Beijing: Renowned Canadian coffee shop chain Tim Hortons has announced a new, exclusive partnership with supermarket giant Freshipoo to market co-branded bottled beverages in China.

Tim's China announced Friday that the first items, "Velvet Cocoa Coffee" and "Chestnut Latte," will be sold on Freshippo's app and in more than 300 physical locations in 27 Chinese cities starting next month.

According to the statement, the two parties will "cooperate in the research and development of co-branded products, focusing on product design, positioning, promotion and pricing."

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According to Yongchen Lu, CEO of Timms China, also known as TH International, the partnership will "provide Timms with excellent coffee products with the convenience of Freshippo's multiple channels to reach millions of consumers across China".

In 2019, Tim Hortons, which is named after a Canadian ice hockey player, expanded into China, taking advantage of rising coffee consumption in the world's second-largest economy.

According to consulting firm iiMedia, the size of China's coffee market, which stood at 381 billion yuan ($53.5 billion) in 2021, is expected to grow 27.2% per year to 1 trillion yuan by 2025.

In the city of Dongguan in southern Guangdong province, Tim's China opened its 500th coffee shop in the country last month. Additionally, it has opened theme stores in partnership with Chinese Big Tech companies, including a Shenzhen location with Tencent Holdings' video gaming division and a pop-up comic shop with video streaming website Bilibili.

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Thanks to its new partnership with Alibaba, the coffee chain will be able to take advantage of Freshippo's wider reach. The supermarket chain, also known as Hema, currently has 3 million daily active users on its app, according to data from market researcher Moonfox.

Timms, however, is up against established rivals such as the China Seattle coffee chain Starbucks, which first arrived in China in 1999 and just opened its 6,000th location last September.

Lavazza from Italy and Blue Bottle Coffee from the US, both entering the market in 2020 and 2022 respectively, have intensified competition in a sector that some analysts believe has reached its peak.

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Tims China stock, which trades on the Nasdaq, fell 10% on Friday to close at US$3.4. Shares of Alibaba, the parent company of the South China Morning Post, fell more than 4.5 percent to US$80.48 in New York on Friday, while rising 2.2 percent to close at HK$80 in Hong Kong.