The application alleged that the coffee chains treat non-dairy substitutes as “extras” instead of replacements, saying that Starbucks charges an additional 80 cents plus tax while Tim Hortons charges an extra 50 cents, despite the substitutes costing the companies a fraction of the amount.
The claim noted an October 2024 statement by Starbucks that said that “U.S. and Canada company-owned and operated stores will no longer pay extra for customizing their beverage with non-dairy milk” as of November 2024.
“Substituting non-dairy milk in a handcrafted beverage is the second most requested customization from our customers, behind adding a shot of espresso,” the Starbucks statement went on to say.
“When this change goes into effect on November 7, almost half of our customers in the U.S. who pay to modify their beverage at company-operated stores will see a price reduction of more than 10 per cent.”
According to the application, the cost for non-dairy substitutes, including almond, soy, oat or coconut milk, is not more expensive than regular milk at the retail level, and is sometimes less expensive. It was suggested that soy, almond and coconut milk retail for $0.21 per 100 ml and oat milk retails at $0.23 per 100 ml, while the least expensive cow's milk in the province, Québon milk, retails for $0.23 per 100 ml.
“Applicant hereby alleges, consistent with Starbucks’ declaration and the evidence above, that the cost for non-dairy substitutes at the wholesale level is the same for the Defendants as regular milk.”
It was further alleged that there are no additional labour costs for a barista to substitute regular milk with non-dairy milk while making lattes, but “charging for non-dairy substitutes is ironically a real cash-cow for the Defendants.”
Approximately 44 per cent of Canadians are lactose intolerant, the application noted, citing a survey documented in the Journal of the Canadian Association of Gastroenterology.
It gave the example of a claim on the Tim Hortons’ website that says the chain sells “5 million cups of coffee every day.” If 44 per cent are lactose intolerant, then about 2.2 million coffees are “potentially upsold by $0.50 per cup on account of a non-dairy substitute.”
“Assuming that 50 per cent will take their coffee ‘black’, this leaves 1.1 million cups of coffee x $0.50 surcharge for a non-dairy substitute = $550,000 per day of pure price gouging of non-dairy consuming customers ($550,000 x 365 x 3 years = $602,250,000.00),” the claim read.
The extra charge by the companies was alleged to be “disproportionate, exploitative, unconscionable and abusive.” The applicant claimed the aggregate of the sums paid on account of a surcharge for non-dairy substitutes.
“In the circumstances, there is clearly a disproportion … between the respective obligations of the parties that amounts to exploitation of the consumer,” the claim said.
The applicant seeks a reduction of obligations equivalent to the aggregate of the surcharges and alleged consumers suffered objective lesion by paying extra for a service that should have been provided free of charge.
“The fact that Starbucks now charges $0.00 for almost the exact same quantities of non-dairy substitutes that Second Cup and Tim Hortons respectively charge $0.80 and $0.50 for, is representative that the fair market value for this substitution is indeed $0.00.”
It was alleged that all the defendants generated many millions of dollars by price gouging consumers and their misconduct was “reprehensible and to the detriment of vulnerable consumers.”
The class was defined as all consumers in Canada who were charged for a non-dairy substitute when purchasing a beverage from the defendants since Dec. 30, 2021, except in the case of Starbucks, whose proposed relevant period would end Nov. 7, 2024.
The class action has not yet been certified.
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