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Coffee Marketing Leads McDonald’s Canada Growth

McDonald’s Canadian market share is at its highest point since 1997, news that the company’s executives attribute to marketing of coffee products.

McCafe Latte and beans

The company introduced its McCafe line of specialty coffee products to the Canadian market in November 2011, and it has been aggressively marketing its basic drip coffee since. In the coffee category, the fast food company is up against market giants such as Tim Horton’s and Starbucks.

“It all started with the coffee. That is the thing that’s turned our business around,” McDonald’s Canada president John Betts told Reuters in an interview. “We’ve converted millions of people.”

According to a Montreal Gazette report, McDonald’s is investing more than $1 billion to renovate Canadian stores to highlight the cafe brand. Sixty five percent of stores are expected to be renovated by the end of April and 80 percent will be complete by the end of 2012, sources told the paper.

When McDonald’s introduced its signature coffee line to the Canadian market last year, market experts suggested Tim Horton’s and Starbucks weren’t the only competitors, as many Canadian cities have lively independent coffee markets.

“The coffee business is a Darwinian struggle driven by the rising costs of labour, rents and ingredients,” Michael Kehoe, an Alberta-based retail specialist with Fairfield Commercial Real Estate Inc., told the Vancouver Sun. “McDonald’s has a distinct advantage with its excellent store network, serious marketing muscle and the firm’s ability to control the daylights of absolutely everything in their supply chain and operations. This is good news for coffee lovers and will squeeze the smaller, local coffee shops in an already competitive market.”

The full story: Montreal Gazette