Tim Hortons to enter trendy smoothie market
A cup of Tim Hortons coffee is poured in Toronto on Friday, May 14, 2010. (Chris Young / THE CANADIAN PRESS)
Published Thursday, March 3, 2011 6:24AM EST
TORONTO - Tim Hortons will soon begin serving up smoothies in Canada as it attempts to shoulder its way into a trendy and growing but fragmented market for the healthy crushed-fruit drinks.
The restaurant chain that made its mark on the Canadian consciousness with the less-than-healthy combination of coffee and doughnuts plans to add pre-blended, mixed berry and banana strawberry fruit smoothies to its menu starting Monday.
"Canadians are snacking more and they are looking for healthier snacks, so for us it's a big business opportunity to launch smoothies in Canada," said Dave McKay, marketing director for beverages at Tim Hortons (TSX:THI).
"It's an opportunity to bring what is more of a niche product right now and really make it mainstream."
There's tremendous opportunity to grow Canada's small and fragmented smoothie market, in which a number of players such as Booster Juice, American coffee giant Starbucks and Canadian chain Cultures compete, said Robert Carter, an expert with the NPD Group.
Research by NPD, which tracks the habits of restaurant-goers, found that no one restaurant chain among those currently offering smoothies has captured more than 26 per cent market share. However, the market has grown every year in the past five years, and increased by eight per cent last year alone, Carter added.
Relative consumption is small -- about 42 million smoothies per year in a marketplace that sees 6.5 billion meal occasions per year -- meaning there's significant opportunity for a big player like Tim Hortons to grow as a smoothie player.
"One area in which smoothies are very underdeveloped is exactly that, the quick service coffee segment: players like Tim Hortons, and even (quick service) burger places," Carter said.
Tims has been testing smoothies in five Canadian markets for a year and has already introduced them into stores in the U.S., where the market is more robust.
"Smoothies in the U.S. are more developed as a category, so we wanted to be there," McKay said.
McDonalds and some of the biggest fast food chains in the U.S. have recently introduced smoothies as part of a move toward making over the greasy image of fast food restaurants into grown-up, health conscious dining establishments.
Coffee, including specialty coffee drinks like mochas, has been a major driver of business for McDonald's. Now Burger King, Subway and Wendy's are putting more emphasis on their coffee selections and revamping their breakfast offerings.
McDonalds Canada spokesman Louis Payette said the Canadian division is keeping a close eye on the response to smoothies in the U.S. and other parts of the world, but has no plans yet to add them to its Canadian menu.
That gives Tim Hortons a jump on at least some of its competitors as demand for healthy eating options at fast food restaurants is expected to grow in the coming years, according to a November study by the NPD Group.
As many as 20 per cent of Canadians who frequent fast food restaurants are looking for healthier food choices and are prepared to pay much more for them, according to a recent Angus Reid survey commissioned by Tims. Those consumers looking for healthy foods are willing to pay as much as 13 per cent more than what they pay for less-healthy options. Smoothies topped the list of consumer wants.
Meanwhile, only five per cent of Canadians said they are consuming at least the seven to 10 daily servings of fruit and vegetables recommended by the Canada Food Guide.
Nearly 50 per cent of respondents said they are not getting enough fruits and vegetables because its difficult to find on-the-go options. And more than a quarter said they don't have time to buy and prepare fruits and vegetables.
Tims 10-ounce smoothie will cost $1.99 and contain 130 calories, zero grams of fat and a full serving of fruit. Customers can add yogurt for 70 cents, adding another 30 calories.