Pax World Funds divested all of its 375,000 shares of Starbucks Coffee Co., Seattle, valued at an estimated $23.4 million, because of Starbucks' development and distribution deal with whiskey maker Jim Beam Brands Co. to sell a coffee-based alcoholic beverage, according to a Pax announcement today.
"In a Feb. 17 letter to Starbucks CEO Orin Smith, Pax World Funds and other parties urged the company to reconsider the decision to attach its name" to a liqueur, the Pax statement said. Pax has not received a reply, the statement said.
Audrey Lincoff, director-media relations at Starbucks, said in an e-mail to P&I Daily: "Starbucks is disappointed in their decision; however we acknowledge that Pax World Funds has a strict policy that it will not invest in companies that derive revenue from the manufacture of liquor."
Starbucks and Jim Beam last year announced an agreement to develop, manufacture and market a Starbucks-branded coffee liqueur, which would not be sold in Starbucks retail stores, Ms. Lincoff said.
The Starbucks stock was held in the Pax World Balanced Fund, representing 1,6% of the $1.5 billion portfolio, Anita Green, vice president of social research, said in an interview. She said 9.5% of the portfolio is held by pension funds and 401(k) plans. Pax had held the stock for eight years, she said, adding it was a good performer; she didn't have return figures. Ms. Green said Pax won't consider buying Starbucks stock again until it ends the Jim Beam relationship and avoids any other alcohol-related deals.
"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," Ms. Green said in the statement. "We have divested ourselves of these shares reluctantly and only after trying to get the company to reconsider its course of action. In the absence of a reversal by Starbucks, our course of action was clear: Investors in Pax World Funds expect us to do what we say we will do about avoiding companies that produce liquor."
