The iconic UK tea brand, Typhoo Tea, is set for a revival after being acquired by Supreme in a £10.2 million deal. This comes after the brand faced severe financial challenges, culminating in administration and a stark sales decline.
Typhoo Tea, known for its long-standing heritage in the UK’s tea market, has been struggling under the weight of substantial debt. Its financial troubles were described as being ‘strangled’ by its previous owners’ debt by the new acquirer, Supreme’s chief executive Sandy Chadha.
In the past year, Typhoo Tea’s sales fell by 26%, decreasing to £25 million from the previous year’s £34 million. The company’s losses also surged from £9.7 million in 2022 to a staggering £38 million, with debts reaching nearly £70 million. Such dire financial pressures necessitated the company’s fall into administration, a situation it is now set to recover from under the new ownership.
Supreme, primarily known for its vape products, sees this acquisition as an opportunity to diversify and expand its presence. Chadha stated that the acquisition would accelerate Supreme’s diversification strategy, bringing its non-vape sales to over £120 million annually. Furthermore, the company intends to increase its footprint within the UK retail sector by collaborating with other high-profile retail names.
Chadha highlighted the challenges faced by the brand under its previous owner, Zetland Capital, a London-based private equity firm that acquired Typhoo Tea in 2021. The acquisition had left Typhoo Tea burdened with millions in debt, severely crippling its operational capacity. Chadha remarked on the difficulty of supporting substantial debt without generating cash, pointing out the company’s lack of profitability.
Looking to the future, Chadha acknowledged the declining trend in the tea market but noted the rising popularity of iced tea. He hinted at potential product innovations, including the possibility of introducing iced teas during the summer months. This strategic consideration aligns with Supreme’s approach to leverage Typhoo’s existing portfolio while exploring new product avenues.
The integration of Typhoo Tea into Supreme’s broader operations reflects a strategic push towards innovation and cross-market collaboration. Having established a soft drinks division earlier in the year, Supreme is poised to enhance its product offerings and strengthen its relationships with credible UK retailers.
With the acquisition by Supreme, Typhoo Tea is poised to navigate out of financial distress and explore new market opportunities, including potential innovations in iced teas, thus echoing a forward-thinking approach to revitalising the brand.
