One of the UK’s oldest tea brands, Typhoo, is at risk of going into administration after filing a notice to appoint administrators due to its growing debt, which has reached £73million.
Founded in 1903 by Birmingham grocer John Sumner, the tea company has asked EY to help explore options to rescue the business.
CEO Dave McNulty explained: “This action has been taken to enable us to pursue a sale of the business. A further statement will be issued in due course with further information.”
The company has been majority-owned by private equity firm Zetland Capital since 2021, but its financial problems have been mounting.
Typhoo’s revenues fell from £3 million in 2022 to just £25million last year, and its losses jumped from £9.7million to £38million over the same period.
While the court filing doesn’t mean the company is officially in administration yet, it buys Typhoo some time to work out a solution with its creditors.
British drinkers are increasingly turning away from traditional tea, opting for coffee, energy drinks, and bubble tea instead
PA
McNulty said the filing was part of an effort to “pursue a sale of the business”, giving the company space to restructure its debts and explore a potential buyer.
Typhoo’s struggles are compounded by the ongoing shift in consumer habits as British drinkers are increasingly turning away from traditional tea, opting for coffee, energy drinks, and bubble tea instead.
At the same time, supermarket own-brand teas are cutting into Typhoo’s market share.
The outlook for the UK tea industry is grim, with forecasts predicting an eight per cent drop in tea consumption by 2028.
In addition to this, Typhoo was hit by a major setback when its Merseyside factory was broken into, causing extensive damage to machinery and stock.
The company had to absorb £24million in exceptional costs as a result. McNulty said the break-in had “materially” impacted the company’s operations, forcing a delay in the sale of the factory, which was finally completed in June 2024.
On top of all this, Typhoo has been grappling with rising costs, tea paper shortages, and the challenges of Brexit.
The company also faces increasing competition from new “wellness” tea brands, which are attracting health-conscious customers.
As part of a major overhaul under McNulty, Typhoo has significantly reduced its partnerships with tea plantations in East Africa.
The company has cut from 300 suppliers down to just three as part of a new ethical sourcing initiative aimed at addressing sexual violence against women working on tea plantations.
McNulty explained that this move could result in higher prices for consumers, warning: “This ethical sourcing initiative could result in higher prices in supermarkets.”
These changes come at a time when the UK tea market is shrinking, with tea sales down by 4.3 per cent last year.
Despite some growth thanks to its lower pricing, Typhoo’s future is uncertain and the company is now fighting to stay afloat.
