers of coffee liqueur and have been clamoring for a Starbucks alternative for years.
Starbucks actually developed an in-house coffee liqueur a decade ago, but has been waiting for the right time, and the right partnership, to roll it out.
The company has no plans to sell liquor in its stores, which would create a range of logistic hurdles, including seeking permits to sell alcohol.
"For the type of business it might generate for us, it's just not the way we want to go," Smith said.
Starbucks launched Starbucks Ice Cream with Dreyers in 1995 and developed a bottled frappuccino drink with PepsiCo Inc. in 1996, each of which has performed well, Smith said.
Fortune Brands, which makes products ranging from Moen faucets to Titleist golf balls, also uses partnerships to leverage its brands.
The company has deals with home improvement retailers Home Depot Inc. and Lowe's Cos and a distribution agreement with the Absolut Spirits Co.
The Starbucks deal fits in with Fortune Brands' goal of developing new high-end products, Chairman and Chief Executive Norm Wesley said.
The new liqueur will compete with the Allied Domecq Plc's sweet-tasting Kahlua and Bailey's Irish cream, which account for 2.5 million cases of the 6 million to 10 million sold each year in the United States.
Fortune Brands currently sells a coffee liqueur called Kamora, but the Starbucks liqueur will cost more and offer a different taste, serving a different market.
April 8, 2004
SEATTLE - Starbucks Corp.'s extensive coffee-based beverage lineup is about to get a different kind of jolt.
The Seattle-based coffee shop chain, along with the Jim Beam unit of Fortune Brands Inc., is developing a premium coffee liqueur to be sold in bars, restaurants and liquor stores — but not in Starbucks' 7,800 retail locations, the companies said Thursday.
The liqueur will be tested in two undisclosed U.S. markets later this year in Starbucks' first attempt to tap into the alcohol business.
"It has been our intention since the mid '90s to build a very strong brand at retail and then to leverage into other product categories and channels of distribution," Starbucks Chief Executive Orin Smith told Reuters in a telephone interview.
Starbucks plans to announce similar product deals with other companies in the next three to six months, Smith said, declining to elaborate.
On Wednesday, however, Tazo Tea Co., a Starbucks unit, reached an agreement with Kraft Foods Inc. to bring Tazo's tea products to more U.S. grocery stores.
A new taste for coffee fiends
The companies have yet to name the new liqueur, but the Starbucks name will be featured prominently, executives said. Financial terms of the deal were not disclosed.
A Starbucks-branded liqueur has a built-in audience, Smith said, noting the company's best customers are also regular drinkers of coffee liqueur and have been clamoring for a Starbucks alternative for years.
Starbucks actually developed an in-house coffee liqueur a decade ago, but has been waiting for the right time, and the right partnership, to roll it out.
The company has no plans to sell liquor in its stores, which would create a range of logistic hurdles, including seeking permits to sell alcohol.
"For the type of business it might generate for us, it's just not the way we want to go," Smith said.
Starbucks launched Starbucks Ice Cream with Dreyers in 1995 and developed a bottled frappuccino drink with PepsiCo Inc. in 1996, each of which has performed well, Smith said.
Fortune Brands, which makes products ranging from Moen faucets to Titleist golf balls, also uses partnerships to leverage its brands.
The company has deals with home improvement retailers Home Depot Inc. and Lowe's Cos and a distribution agreement with the Absolut Spirits Co.
The Starbucks deal fits in with Fortune Brands' goal of developing new high-end products, Chairman and Chief Executive Norm Wesley said.
The new liqueur will compete with the Allied Domecq Plc's sweet-tasting Kahlua and Bailey's Irish cream, which account for 2.5 million cases of the 6 million to 10 million sold each year in the United States.
Fortune Brands currently sells a coffee liqueur called Kamora, but the Starbucks liqueur will cost more and offer a different taste, serving a different market.
posted by Scott Fish | 2:43 PM
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