Typhoo Tea: How trespassers and losing £120m led to downfall of historic brand
Despite not making a profit since 2017, the management running Typhoo Tea had still been optimistic for 2024 just months before the historic brand crashed into administration.
Writing in its latest accounts, the company’s directors stated they were “excited” for the 2024 financial year, proclaiming that “legacy issues have been largely dealt with and the results of this operational transformation should become evident”.
They added that Typhoo Tea, which had switched its headquarters from Merseyside to Bristol, was now “set up for growth, will add value to our customers and consumers and expects to further increase and improve its product range”.
But that optimism was wiped away this week as the 120-year-old brand collapsed into administration – with Kroll appointed to oversee the process.
The move put more than 100 jobs at risk and came after it was revealed earlier in November that Typhoo Tea was on the brink of collapse.
But there does remain hope for the business after it emerged that Supreme, which sells products such as vapes and vitamins, was in talks with Kroll over a rescue deal.
Greater Manchester-headquartered Supreme has confirmed it is “currently participating in a process regarding the potential acquisition” and added that discussions are at ‘an advanced stage”.
However, the company said that no final terms have been agreed but that a potential offer “would be funded by Supreme’s existing bank facilities”.
Typhoo Tea on loss-making streak
Typhoo Tea has endured a torrid few years since it was last able to turn a profit in 2017 – a total of £220,000.
Since then the business, which has been owned by Zetland Capital Partners since 2012, has lost more than £120m.
In August, City PM reported that Typhoo Tea had lost a further £37.9m in the year to 30 September, 2023, after being hit by one-off costs of more than £20m after its Moreton factory was broken into and occupied for several days during August 2023.
In March 2023 it was revealed that the firm was to shut down its site in Moreton in June that year with the loss of up to 90 jobs.
The accounts filed with Companies House also showed that its revenue fell from £33.6m to £25.3m over the same period.
Writing in the accounts, Typhoo Tea said: “Whilst trading was broadly in line with expectations given the effects of the transformation of the business during the period, 2023’s results are dominated by exceptional costs of £24m.
“A portion was the one-off costs of executing a major transformation plan, necessary to address the significant legacy and structural issues faced by the company but fundamental to providing a pathway to sustained profitability. Significant progress was made in the plan’s delivery during the year.
“However, a significant portion also came from one-off events, outside of the company’s control, which could not have been foreseen but negatively impeded progress and had additional material adverse effects on the company’s results.”
That transformation plan included the discontinuation of unprofitable lines, the closure of its Moreton factory and transfer of operations which led to the loss of almost 100 jobs.
At the time, Typhoo Tea said the factory was “inefficient and unsuitable to the revised rationalised product portfolio and beyond economic refurbishment”.
Its products and operations were also restructured “to focus more efficiently on value accretive and profitable lines”.
The production of marginal or loss-making lines, particularly own label products for UK and international customers, were ceased.
‘Organised trespassers’ disrupt operations
In August 2023, a group of “organised trespassers” broke into the Moreton site and occupied it for several days.
Typhoo Tea said they caused “extensive damage to its fabric and contents, making the site inaccessible”.
It added that the “abrupt closure” of the site necessitated the relocation of production to third parties “faster than anticipated” and that this led to “significantly higher direct expenses, impairment of assets and inefficiencies on production as our co-packing partners ramped up their production”.
An insurance claim of £4.3m recovered after the end of its year to September 2023 seems not to have been enough to save it from entering administration this week.
Whatever happens with the future of Typhoo Tea, Kroll will not put together a document detailing how the brand came to enter administration and how much it owes to its creditors.
For now, the company has suffered the same fate as other household brands in 2024 such as Homebase, The Body Shop, Ted Baker and TGI Fridays.