A few years ago, Starbucks announced plans to sell alcoholic beverages in some of itsstores in some test markets. A commentator argued: "Some obvious reasons why they aredoing this:

(i) Maximize the value of the real estate by expanding into a day part they don't penetrate

very well.70% of Starbucks' revenue is generated (in most cases) before 2 p.m. According to the mega retailer of the roasted bean, the six stores in the Portland and Seattle areas that serve alcohol, have increased revenue by double digits after 4 p.m. Selling alcohol expands their opportunity and invites consumers back into their outlets for another occasion.

(ii) Increased margin opportunity. Since commodity costs continue to pressure margins,Starbuck's is on the lookout for anything that can help deal with margin compression.

While the coffee business already has nice margins, alcohol sold on premise can also command obscene margins. At the $5 price point reported for a beer, the margin can be north of 400%.

(iii) Capitalizing on Community. Coffee houses have been described as the modern day tavern or saloon.They've done a nice job cultivating or re-cultivating the notion of"community."People gather there for various reasons: Free Internet, nice atmosphere to relax and think, a place to hang out with friends or conduct informal (and sometimes formal) business meetings, and many more.Alcohol extends the community dynamic."

For each of the three arguments, explain whether it points to a cost synergy between selling coffee and selling alcoholic beverages, a revenue synergy, or does not point to a synergy.