Pax World Funds has dropped Starbucks from its investment portfolio, blaming the coffee company's launch of a liqueur with Jim Beam. Pax World invests only in businesses that it deems socially responsible.

The mutual fund company, which avoids companies involved in defence or weapons, tobacco, liquor or gambling, sold 375,000 Starbucks shares worth around US$23.4m yesterday (23 March).

"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 Anita Green, Pax World Funds' vice president of social research, in a statement.

In a written response to the fund's announcement, Starbucks said it was disappointed but understood Pax World Fund's strict policy on not investing in companies that make money from the manufacture of liquor.

"Starbucks is committed to responsible marketing, and proud of our history of corporate responsibility," the statement said. "Prior to the introduction of this product, Starbucks worked diligently to research and understand its potential impact."

Pax World Funds said it wrote to Starbucks CEO Orin Smith last month urging the company to end its deal with Jim Beam, which was announced last year.

"We have divested ourselves of these shares reluctantly and only after trying to get the company to reconsider its course of action," Green said. "Investors in Pax World Funds expect us to do what we say we will do about avoiding companies that produce liquor."