The country's high-end coffee market remains a competitive battleground despite months of recession, with increasing numbers of specialty cafes and the arrival of new international players on the scene -- all vying for the toonies and loonies of Canada's caffeine-addicted consumers.

Late last week, two American companies snatched up the market share controlled by Timothy's Coffees of the World Inc. -- a well-known Canadian chain that operates retail outlets across the country.

Vermont's Green Mountain Coffee Roasters Inc. bought the Toronto coffee company's wholesale business and its Timothy's World Coffee brand for a cool $165 million.

In a separate sale, the retail portion of Timothy's Canadian stores was purchased by Bruegger's Enterprises Inc., a U.S. company and affiliate of Sun Capital Partners Inc., which operates bagel restaurants south of the border.

Sandy McAlpine, the president of the Coffee Association of Canada, said the Timothy's sale was a reverse of the usual story of "Canadian firms going south of the border and having success."

Instead, a big U.S. company bought the coffee company, giving "a pretty dramatic endorsement" of the Canadian market and the quality products it has developed, McAlpine told CTV.ca in a telephone interview from Toronto.

Then there are the international players that have opened franchise on Canadian soil during the recession.

Israel's Aroma Espresso Bar chain has opened two more Canadian stores in 2009, with new locations in Toronto and Thornhill, Ont.

On its corporate website, Aroma said that although "the Canadian coffee market is known to be highly competitive," it expects "to become a significant brand in this market in a short time."

The company previously opened a Toronto store in May 2007, its first in Canada.

Australia's Gloria Jean's Coffees International is also said to be eyeing a move into the Canadian market, after moving into China and the Czech Republic in 2009.

The National Post recently reported that the Gloria Jean's could be north of the U.S. border as soon as next year and has attracted interest from dozens of investors.

The domestic picture

The past year has been tougher than usual for Canada's established high-end java giants, but not nearly as bad as it has been for specialty coffee merchants in the United States.

McAlpine said specialty coffee chains in Florida and California, for example, have been hit hard by the continued "economic funk" that has seen millions of jobs shed across the U.S. during the current recession.

In Canada, the high-end coffee business remains "a healthy overall market," McAlpine said, the same way it has been for the past 20 years or so.

But it hasn't been easy for everyone.

At Second Cup, same store sales have dropped more than 4 per cent as of the start of November -- a change the company blames on "softer traffic" moving through its stores during a recession year. The company also had to close 22 of its stores, while opening less than half that number.

Starbucks, on the other hand, had more stores open in Canada at the start of October 2009 than it did 12 months earlier. But it closed hundreds of stores in the U.S. over the same time period.

According to Starbucks, it is "pleased by the improvement in our international segment" in recent months, the company said in an e-mail to CTV.ca. "Canada, the U.K., China and Japan are our largest international markets and drive the majority of this segment's revenue and operating profits."

At the moment, McAlpine said most of the specialty coffee stores in Canada are seeing improved sales after a prolonged slow period and there are more high-end cafes in business today than were a year ago. Independents have been particularly successful in Central and Eastern Canada in recent months.

But Randy Pedersen, co-owner of the Saint John, N.B.-based Java Moose chain, said that while the Canadian market may be healthy on balance, much of it is heavily saturated.

In the Saint John metro area, for example, there are only 120,000 people, yet there are eight specialty coffee shops in business. Half of those are Starbucks stores, the other half Java Moose outlets.

With so many coffee shops already established, it's a tough hill to climb for any newcomers.

The appeal for them at the moment is likely rooted in the fact that "Canada seems to have escaped the worst of the worldwide recession," Pedersen explained during a telephone interview from his New Brunswick home.

"As the recession eases, I think that interest will wane," he said, adding that some of that interest may be lost when other more profitable markets also recover from the recession.

But he agrees with McAlpine that Canadians love their coffee and haven't skimped back too far on their coffee indulgences.

"I think people want an opportunity to treat themselves, especially in bad times," Pedersen said.

McAlpine, who has seen the ups and downs of previous recessions during his 30 years in the coffee business, said "coffee seems to be nearly recession-resistant."

While people may choose to spend less on other discretionary items, a good cup of joe doesn't seem to be on that list.

"It just does not seem to have the impact of: 'Oh my God, I've got to cut back," he said.

With files from The Canadian Press