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Timbit diplomacy
I have frequently resorted to poking a stick at the easy target of Tim Hortons. It’s about time I said something a little nicer about the company. So here goes.
According to an article in the Globe and Mail a few weeks ago, Tims has decided to enter the coffee market in China It plans to open up some 10 to 20 stores a year over the next couple of years and be up to 1,500 outlets in ten years.
And who can blame it? Coffee is becoming a big thing in the land of tea drinkers. The overall Chinese coffee market is said to be $4.5 billion; and demand for coffee has jumped 235 per cent in the last five years. China, let’s not forget, has a population of some 1.386 billion, making Canada’s 35 million seem like a rounding error. And yet we have about 3,800 Tims outlets in Canada. You can work out the potential “Tims per Chinese” for yourself; but clearly the upside potential is huge.
There are, however, a few small obstacles along the way. First, the competition is already there. Starbucks has been in China for 20 years and already has about 3,700 outlets, with plans to open 2,400 additional outlets in the next four years. A Chinese chain, Luckin, established in just 2017, expects to reach 4,500 outlets by the end of this year. The British Costa Coffee group wants to be in 1,200 locations by 2022. There are other ambitious Chinese companies targeting the market.
However, the apparent capacity of the market to absorb all comers has not led to inevitable success. Krispy Kreme donuts was in and out of the Chinese market, twice. Dunkin’ Donuts is giving it a third try. So Tims will have to be careful not to simply show up with its Old Fashioned Glazed with Extra Large Double Double and tell the Chinese that they are lucky to be able to consume the product: it has to have its ear to the ground. Indeed, Tims has already tweaked its menu to appeal to Chinese tastes by offering fewer sweet items, and introducing salted egg yolk Timbits, shrimp sandwiches and green tea lattes.
Apart from being late to the party and having to be sensitive to the market, Tims also faces a challenge in differentiating itself from the competition. Its chosen strategy is to style itself the ‘everyday’ choice, rather than the ‘special occasion’ choice, of the coffee consumer. That means careful pricing. On one hand, Tims coffee will be priced about 30 per cent lower than Starbucks. On the other hand, the Luckin chain is planning to charge less than a third of Tims’ price. Can Tims find a niche somewhere in the middle? Will it be enough to offer quality decor, with wood finishes and comfortable seats? Will it ever develop a cachet?
Then there is the elephant in the room: Tims’ Canadian identity. That doesn’t win you many brownie points with the Chinese government at the moment. Perhaps the Chinese people will express their independence from authority by loading up on Honey Crullers, but perhaps not.
To its credit, Tims China has rejected the chance to start pitching itself as a Brazilian outfit that just happened to acquire a company based in Canada, but that has no special affection for the place. Instead, it is doubling down on its Canadian identity. A giant coffee cup bearing the maple leaf insignia beckons customers. Maple Leaf themed quilts hang on the walls. A maple latte is on the menu.
If I were Tim’s, I would be sticking to my Canadian guns as well, and indeed doubling down on one of my strengths: the Timbit. The company has already stated that it plans to sponsor Timbits sports teams in China. Maybe the time is right for a little Timbit diplomacy. Timbits soccer teams from China could twin with teams from Canada and visit Canada for friendly games. The Chinese could introduce the Canadians to salted egg yolk Timbits, and the Canadians could intrduce the Chinese to the sweeter varieties unavailable in China. A people-to-people connection would be established. The parents of the Chinese Timbits kids would soon spread their gratitude on social media and rapidly reach all 1.386 billion of their countrymen.
Tims could focus its marketing budget on the twinning program and reap the benefits of a positive public image. This would in turn save it from having to flog some new sandwich gimmick every couple of months, or come up with more commercials featuring selfless gestures by hockey kids and their grandparents.
And, who knows, our government may be interested in getting involved. After all, ping pong diplomacy worked for Richard Nixon; why shouldn’t Timbit diplomacy work for Justin Trudeau? Nothing else seems to be going right for him on the China file; well, make that the whole Prime Minister file. He himself could probably benefit from a time-out for coffee and a couple of Timbits.
So to you, Tim Horton’s: full marks for your gumption and good luck in trying to establish a beachhead in the People’s Republic. Stick with the maple leaf— and deploy the Timbit!
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