Typhoo Tea, the United Kingdom’s oldest tea brand, has experienced significant challenges under its previous ownership, marked by crippling debt and declining sales. However, a recent acquisition by Supreme marks a new chapter for the beleaguered company.
Supreme, primarily known for its vape products, acquired Typhoo Tea for £10.2 million after the company fell into administration last week. The acquisition follows a turbulent period for the tea brand, which saw sales plummet by 26% to £25 million in 2023 from £34 million the previous year. Losses during this time escalated to £38 million, nearly quadrupling from £9.7 million in 2022, while debts reached a hefty £70 million.
Sandy Chadha, Supreme’s Chief Executive, revealed to The Times that Typhoo Tea was burdened with excessive debt, making it difficult to sustain financially. Chadha emphasised, ‘This is a business that’s not made any money, so how do you support £25 million-plus debt unless you’re generating any cash?’ The debt originated from the acquisition by Zetland Capital, a London-based private equity firm, in 2021, which left Typhoo with substantial financial constraints.
Supreme’s acquisition strategy aims not only at rejuvenating Typhoo Tea but also at accelerating its own diversification strategy. Chadha noted that the deal would help expand Supreme’s non-vape sales to over £120 million annually and extend its UK retail reach by incorporating well-known high street names such as Holland & Barrett. This move is expected to open new sales opportunities across various product categories.
Looking forward, Chadha acknowledged the shifting dynamics in the tea market. While traditional tea consumption is on the decline, the iced tea segment is witnessing significant growth. Chadha remarked, ‘We’ve not made any decisions, but does the brand lend itself to iced teas in the summer?’ This reflects a potential shift in product focus to adapt to changing consumer preferences.
Moreover, Chadha highlighted the strategic benefits of adding Typhoo Tea to Supreme’s portfolio, stating that the tea brand’s blend of value and premium products offers immediate opportunities for cross-selling and innovation. By aligning with credible UK retailers, Supreme intends to leverage these relationships to explore new market avenues and strengthen its presence in the British retail landscape.
The acquisition of Typhoo Tea by Supreme represents a strategic effort to revitalise a historic brand burdened by debt and declining sales. As Supreme seeks to diversify and expand its market presence, the integration of Typhoo Tea provides both challenges and opportunities for growth, particularly in adapting to evolving consumer trends. With plans to explore the burgeoning iced tea market, Supreme is poised to steer the brand towards new horizons.
