Introduction

The surge in coffee consumption in China, nearly tripling between 2012 and 2016 and anticipated to
reach 1,000 billion Yen by 2025, presents a substantial growth opportunity for Tim Hortons to expand its
global market share. Capitalizing on this potential, Tim Hortons, owned by RBI, initiated its expansion
into the Chinese market on February 26, 2019, with the inauguration of its first coffee shop in Shanghai's
bustling business district. This venture materialized through a strategic joint-venture partnership with
Cartesian Capital. As the iconic Canadian coffee brand ventures into China, management faces the
critical task of formulating an effective and sustainable strategy to guide its subsequent expansion
efforts.

This case study delves into two significant challenges confronting Tim Hortons in its Chinese expansion.
Firstly, with a brand so closely tied to Canadian life, gaining brand salience in a foreign market will pose
challenges. Second, entering a market dominated by established players like Starbucks and Luckin, Tim
Hortons must navigate the challenge of competition as a late entrant with a goal of increasing their
market penetration. This study aims to dissect these threats and proposes an action plan to mitigate
them, providing strategic insights for Tim Hortons to successfully navigate and thrive in the dynamic
Chinese market.

Findings (See Appendix A for SWAT Analysis)

The Tim Horton’s-Cartesian Capital collaboration marks a continuation of the successful working
relationship between Cartesian Capital and RBI, dating back to 2012 when they joined forces to expand
Burger King into China. The outcome of their cooperation led to the establishment of over 1,000 Burger
King outlets across the country. Adding to the strength of Tim Hortons' venture is the expertise of
Yongchen Lu, the CEO of Tim Hortons China, who previously served as the CFO of Burger King China. Lu's
firsthand experience in rapidly growing RBI brands in China positions Tim Hortons for a promising and
successful journey in the dynamic Chinese market. Overall, Tim Horton’s China holds the required
expertise to navigate the Chinese market.

Nevertheless, Tim Hortons encountered challenges when they tried to rapidly expand in the United
States. Although they understood the US market, they were hindered by strong competition from
established local coffee providers such as Starbucks, Dunkin Donuts, McDonald's, and numerous
convenience shops. In China, the market is already occupied by foreign giants like Starbucks and Costa
and domestic brands like Luckin. With this competitive landscape, Tim Hortons is positioned to face
intense rivalry in the Chinese market, necessitating strategic measures to carve a distinctive space
amidst formidable competitors.

Furthermore, in Canada, the Tim Hortons brand enjoys the significant advantage of being revered as a
cultural icon. However, in the Chinese market, this iconic status may pose challenges rather than
offering a clear advantage. While the brand may have a degree of recognition in China, it lacks the same
influential impact on consumer purchasing decisions. Tim Hortons is now tasked with the strategic
imperative of redefining and aligning its brand to resonate with Chinese culture to foster genuine
consumer connection and loyalty.
Nevertheless, expanding Tim Hortons' brand into the Chinese market presents a series of distinctive
challenges and implications for stakeholders, necessitating a careful examination of key considerations
as follows:

 Cultural Adoption: The differences between Chinese and Canadian cultures pose a significant
challenge for stakeholders. Adapting to Chinese culture is vital for success. This involves not only
tweaking menu offerings but also tailoring marketing campaigns and store designs to resonate
seamlessly with Chinese cultural values. Striking a balance between integrating elements that
appeal to the local market while preserving Tim Hortons' core brand essence is crucial. This
cultural adaptation extends beyond surface-level changes, encompassing a deeper
understanding of Chinese consumer behaviors, preferences, and traditions.
 Brand Identity: Preserving Tim Hortons' Canadian brand identity during the expansion into the
China market is a critical consideration. Stakeholders must strategically determine which facets
of the brand resonate most strongly with the target audience in the Chinese market. Balancing
the preservation of the brand's Canadian roots with the incorporation of elements that align
with Chinese sensibilities is key to success. Tim Hortons needs to articulate a clear narrative that
communicates its heritage and values, ensuring a consistent and authentic brand representation
that resonates with the local consumer base in China.
 Customer Engagement: Engaging Chinese consumers requires an approach that goes beyond
replicating strategies employed in the Canadian market. Tim Hortons should assess the
effectiveness of its current marketing campaigns in Canada and evaluate their suitability for the
Chinese context. Understanding the unique preferences and behaviors of Chinese consumers is
essential in tailoring engagement strategies. This may involve developing new marketing
campaigns specifically designed to align with Chinese cultural norms and preferences.
Emphasizing digital channels, social media, and other platforms popular among Chinese
consumers should be integral to Tim Hortons' customer engagement strategy.

To successfully navigate the challenges of expanding into the Chinese market, Tim Hortons should
employ strategic measures such as leveraging market research, collaborating with local experts, and
establishing continuous feedback loops. Flexibility and adaptability are crucial for the brand to establish
a meaningful presence in China while respecting local culture and preferences. Achieving success
requires a meticulous and culturally sensitive strategy that strikes a balance between preserving Tim
Hortons' brand identity and understanding the challenges of the Chinese market.

Discussion

Overall, in its expansion efforts, Tim Hortons faces two primary challenges, intense competition, and
brand salience. The following showcases potential courses of action to address these threats:

Brand Salience
To bolster brand recognition in the competitive Chinese market, Tim Hortons can implement a multi-
faceted strategy.

1. Tim Hortons had established a partnership deal with Cartesian Capital, initiating the process of
bringing the coffee chain to China. Tim Hortons can further explore strategic partnerships with
local Chinese food / grocery chains and participation in popular events that offer effective
avenues for increasing brand exposure. In pursuing this strategy, Tim Hortons would gain
exposure to a broader audience - leveraging the existing customer base and reputation of well-
established Chinese entities would allow Tim Hortons to increase its brand visibility in a
competitive market. Additionally, collaborating with reputable local partners adds a level of
credibility and trust to Tim Hortons’ brand image, as the association with well-known Chinese
businesses signals to consumers that Tim Hortons is aligning itself with trusted names in the
market, fostering a positive perception and overcoming potential barriers associated with being
a latecomer compared to other coffee brands. For example, Tim Hortons can partner with local
grocery chains and introduce instant Tim Hortons coffee for online and grocery store sales as
instant coffee still dominates in China. This strategy can increase brand visibility beyond physical
store – highlighting the convenience and quality of Tim Hortons’ instant coffee can differentiate
the brand in an online marketplace without cannibalizing its core offerings. Nevertheless
partnerships who do not have aligning core values could create future conflict and are not
sustainable long term, as a result it is important for Tim Hortons to enter strategic partnerships
with corporations that share similar core values and a shared vision for the future.

2. Engaging Key Opinion Leaders (KOLs) in the Chinese market is a strategic move that goes beyond
traditional advertising, offering Tim Hortons a dynamic avenue to connect with its audience. This
approach would resonate with the local demographic and can play a pivotal role in boosting
brand awareness, particularly if these influencers align with the preferences of the Chinese
consumer segment. KOLs often have a substantial following within specific demographics or
niches; however, it is important that there is a selection process for KOLs to ensure they align
with Tim Hortons’ core values.

3. Adapting Tim Hortons’ core brand values, such as its dedication to sports and unique campaigns
like “roll-up-the-rim,” to align with Chinese culture will foster a deep connection with the local
audience. This would not only enhance the campaign’s cultural relevance, but also creates a
unique and memorable experience for Chinese consumers.

Market penetration amdist competitive pressures

To increase market penetration:

1. Adapting Tim Hortons’ menu to cater to Chinese tastes and preferences is essential for gaining
traction in this competitive landscape. For example, Tim Horton’s can introduce tea-based
beverages and incorporate regional pastries / snacks into the menu, whilst maintaining the
essence of Tim Hortons’ core offerings. Incorporating local ingredients adds an authentic touch
and enhances the appeal of the menu by showcasing an understanding and appreciation for
Chinese culture.
 2. Franchising into other Chinese provinces would allow Tim Hortons to penetrate diverse markets
whilst maintaining local relevance. Franchisees possess a deep understanding of the regional
market dynamics and cultural nuances and so, this insight would enable tailored adaptations,
ensuring that Tim Hortons can offer a menu and experience that resonates with the specific
tastes and preference of each region. For example, Yunnan is a potential territory where
Franchises could prove to be successful. According to the South China Morning Post, Chinese
people drank 47.6 grams of coffee in 2012, vs 9.6 in 1998. (Appendix B)

nevertheless, more research needs to be conducted to test these hypothesis which are our underlying
issues

The following methods can be used to pursue further market research:

1. The theoretical framework to be used incorporates concepts from market entry strategies,
consumer behavior, brand management, and go-to-market tactics.
2. Analytical tools include secondary and primary research.
a. The goal of the secondary research is to assess current market climate Tim Hortons is
operating in in China. Secondary research involves integrating internal company data,
information on competition, state of industry, and current consumer coffee
consumption and beverages trends in China.
b. The goal of the primary research is to understand how, where coffee drinkers purchase
and consume coffee; Tim Hortons’ brand affinity, most important brand drivers/in-
market white spaces, sources of awareness, and optimized menu offerings. To achieve
the abovementioned, the following primary research will be conducted:
i. Qualitative:
 Ethnographic research: shop-alongs with Chinese coffee drinkers to
understand how, where, when, and why coffee drinkers shop for and
consume coffee in various coffee shops including Tim Hortons and main
competitors in Tier 1 and 2 cities.
ii. Quantitative:
 Brand Health Study (Reference: KANTAR Brand Health model: brand-
tracking-and-guidance-systems, cost: $20k) to understand:
a. Broader coffee category needs among coffee drinkers
b. Coffee brands’ salience, differentiation and affinity
c. White spaces in the market and most important activations to
improve brand health
d. Most important sources of awareness
e. In-store volume facilitators and barriers
 Priced Concept Test (Reference: https://upsiide.com/), cost: $10k) to
evaluate and optimize menu offerings.

3. The theoretical framework to be used incorporates concepts from market entry strategies,
consumer behavior, brand management, and go-to-market tactics.
4. Analytical tools include secondary and primary research.
a. The goal of the secondary research is to assess current market climate Tim Hortons is
operating in in China. Secondary research involves integrating internal company data,
information on competition, state of industry, and current consumer coffee
consumption and beverages trends in China.
b. The goal of the primary research is to understand how, where coffee drinkers purchase
and consume coffee; Tim Hortons’ brand affinity, most important brand drivers/in-
market white spaces, sources of awareness, and optimized menu offerings. To achieve
the abovementioned, the following primary research will be conducted:
iii. Qualitative:
 Ethnographic research: shop-alongs with Chinese coffee drinkers to
understand how, where, when, and why coffee drinkers shop for and
consume coffee in various coffee shops including Tim Hortons and main
competitors in Tier 1 and 2 cities.
iv. Quantitative:
 Brand Health Study (Reference: KANTAR Brand Health model: brand-
tracking-and-guidance-systems, cost: $20k) to understand:
a. Broader coffee category needs among coffee drinkers
b. Coffee brands’ salience, differentiation and affinity
c. White spaces in the market and most important activations to
improve brand health
d. Most important sources of awareness
e. In-store volume facilitators and barriers
 Priced Concept Test (Reference: https://upsiide.com/), cost: $10k) to
evaluate and optimize menu offerings.

Alternative Solutions:

6. Recommendations

Action Plan:

The project will consist of 3 phases:

1. Discovery Phase: During the Discovery Phase A-Team consulting group will define the business
problem and underlying issues through conducting the secondary research of internal Tim
Hortons China documents relevant to the expansion, competitive analysis, industry and current
consumer beverages trends in order to formulate hypothesis. Once the hypotheses are
formulated A-Team consulting group will engage external research suppliers to conduct primary
research on consumer behaviours around coffee consumption, brand health of Tim Hortons and
its competition and priced concept test to test the hypothesis and optimise the menu offerings.
Next, A-Team consulting group will conduct an in-depth analysis of all the finding and generate
the most viable solution to be presented to Tim Hortons China.
 2. Proposal Phase: During the Proposal Phase A-Team consulting group will align on the proposed
solution and co-develop implementation plan with Tim Hortons China.
3. Implementation Phase: During the Implementation Phase A-Team consulting group will oversee
and co-manage solution implementation with Tim Hortons China.

Below is an Action Plan in more detail:

Action Plan:

Phase 1: Discovery Phase 2: Proposal Phase 3:

Implementation
Description - Meet with Tim - Meet with Tim - Work with Tim
Hortons to Hortons to Hortons on
align on the discuss the implementing
goals of the findings and the solution
project align on the
- Conduct and provided
analyses solution
secondary - Co-develop
research implementatio
- Formulate n plan
hypothesis
- Conduct and
analyse
primary
research
Purpose Formulate and test Work with Tim Hortons Work with Tim Hortons
initial hypothesis, and to validate the solution to implement proposed
develop business and develop an solution
problem solution implementation plan
Responsibilities A-Team consulting A-Team consulting A-Team consulting
group: group: group:
- organising and - organising and - continuously
attending meetings attending solution managing an
with Tim Hortons formulating and implementation plan
- conducting secondary implementation
research and developing meetings Tim Hortons China:
formulating hypothesis with Tim Hortons - providing
- engaging research agreed upon
supplier to conduct Mr. Lu: resources to
primary research - Attending the implement the
- testing hypothesis consulting solution
through analysing meetings and - actively
primary research data having working with
results and developing appropriate A-Team
 solutions internal teams consulting
for solution group to
Mr. Lu: presentation implement the
- Rendering A- and solution
Team implementatio
consulting n development
group services
- Attending
consulting
meetings and
delegating
tasks to
appropriate
internal
managers
when working
with A-Team
consulting
group

Research suppliers
(KANTAR, Upsiide,
qualitative research
supplier):
- Conduct and
present the
finding of the
primary
research to A-
Team
consulting
group
Assessment criteria Creating informed Co-developing an Implementing the
solution implementation plan solution
Timeline 12-16 weeks 4 weeks Up to 6 months

Cost estimate $80,000 $10,000 $50,000

Payment terms: overall project cost of CAD $140,000 is paid in 5 installments:

#1 installment of $40,000 is paid upon rendering A-Team consulting group

#2 installment of $40,000 is paid upon presenting solution to Tim Hortons

#3 installment of $10,000 is paid upon aligning on implementation plan

#4 installment of $25,000 is paid upon commencement of implementing the solution

#5 installment is paid upon the completion of the implementation of the solution.

• Solution Selection: At the moment, A-Team consulting group is only able to formulate a business
problem and some of the underlying issues yet is unable to formulate the solution for Tim Hortons China
due to the lack of data from the secondary and primary research. .

Conclusion

• Report Purpose Restatement: Recapitulate the primary objectives of the report.

• Main Points Summarization: Sum up key points from the findings, discussion, and

Recommendations.

• Limitations Acknowledgment: Address any limitations or constraints associated with the case

Study.

In summary, Tim Hortons faces a significant challenges in establishing a unique presence within the
highly competitive Chinese coffee market. The increasing trend in coffee consumption provides a growth
opportunity, but the market is already dominated by players like Starbucks, Costa and Luckin Coffee.
Leveraging the iconic status in Canada proves to be challenging, and aligning the brand with Chinese
culture becomes a critical task.

Appendix B
Appendix A

Strengths

- Cartesian Capital and RBI have had a successful working relationship in the past by bringing
Burger King to China
- Yongchen Lu, Tim Horton’s China CEO, has experience in expanding a foreign brand, Burger King,
into China successfully
- The Tim Horton’s brand is very well loved in its domestic market which can cater to Canadian
expats living in China

Weaknesses

- Tim Hortons is a late entrant in China and does not have the financial backing of Chinese
domestic brands
- The Tim Horton’s brand although recognizable in China, does not carry the same purchasing
power in China as it does in Canada

Opportunities

- The Chinese coffee market is projected to grow exponentially

- Fuelling this growth is a swelling body of coffee drinkers in China comprised of people in the
middle-income class, returnees from overseas and foreign expatriates

Threat’s

- Tim Hortons is a late entrant in the Chinese market. This market is already occupied by foreign
giants like Starbucks and Costa and domestic brands like Luckin. As a result, they will face fierce
competition which is not the case in the Canadian market (where competition is limited)