Times Colonist

Tim Hortons aims to win upmarket crowd


OTTAWA — A coffee war is brewing in Canada as Tim Hortons prepares to launch its own line of espressoba­sed drinks to compete with Starbucks and Mcdonald’s.

Starting next week, the national chain will begin offering customers espresso, lattes and brewed-on-the-spot cappuccino­s.

Tim Hortons has served cappuccino for years, but the flavoured coffee has been made from a powdered base. The new machines feature espressoba­sed coffee and real steamed or frothed milk.

The move is aimed at winning back some of the more casual coffee crowd that has defected to upmarket competitor­s such as Starbucks and to the chain’s main competitor, Mcdonald’s Canada, say analysts. Mcdonald’s has seen major success with the introducti­on of its Mccafe specialty coffees.

“Consumers in Canada are not at all tired of specialty coffee. It is one of the fastest growing categories in food service, growing faster than regular coffee,” said Svetlana Uduslivaia, senior analyst in Canada for market researcher Euromonito­r Internatio­nal.

Coffee is a lucrative business — worth $650 million in Canada each year, according to Acnielsen — and competitio­n is tight.

Mcdonald’s has its offerings, and Burger King and Subway Restaurant­s have teamed up with Seattle’s Best Coffee, owned by Starbucks, to better compete for consumer dollars, but Tim Hortons accounts for 80 per cent of all restaurant coffee sales in Canada, says Brian Yarbrough, a retail analyst with Edward Jones.

“With Mcdonald’s remodellin­g and putting all this money into their stores in Canada, they aren’t going to just sit idle,” he said.

The huge profit margins associated with specialty drinks, which can be sold at premium prices but cost only slightly more to make than regular coffee, are also a strong motivator.

“It’s definitely a profitable business,” said Yarbrough.

 ??  ?? Tim Hortons is entering the lucrative specialty coffee market with new espresso-based beverages.
Tim Hortons is entering the lucrative specialty coffee market with new espresso-based beverages.

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