Iconic tea brand Typhoo has appointed administrators as it wrestles to secure a rescue deal.
London-listed vape manufacturer Supreme also confirmed this afternoon it is “currently participating in a process regarding the potential acquisition of Typhoo Tea”.
Phil Dakin, Janet Burt and Benjamin Wiles of recovery firm Kroll were appointed to Typhoo Tea Ltd yesterday (27 November 2024).
Kroll told The Grocer Typhoo had been exploring a sale of the business and assets, which was “in the process of concluding”.
“The administration process provides Typhoo Tea with protection, allowing the joint administrators to finalise the sale to rescue the business,” a statement said.
It follows the group filing a notice of intent (NOI) to appoint administrators with the courts two weeks ago to give it protection from creditors as it fought for survival.
“As reported recently, the company has experienced significant cashflow constraints as a result of supply chain disruptions and subsequent service issues,” Kroll added.
The Grocer understands around 20 staff are affected by the administration, with the majority of employees let go following the closure of its loss-making Moreton factory in 2023.
“Whilst discussions with the administrators are now at an advanced stage, there can be no certainty that the potential acquisition will be completed,” Supreme said in a short statement to the London Stock Exchange.
“No final terms of the potential acquisition have been agreed but the company can, however, confirm that any potential offer would be funded by Supreme’s existing bank facilities.
“Further announcements will be made as and when appropriate.”
Shares in Supreme have fallen 3.8% today to 167.3p as investors weighed up what the news would mean for the group.
Supreme diversified into the beverages category in June with the acquisition of Clearly Drinks. And this deal would further further accelerate its broader diversification strategy, bringing non-vape annualised sales to about 50% of the group annual revenues of in excess of £200m.
The group operates across five categories: vaping, batteries, lighting, sports nutrition and wellness, as well as branded distribution.
It supplies a range of major retailers in the UK, including B&M, Home Bargains, Poundland, Tesco, Sainsbury’s, Morrisons, Asda and Iceland.
The group distributes the likes of Duracell, Energizer and Panasonic, and supplies lighting products under licences from Energizer, Eveready, Black & Decker and JCB in 45 countries. Its in-house brands include 88Vape, Sci-MX and Battle Bites.
Typhoo, which celebrated its 120th anniversary last year, has been embroiled in a long turnaround attempt in recent years but faced a number of unexpected challenges.
Its losses raced to almost £40m last year after trespassers broke into one of its factories in Merseyside. Losses at Typhoo have now surpassed £120m in total since 2017/18.
Revenues also sank another 25% to £25.3m in the year ended 30 September 2023 as Typhoo rationalised SKUs and exited unprofitable lines. It represented a huge fall from the £82m turnover generated in 2014/15.
Typhoo been fighting on multiple fronts as weakened consumer demand for black tea hit the business, alongside issues stemming from Brexit as well as currency headwinds and soaring raw material prices.
The business, which has been owned by private equity firm Zetland Capital since 2021, appointed former Burts Snacks boss Dave McNulty as its new CEO in October.
Founded in 1903 by Birmingham grocer John Sumner, Typhoo is the eighth-largest tea in UK retail. The administration comes as sales of its flagship namesake brand are on the up, having grown 48.3% to £6.8m on volumes that have surged 43.0% [NIQ 52 we 15 June 2024].
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