Typhoo Tea, Britain’s oldest tea brand, is grappling with financial difficulties as it navigates over £70 million in debt and a significant drop in sales.
The 121-year-old company, established in 1903 by Birmingham grocer John Sumner, has filed a court notice to appoint administrators EY to explore rescue options and alleviate pressure from creditors.
The tea industry has seen a steady decline, with changing consumer preferences favoring coffee, energy drinks, and emerging trends like bubble tea.
Research firm Mintel predicts an 8% drop in tea consumption between 2023 and 2028.
Typhoo has been particularly hard-hit, with annual sales plummeting from £34 million to £25 million as of September 2023.
Losses escalated from £9.6 million to £38 million, driven by a costly restructuring program and an incident involving trespassers at its sole factory in Moreton, Wirral.
Typhoo Tea faces financial challenges as changing consumer preferences impact the industry.The trespassing incident forced the company to accelerate its production shift to third-party co-packers, incurring significant expenses and production inefficiencies.
Although Typhoo recovered £4.3 million from an insurance claim and £4.6 million from the factory’s sale, these efforts were insufficient to offset mounting losses.
In its transformation plan, Typhoo aimed to scrap unprofitable products and downsize operations. However, the abrupt factory closure disrupted these plans.
Meanwhile, concerns have been raised about management practices, as key personnel were paid £1.2 million last year despite the brand’s financial troubles.
Typhoo last posted a pre-tax profit of £220,000 in 2017 but has since accumulated over £100 million in pre-tax losses. As insolvency expert Roger Hutton notes, early interventions are critical to saving the business.
While the company has not yet entered administration, the filing highlights the urgent need for solutions to secure the future of this historic tea brand.