Sylvain Charlebois is dean of the faculty of management and a professor in food distribution and policy at Dalhousie University
In case you didn't know, coffee is a big deal. It's the second-most-traded commodity in the world. The first one, oil, is something Canada produces in abundance. But even though we don't produce coffee beans, we seem addicted to them.
Canada ranks third amongst the world's biggest coffee drinkers, after the Netherlands and Finland, according to the global marketing researching company Euromonitor. The average Canadian drinks a whopping 152 litres of coffee a year – nearly enough to fill an oil barrel. But even as we savour our fix, some people are wondering whether this trend is actually desirable.
Many years ago, Canadians travelling to Europe quickly noticed two big lifestyle differences: more smoking and aromatic coffee. The smoking differential remains, but the coffee gap has shrunk in recent years. Europeans still drink mainly smaller, stronger coffee portions, but North American coffees have changed dramatically. The charge for stronger coffee, led by Starbucks more than two decades ago, enticed other retailers to adjust to the North American consumer's changing palate. Most with significant market shares in coffee, including Canadian icon Tim Hortons, have "Europeanized" their coffees.
Coupled with this phenomenon are the inroads McDonald's has made in the Canadian coffee game in recent years. With one restaurant per 25,000 Canadians, McDonald's growing success in the coffee space has been noticeable. But it's hard to overlook Tim's legacy in the story of Canadian coffee consumption.
Canadians may drink more coffee due to our colder climate, like the Scandinavian countries. But the story is much more complex than that. Canada has one Tim Hortons outlet for every 9,000 consumers, which is a high ratio. The company built its empire by connecting with many communities in many ways, both urban and rural. For decades, the company's corporate and social engagement was textbook – sponsoring sport teams and holding summer camp drives. By giving back, Tim Hortons sold more coffee. So it's not a fluke that Canadians are the largest consumers of coffee outside the household, according to Eurometer – a trend known in the sector as the "Timmies effect."
At the same time, coffee drinking in Canada has changed immensely over the past few years. The demand for coffee outside the home has been contracting by almost 3 per cent yearly. The single-serve coffee market and coffee machines have positioned themselves as a strong rival to the traditional drip brewers, prompting more home-based consumption. Single-serve coffee pods have put Canada almost at the top of coffee drinkers in the world.
This is why many coffee retailers are selling us so many pods, with their attendant environmental costs. With some leadership from companies such as Loblaw, Canada has seen its first compostable coffee pods. More manufacturers will inevitably follow suit, to the delight of environmentally conscious millennials. (Speaking of whom, millennials have also something to do with this story, as their coffee consumption is increasing annually in the order of 5 to 6 per cent.)
Helping coffee's cause, the commodity has been getting some good press recently. Many studies suggest that drinking up to four cups of coffee per day is healthy. The International Agency for Research on Cancer has recently downgraded coffee from a cancerous food product to one that is part of a healthy diet. In fact, it has stated that coffee can lower the risk for liver and uterine cancer. (The IARC does warn against drinking very hot beverages – anything over 150 degrees Fahrenheit – since they are considered to be possible carcinogens.)
Over the past 50 years, Tim Hortons has given Canada a very different coffee drinker, but things may be changing on the corporate front. In a megadeal in 2014, the company was sold to 3G Capital and Warren Buffett's Berkshire Hathaway, owner of Burger King. In a tax inversion scheme, Tim Hortons remained Canadian-based, but is now American-controlled.
With this new ownership, Tim Hortons is arguably becoming a very different company, with many head-office layoffs and new hires in recent months. It's even turning its attention to Britain, where it's trying to make a case with British consumers. Beyond Canada (and perhaps the Middle East), Tim Hortons really hasn't had much success abroad. It will be interesting to see whether Restaurant Brands International, the parent company formed in the 2014 merger, can figure out how to lure Britons away from their tea and toward a double-double.
Meanwhile, Tim Hortons should never forget how it has transformed the coffee market in Canada to its benefit. Because if it does, other retailers are more than ready to pick up the baton.