Typhoo Tea Enters Administration Amid Financial Struggles and Damage Setbacks
Typhoo Tea, a historic brand with a legacy spanning 120 years, has entered administration following a significant decline in sales, rising losses, and increasing debts. Advisory firm Kroll has been appointed to oversee the administration process and seek a buyer for the struggling tea business.
The company’s financial troubles are stark, with pre-tax losses reported at £38 million for the year ending September 2023, a substantial increase from just £9.6 million the previous year. Sales have also plummeted from £33.7 million to £25.3 million, amidst what Kroll describes as severe cash flow issues exacerbated by disruptions in supply chains and service deficiencies. Moreover, Typhoo’s debts now exceed the value of its assets, highlighting the company’s precarious financial position.
A particularly damaging incident occurred in August 2023, when organized trespassers broke into Typhoo’s former factory in Moreton, Merseyside. The trespassers occupied the site and caused extensive damage, leading to a considerable portion of the tea being rendered unusable and hampering the company’s ability to fulfill customer orders. Reports indicate that the incident resulted in £24.1 million in exceptional costs, contributing to the financial strain.
Currently, Supreme, a Manchester-based vape and battery manufacturer, is the leading contender to acquire Typhoo. Although Supreme has expressed interest in diversifying its business portfolio, it has indicated that discussions are still ongoing and no final agreement has been reached. Supreme does not currently engage in the tea market, mainly dealing with brands in soft drinks, supplements, and vapes.
The brand’s challenges come despite efforts to reposition itself in the market, most notably through the recent “Fear Free Tea” campaign. Launched just two months ago, this initiative aimed to raise awareness about violence and abuse within the tea supply chain but controversially acknowledged that Typhoo could not guarantee its own products were entirely free from such issues. The timing of this campaign is critical, especially in light of the findings shared in the 2023 BBC Panorama documentary “Sex for Work: The True Cost of our Tea,” which revealed alarming statistics regarding sexual abuse experienced by women in tea plantations.
Founded in 1903 by John Sumner and headquartered in Bristol, Typhoo is recognized as one of the UK’s prominent tea brands, alongside competitors like PG Tips and Tetley. The company is currently under majority ownership of private equity firm Zetland Capital. Typhoo’s administration, driven by dwindling sales and compounded by operational setbacks, underscores the fragility of legacy brands in adapting to market pressures and maintaining financial stability.