In a bold move to diversify its business operations, Supreme, a company traditionally associated with vaping products, has acquired Typhoo Tea for £10.2 million. The acquisition comes at a crucial time, as Typhoo Tea, the UK’s oldest tea brand, recently entered administration due to significant financial losses.
Typhoo Tea faced a substantial downturn as sales dropped by 26% to £25 million last year from £34 million in 2022. Furthermore, its losses escalated to £38 million, up from £9.7 million the previous year, contributing to a mounting debt reaching approximately £70 million. This dire financial situation necessitated a strategic intervention, which Supreme has provided through its acquisition.
Supreme’s acquisition involves taking over Typhoo’s stock and trade debtors, which hold a book value of £7.5 million. Despite the scale of this transaction, Supreme has assured that the integration of Typhoo Tea into its operations will not disrupt current business activities or customer services.
The company has outlined optimistic financial projections for Typhoo under its stewardship. Supreme anticipates achieving a gross profit margin of about 30% by reducing overhead costs significantly. This acquisition also aligns with Supreme’s broader diversification strategy, which aims to expand its presence in the drinks and nutrition sectors.
With Typhoo Tea becoming part of its portfolio, Supreme expects to increase its non-vape sales to over £120 million annually. The company plans to leverage its extensive market reach and successful brand loyalty programs to revitalise Typhoo’s presence in the retail market.
Sandy Chadha, CEO of Supreme, expressed confidence in Typhoo’s potential under the new ownership. He stated, ‘I believe Typhoo Tea will thrive under our ownership, further benefitting from Supreme’s significant market reach and successful track record in creating brand loyalty, making us an ideal fit for this business.’
Chadha also highlighted the strategic benefits of this acquisition, emphasising the opportunities for cross-selling and product innovation that Typhoo’s diverse tea offerings present. This move also opens new avenues for partnerships with credible UK retailers, which aligns with Supreme’s expansion goals.
The addition of Typhoo Tea complements Supreme’s earlier establishment of a soft drinks division, enhancing its ability to offer a broader range of products to the market. The company looks forward to updating its stakeholders on the integration process and the performance of Typhoo Tea in the coming financial year.
Supreme’s acquisition of Typhoo Tea marks a significant step in its strategy to diversify beyond its traditional vaping sector. By integrating a well-recognised yet struggling tea brand into its portfolio, Supreme not only boosts its presence in the drinks market but also embarks on a journey to revitalise a historic name in UK tea. The coming months will reveal how effectively Supreme can steer Typhoo towards renewed success.
