Coffee War Heats Up in Canada

This week, Tim Hortons announced it’s testing a new dark-roast coffee blend in two markets. It’s a significant move for the No. 1 restaurant chain in Canada as it looks to stave off competition from McDonald’s, Starbucks and other rising coffee players. And in a beverage market where new product introductions are dominated by frozen, frothy or whipped-cream-topped limited-time offers, what the in-test blend lacks in flash, it could make up for by providing a lasting, not-insignificant sales and traffic boost for Tim Hortons.

In a news release, Tim Hortons said the new blend—the first new coffee style in the chain’s 49-year history—addresses a segment of consumers who enjoy dark-roast coffee. “Coffee drinkers have told us they enjoy variety when it comes to their coffee, and according to our research, many of them consumed dark roast coffee in the past month,” Vice President of Beverages Dave McKay said in the release. With the new dark roast, currently available in participating Tim Hortons’ locations in Columbus, OH, and debuting in London, ON, stores next week, “Those looking for a darker blend can now get it with the ease and convenience of Tim Hortons,” he said.

Making Tim Hortons an easy choice for guests who prefer a bolder brew is key: 62% of Canadian consumers say they visit coffee cafes at least weekly, and 12% do so daily, according to Technomic’s 2013 Canadian Bakery & Coffee Cafe Consumer Trend Report. And among the 34% of consumers who report visiting coffee cafes more often in the past year, convenience and service speed were cited as top factors encouraging their increased patronage.

Tim Hortons currently stands head and shoulders above other restaurant chains in Canada in terms of domestic systemwide sales: Its Canadian sales stood at $5.9 billion in 2012, according to Technomic’s 2013 Top 200 Canadian Chain Restaurant Report, versus McDonald’s Canada’s $3.8 billion and Starbucks Canada’s $978 million. Still, while Tim Hortons’ sales were up 6.2% in 2012, Starbucks Canada’s were up 8.8%, and McDonald’s Canada’s rose an also-impressive 5.7%—and so the battle to become (or remain) part of consumers’ daily routine intensifies.

New Tim Hortons CEO Marc Caira said in September that the chain is aiming to improve its speed as part of an effort to maintain its competitive edge. The dark-roast coffee blend, priced the same as the chain’s original blend, could present a meaningful new menu choice for guests without potentially slowing operations the way a new, more-complicated espresso beverage might.

Some observers may question whether the dark-roast venture is worthwhile for Tim Hortons; after all, the decidedly Canadian, decidedly unpretentious chain has managed to go 49 years offering only one blend of java, though it has added a bevy of specialty espresso drinks in recent years. But Starbucks in the past year has reached out to the segment of consumers put off by its more full-flavoured brews with the introduction of lighter blends, and Tim Hortons similarly stands to appeal to a wider audience with its recognition that Canadian consumers’ coffee tastes are changing. Furthermore, with respect to brand evolution, who would have imagined 10 years ago McDonald’s becoming a competitive threat on the coffee-and-lattes front? But with its McCafe platform, it has become just that. (Notably, McDonald’s Canada is offering guests a free small McCafe brewed coffee from October 28 through November 3—Tim Hortons’ dark-roast blend arrives in Ontario on November 4.)

Dark-roast coffee may not become a blockbuster sales driver for Tim Hortons, but its trial is a good example of identifying and responding to evolving guest preferences.

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Patrick Noone

With more than 15 years of experience in the research/consulting industry, Patrick Noone, Executive Vice President, Business Development, is integrally involved in the sales, development and marketing of Technomic's online resources, reports and custom studies—tools that provide clients with actionable industry data that supports their strategic and tactical business planning processes. He also manages Technomic's Business Development and Client Service teams.

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