Coffee fever

The first Tim Hortons store in Yangzhou, Jiangsu province, opens this month. [Photo provided to China Daily]

According to the 2022 China Coffee Consumption Insight Report released by the food delivery platform Meituan in July, the market size of the made-on-site coffee industry in China was 8.97 billion yuan in 2021, a year-on-year rise of nearly 42 percent, and it is expected to reach 15.79 billion yuan in 2023.

Lu Yongchen, CEO of Tim Hortons China, senses that the Chinese coffee market is developing rapidly. "I think that with the increasing demand from Chinese consumers, this market will be more vigorous," he said.

He said about 200 to 300 cups of coffee per capita are drunk annually in the United States and Europe, but the corresponding figure for China is about 10 cups. "With consumption habits changing, the latter number will rise from 10 to 100," he added.

Since opening its first branch in Shanghai in 2019, Tim Hortons has launched more than 500 stores in some 30 Chinese cities.

"We initially opened our stores in first-tier cities, as they have a large population base and a more mature coffee consumption market," Lu said.

Taking Shanghai as an example, he said that as of June 30, there were 7,857 cafes in the metropolis, making Shanghai the city with the most cafes in the world, with 3.16 per 10,000 people.

"This situation is quite favorable for us, so we have more than 200 stores in Shanghai," he said, adding that the city's coffee consumption atmosphere is more personalized and diversified than elsewhere, as it includes major brands and independent cafes.

"We are also expanding to third- and fourth-tier cities. In the second quarter, we temporarily slowed the pace of expansion due to the pandemic, but since August, we have stepped it up by opening stores in many cities, including Jinan, Jiaxing, Wuxi, Yangzhou and Zhuhai," Lu said.

By the end of 2025, Tim Hortons' China unit plans to have opened 2,750 stores in the nation, according to Lu.

Tim Hortons' Chinese business went public on the Nasdaq Composite Index in the US at the end of September. Lu said that since entering China in 2019, the company has attracted several rounds of investment from enterprises such as Tencent, Sequoia Capital and Eastern Bell Capital.

"We achieved revenue of 404 million yuan in the first half of this year, a rise of more than 70 percent year-on-year. Despite the strong impact of the pandemic in the first six months, revenue growth remained strong," he said.

Collaboration is one of the ways in which Tim Hortons reaches targeted customers. In August, it opened Tims x Easy Joy cafe in Beijing with Easy Joy coffee. Since 2020, the Canadian chain has collaborated with Tencent E-sports to open co-branded coffee stores in Shanghai and Shenzhen, Guangdong province, providing a new experience for gaming fans.

Ready-to-drink coffee products in velvet coco and chestnut flavors will be jointly launched by Tim Hortons and Freshippo next month for sale at the grocery chain's 300-plus stores.

Lu said, "Our co-branded coffee products will fully exploit the dual advantages of our high-quality products and Freshippo's multiple sales channels to serve a wide range of consumer groups."