Tim Hortons boldly enters specialty coffee market
Published Wednesday, November 2, 2011 6:35PM EDT
Last Updated Saturday, May 19, 2012 6:26AM EDT
There's a beverage war percolating at one of Canada's largest quick coffee chains.
Tim Hortons will soon start offering lattes, cappuccinos and other specialty coffee drinks, expanding its brand into an arena dominated by chains such as Starbucks and Second Cup.
Café-mainstays such as espresso shots and fresh-brewed cappuccinos will roll into more than 2,500 locations across Canada, starting as early as next week in Ontario.
It's a significant departure from the basic formula of speedy, no-nonsense java that made Tim Hortons stand out as a franchise.
By expanding its brand into more elaborate drinks, Tim Hortons CEO Paul House said the company aims to give Canadians café-style coffee at value prices.
"Now, anyone can enjoy a delicious latte in one of our thousands of locations, or grab one in a drive through window, any time of day," he said in a news release issued Wednesday.
With drinks starting at $2, Tim Hortons is dangling low-cost alternatives in front of java lovers who willingly shell out twice as much for lattes at Starbucks and Second Cup.
But whether or not consumers will take the bait is yet to be known.
Exclusive-seeming, customizable drinks that offer coffee lovers the feeling of high-class comfort during a frenzied work day is part of the reason Starbucks is so successful, explains Taylor Clark in his book "Starbucked."
Tim Hortons' new specialty coffee line will be something of a litmus test to see if an "everyman's" chain can tap into that success.
Given that eight out of 10 cups of coffee sold in Canada every morning come from Tim Hortons, one research analyst said he believes the chain has a fighting chance.
"They're already bringing these customers in the door, now it's about expanding their base and building on a good thing," said Brian Yarbrough of Edward Jones.
Yarbrough points out that customers pay attention to value and are constantly scoping out deals, which may play to Tim Hortons' advantage.
"This gives them the opportunity to draw in new customers," he said. "As long as quality remains high, people may give their drinks a shot and realize they're paying less."
But even when the arena is cheap java, Tim Hortons faces fierce competition.
The company's announcement also comes as McDonald's launches its two-week long free coffee promotion in Canada, a limited-time offer meant to pull java lovers away from traditional coffee shops and into the Golden Arches.
Tim Hortons' specialty drinks will be available Nov. 14 in Ontario. Loyal "Timmy's" fans in other parts of Canada and the United States will have to wait until mid-December to get their hands on the new drinks.