Vape firm emerges as shock likely buyer of British icon Typhoo Tea

A vape firm has emerged as the likely new buyer of iconic British tea brand Typhoo who has fallen into administration for the first time in more than 120 years to 'protect' itself.

After finding itself in £70million of debt, the historic drinks business filed a notice to appoint administrators on Wednesday, according to official filings.

The collapse follows several years of declining sales, mounting debts - close to £70million - and even a break-in at its Wirral factory last year. 

Insolvency specialists at Kroll have been appointed to oversee the administration process and are hoping to strike a rescue deal for the business. It is understood the business has fewer than 100 employees.

Now, it has been revealed that Supreme - the London-listed vaping products and drinks manufacturer - told shareholders on Thursday that rescue talks are at 'an advanced stage' but it is not certain an acquisition deal will be completed.

The move would be part of efforts by Supreme to grow its drinks and nutrition operations, as it reduces its focus on vaping ahead of a Government clampdown on disposable vapes due next year.

A spokesman for Kroll said: 'As reported recently, 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. Since 2021, private equity firm Zetland Capital has also been its majority shareholder.

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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. 

Its struggles have been attributed to customers switching brands or drinks altogether, instead opting for coffee, energy drinks or bubble tea alternatives. 

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.

Founded in 1903, Typhoo has long been one of Britain's best-known tea brands, but the decline in recent years has pushed it to the brink of going out of business.

To add to this, 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.'