A new liqueur, produced through a partnership with Jim Beam Brands, is the latest addition to Starbucks' product portfolio. The drink is likely to be a success with many of Starbucks' coffee drinking fans. However, the alcoholic beverage must be positioned carefully to avoid tarnishing Starbucks' family-friendly image.

Starbucks, the world's largest coffee chain with revenues of over $4 billion in 2003, is well known for its own brand coffees and other in-store food and drinks. Its new Starbucks Coffee Liqueur, however, represents the company's first alcoholic beverage offering. The liqueur is not to be sold in Starbucks stores, but in licensed bars, restaurants and liquor outlets.

The alcoholic beverage is not the first of the company's products to be sold outside its retail stores. Starbucks also produces and sells bottled Frappuccino coffee drinks through a joint venture with PepsiCo, and a line of premium ice creams through a partnership with Dreyer's Grand. The success of both ventures is likely to have spurred the development of the alcoholic alternative.

According to Starbucks chief executive, James L. Donald, 50% of the company's consumers are liqueur drinkers. This suggests a large potential market for the new beverage, which is flavored using "100% Starbucks coffee" according to the label.

The coffee-flavored liqueur is likely to face the greatest competition from Allied Domeq-owned Kahlua, which is an extremely well-established brand-leader in the market. To offset competition, Starbucks' liqueur will be reliant on its well-known coffee chain name and the loyalty of its current client-base.

Whilst a coffee-flavored liqueur is likely to appeal to the large number of Starbucks coffee-lovers, it is important that any brand extension strategy should fit in with the company's image. Starbucks' coffee appeals predominately to adults, yet its image is as a family-friendly coffee chain, which the new liqueur must distance itself from. The limited distribution channel availability of the liqueur will assist this, while a Starbucks-supported alcohol-awareness program in schools represents an effort to maintain the company's socially responsible image.

The success of the liqueur seems likely with Starbucks' well-known name and loyal client base. However, the company must be careful to ensure that this success is not at the expense of the chain's responsible public image.