AN ICONIC British tea company is to be sold after it collapsed after 120 years.
Vape and beverage maker Supreme said it is discussing a potential rescue deal to take over Typhoo.
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Typhoo has officially appointed administrators after a two-week search for a buyerCredit: Alamy
The historic drinks business officially appointed administrators yesterday after a two-week search for a buyer.
Supreme said rescue talks were at an “advanced stage” but it was not certain that a purchase deal would be completed.
In a statement released today, the manufacturer said: “Supreme Board can confirm that it is currently engaged in a process relating to the potential acquisition of Typhoo Tea.
“Although discussions with the administrators are now at an advanced stage, there can be no certainty that the potential acquisition will be completed.
“The final terms of the potential acquisition have not been agreed, but the company can confirm that any potential offer would be funded by Supreme’s existing bank assets.”
This means that a final deal between Typhoo and Supreme has yet to be reached and the deal could fall through, leaving Typhoo in jeopardy.
The move would be part of Supreme’s efforts to grow its drinks and food business as it reduces its focus on vaping ahead of government crackdowns on single-use vapes due next year.
Typhoo, one of Britain’s oldest tea companies, warned earlier this month that it was headed for collapse as it races to find a buyer and pay off mounting debts.
When a company enters administration, all control passes to the appointed administrator.
The administrator must use the company’s assets and operations to pay off all outstanding debts to creditors.
Can you get your money back when the company fails?
The risk and financial consulting firm Kroll is now in charge of the job of rescuing the business.
In a statement today confirming that Typhoo is now officially under administration, it said: “The company has experienced significant cash flow constraints as a result of supply chain disruptions and subsequent service issues.
“The company investigated the possibility of selling business and assets, which is in the process of conclusion.
“The administrative process provides Typhoo Tea protection, allowing the joint administrators to finalize the sale to save the business.”
During this time, it will continue to be traded until a rescue buyer is sought and it will not disappear from the supermarket shelves.
It is understood that the potential buyer is Supreme, a company specializing in fast-moving consumer goods (FMCG).
It supplies stores such as B&M, Home Bargains and Poundland, as well as major supermarkets.
It is believed that the administrative process could put more than 100 jobs at risk, according to previous reports.
Dave McNulty, chief executive of Typhoo, previously told The Telegraph that he hoped the process would result in a buyer being found.
Typhoo became famous for its classic slogan “with Typhoo you only get oo” and campaigns for celebrities from Nigella Lawson to the late Cilla Black.
But recently it has been hit by a perfect storm of problems, including falling sales, mounting debts and even a burglary at the Wirral factory last year.
In August 2023, intruders broke into the company’s former factory in Merseyside and occupied the site for several days.
Typhoo said at the time that they caused “enormous damage” and made the site “unreachable”.
The company tried to sell the plant, in a deal that eventually went through in June 2024.
But Typhoo said the incident accounted for the bulk of £24m of extraordinary costs that year and had “materially” affected its day-to-day operations.
Founded in 1903, Typhoo has long been one of Britain’s best-known tea brands, but a decline in recent years has pushed it to the brink of closure.
As of 2021, the private capital company Zetland Capital is its majority shareholder.
In October, it hired former Burts crisps boss Dave McNulty as its new chief executive, while also launching a supply chain reshuffle.
The audit aimed to stop sexual violence against women working on tea plantations in East Africa and resulted in the number of plantations in the supply chain in the region being reduced from 300 to just three.
Falling sales
Typhoo faces slowing sales, with the popularity of coffee, energy drinks and even bubble tea overtaking the traditional cup.
Volume sales of regular tea were 53.7 million kilograms in 2021 and decreased to 51.0 million kilograms in 2022, according to Mintel.
The UK tea market is forecast to see a slight increase in value sales of 1.1% to £884 million in the period 2023-2028, despite a forecast decline in volume sales.
The cost of living crisis has also meant that households are switching from big-brand tea bags to cheaper, own-brand alternatives in supermarkets.
In March 2023, it was revealed that the company was due to close its Moreton site in June of that year with the loss of up to 90 jobs.
It also discontinued some unprofitable lines, “to focus more effectively on profitable, value-adding lines.”
The company was also hit by supply shortages, which were linked to the disruption of deliveries through the Red Sea.
What does going into administration mean?
WHEN a company enters administration, all control passes to the appointed administrator.
The administrator must use the company’s assets and operations to pay off all outstanding debts to creditors.
Once a company goes into administration, a “moratorium” is put in place, meaning no legal action can be taken against it.
Administrators write to your creditors and Companies House to say they have been appointed.
They try to prevent the liquidation (shutdown) of the company, and if they can’t, they pay as much of the company’s debts from their remaining assets.
The administrator has eight weeks to write a statement explaining what he plans to do to move the business forward.
This must be sent to creditors, employees and Companies House and invited to approve or amend the plans at a meeting.
A Notice of Intent is used to notify interested parties that a company intends to enter administration.
It is a physical document submitted to the court, usually by the directors, with the aim of preventing the liquidation of the company.
As with standard administrative proceedings, a notice of intent prevents creditors from taking any legal action against the company while they try to straighten out the business.
Other companies that have filed for bankruptcy or administration
Typhoo is not the first company to file for administration or go bankrupt in recent years.
Homebase fell into administration earlier this month and The Range went on a shopping spree of 70 sites before administrators Teneo put the remaining stores on the market last week.
Carpetright filed a notice of appointment of administrators in July.
The chain was bought by rival Tapa as part of a rescue deal, but has closed the vast majority of stores and cut more than 1,000 jobs.
TGI Fridays has closed 35 locations after falling into administration.
More than 1,000 employees have lost their jobs at TGI Fridays after a deal to save the iconic brand did not include all 86 locations.
Tupperware Brands, which sells in 90 countries, has filed for bankruptcy in the US.
Last year, Tupperware Brands, a 78-year-old company, warned it could collapse if it didn’t raise new funding quickly.
The brand is facing slowing sales as it tries to target a younger audience.
Brewery Fourpure has placed itself into voluntary administration to ‘protect itself from market pressures’
U Good Company, which owns Fourpure and another craft beer brand called Magic Rock, said the move would “protect the brand from future liabilities and the harsh commercial realities of the drinks and hospitality industry”.
Wilko fell into administration in August last year after PricewaterhouseCoopers (PwC) failed to find a rescue bidder.
The brand name has since returned to the high street, but after closing 400 stores.
The Body Shop fell into administration in February and 82 branches have since closed.
However, it was pulled out of bankruptcy after it was bought by capital development firm Aurea earlier this month.
Paperchase, M&Co and Cath Kidston have also fallen into administration from early 2023.
Last month, cosmetics company Avon filed for bankruptcy after multiple lawsuits and financial problems.
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Source: HIS Education