Iconic British tea brand calls in the administrators to rescue firm

An iconic British tea brand has called in administrators as the company scrambles to find a buyer to rescue the firm.

Typhoo Tea has found itself £70 million in debt and facing multiple setbacks including increased competition and a high-profile break-in.

Founded in 1903 by Birmingham grocer John Summer, the brand has now officially appointed administrators from Kroll, a risk and financial advisory company, after attempting to find creditors to pay its debts for two weeks.

Despite formerly being one of the UK's best selling tea brands, the company's sales declined from £34million in 2022 to £25million last year and losses rose from £9.7million in 2022 to £38million in 2023.

A spokesperson for Typhoo Tea said: 'The company has experienced significant cash flow constraints as a result of supply chain disruptions and subsequent service issues.

'The company has been exploring a sale of the business and assets, which is in the process of concluding.

'The administration process provides Typhoo Tea with protection, allowing the Joint Administrators to finalise the sale in order to rescue the business.' 

Typhoo Tea is now run by CEO Dave McNulty, who used to run the snack brand Burt's crisps.

Earlier this month, it was revealed that it has struggled with a decline in sales, attributed to customers switching brands or drinks altogether, instead opting for coffee, energy drinks or bubble tea alternatives. 

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It comes amid nationwide forecasts which show Brits will continue to cut down on tea consumption in the coming years.

The tea brand has also been hit by a series of setbacks in recent years and rising costs as it seeks to become a more ethical brand.

Typhoo suffered after a break-in at one of its factories in Merseyside, which was used to store expensive equipment and tea stock. 

The raid caused 'extensive damage' to both, with Typhoo having to spend £24 million to repair the damage and boost stocks.

The planned sale of the factory was also delayed by the incident, although was completed by June this year.

Amid the cost of living crisis, shoppers are also increasingly switching from brands such as Typhoo, PG Tips and Twinings for cheaper supermarket alternatives.

And tea sales fell by 4.3 percent last year - although Typhoo's sales actually rose due to its prices being cheaper than most other brands.

Typhoo's debts reached £73 million in September 2023. Overall its tea sales are still in decline and tea consumption is expected to fall by eight percent by 2028.

Further afield, Typhoo has recently gone from working with 300 tea plantations in East Africa to just three.

It's part of a push launched as the new CEO took over to overhaul its supply chain and stop sexual violence against women at the plantations.

Typhoo has warned prices could rise as a result.

Dave McNulty, chief executive of Typhoo, said: '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.'