ScopeNEXT GENERATION #9 Tim Hortons Singapore
Bringing a Taste of Canada to Southeast Asia
On the sixth morning after its grand opening in Singapore on November 17, 2023, Canada’s favorite coffee shop, Tim Hortons®, housed inside Vivo City Mall, the country’s largest shopping mall, was crowded with people longing for a taste of Canada. The coffee shop is furnished with wood tables and chairs, with maple-leaf motifs hanging from the ceiling. Along with a brewed coffee or latte, many customers were having a grilled sourdough sandwich; maple glazed chicken ham and cheese seems to be the top local favorite. Outside the store, there was a long line of people waiting to buy a box of donuts, another iconic item Tim Hortons has to offer.
Tim Hortons is one of the world’s largest coffee chains, currently boasting more than 5,700 stores in 14 countries. Its first shop was opened in 1964 in Hamilton, Ontario, Canada, by Tim Horton, a legendary professional hockey player, with his cofounder. Tim Hortons is known for serving moderately priced yet high quality coffee; it uses only 100% premium Arabica beans, which are responsibly sourced from various parts of the world. The formula for blending and roasting the beans is top secret, known only to three people in the entire world.
Marubeni brought Tim Hortons to Singapore through its wholly owned subsidiary, Marubeni Growth Capital Asia (MGCA), which was created under Marubeni’s Next Generation Corporate Development Division (NGCD Div.) as an investment platform with a specific focus on consumer businesses having high growth potential in Southeast Asia. NGCD Div., which was newly established in 2022, is tasked with enhancing Marubeni’s corporate value through the investment in new business areas in Southeast Asia and the United States (Marubeni has the same investment platform in the U.S. as well), which will become pillars of growth in the long run. The consumer business has been identified as a key area for growth, and the franchise business of Tim Hortons is the first project in Southeast Aisa led by the NGCD Div. In addition to Singapore, the NGCD Div. plans to introduce Tim Hortons to Malaysia and Indonesia.
Offering a New Coffee Experience: Indulgence at a Good Price
In Southeast Asia—where GDP is steadily increasing, urbanization is accelerating, and young people constitute a significant proportion of the total population—coffee consumption is on the rise, and people are drinking more and more coffee outside of the home. According to Ipsos, an international market research firm, the coffee-shop market in Singapore is forecasted to increase by 3.1 percent (the compound annual growth rate between 2022 and 2027). The Indonesian market is expected to grow even more rapidly, by nearly 10 percent.
Already housing many local and international coffee chains, Singapore appears to be a very competitive market to venture into. Nevertheless, “It is an extremely exciting place for us,” says Vaibhav Punj, CEO of MGCA Cafe, which was created under the umbrella of MGCA as the master franchisee responsible for developing and operating the Tim Hortons® business in Singapore, Malaysia, and Indonesia. He explains, “First, consumers in Singapore are open to experiencing new brands, newer concepts. Second, per capita income is very high, which means that people in Singapore can spend more money on discretionary products like latte and cappuccino. Third, per capita consumption of coffee in Singapore is among the highest in the world.” Punj adds that Singapore was chosen as “ground zero for Tim Hortons in Southeast Asia” because of its influence as a trendsetter over its neighboring markets, saying, “If the brand is established in Singapore first, that will help us as a springboard into other markets.”
In India, his home country, Punj contributed to the successful launch and expansion of Burger King®, an American quick-service restaurant chain also owned by Restaurant Brands International (headquartered in Canada), the owner of Tim Hortons®. He explains that Tim Hortons is positioned in Singapore as a “third place” coffee shop, creating a space for entertainment and indulgence in the community—distinctively different from the traditional Singaporean coffee culture, in which people quickly grab breakfast and a cup of kopi, a low-priced coffee using robusta beans roasted with sugar and other ingredients.
Building a Strong Supply Chain from Scratch
At Tim Hortons, coffee-based drinks are made with the same recipes across its global network of franchises, but in Singapore, sugar levels are adjusted down, tailored to local tastes. Another unique offering in Singapore is a selection of cakes, which have several locally inspired flavors. For example, the inspiration for the Ondeh Ondeh cake came from a Singaporean sweet rice cake of the same name. “We would like to keep authenticity, the true representation of our brand, while also keeping local palates and flavors,” says Australian chef Ken Bryce, head of innovation at MGCA Cafe, whose responsibilities include developing the menu. “We will continue to introduce new local flavors to keep things exciting,” he adds.
Everything that is needed at the coffee shop, from perishables and coffee machines to cups and packaging, is sourced by MGCA Cafe’s supply chain management team, which has created a network of suppliers from scratch. “Identifying those who could be our core suppliers was the key,” says Serene Low, director of the team. She recalls that it was a challenging task because the team needed to establish a supply chain that can ensure everything—product quality, stable supply, and business profitability. The team also tried to get as many suppliers within the region as possible so that shipping costs could be minimized. “By utilizing Marubeni’s network and expertise in trading, we were able to identify suppliers who are able to support our business,” Low says.
In Singapore, MGCA Cafe plans to open 10 to 15 more Tim Hortons coffee shops within 2024, and it also intends to keep growing at the same pace going forward. “There is no reason why we cannot scale up to become one of the top players in the market,” Punj says. The company’s long-term goal is to expand to hundreds of coffee shops within 10 years after it has entered the two other markets. Indonesia especially, as the fourth most populous country in the world, is expected to be one of the biggest markets among Tim Hortons’s entire network.
As it will be employing close to 8,000 people in the coming years, MGCA Cafe is striving to become a company that can make an impact in the region. “Our vision is to build a business, which is not only successful from a financial point of view, but also creating a lot of value for the communities that we operate in—for our employees, our guests, the people who work in the factories of our suppliers as well as people who live around the communities,” Punj says. “That would be the true success of Tim Hortons in the next 10 years.”
All information contained in this article is based on interviews conducted in November 2023.
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