Iconic British tea company crashes into administration as rescue deal hangs in the balance
AN ICONIC British tea company has crashed into administration, with a rescue deal hanging in the balance.
Typhoo Tea has officially appointed administrators after a two-week search for a buyer.
The brand, which is one of Britain’s oldest tea companies, warned earlier this month it was heading towards collapse as raced to find a buyer and pay off mounting debts.
When a company enters into administration, all control is passed to an appointed administrator.
The administrator has to leverage the company’s assets and business to repay creditors any outstanding debts.
Risk and financial advisory company Kroll has now been put in charge of a rescue deal for the business.
In a statement today confirming Typhoo is now officially in administration, it 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.”
During this time, it will continue to trade while a rescue buyer is sought and it won’t disappear from supermarket shelves.
It is understood that the administration process could put more than 100 jobs at risk, according to previous reports.
Dave McNulty, chief executive of Typhoo, previously told The Telegraph he was hoping the process would result in a buyer being found.
Typhoo became known for for its classic slogan of “you only get an oo with Typhoo” and celebrity campaigns ranging from Nigella Lawson to the late Cilla Black.
But recently, it has been hit by a perfect storm of problems, including declining sales, mounting debts and even a break-in at its Wirral factory last year.
In August 2023, trespassers broke into the company’s former factory in Merseyside and occupied the site for several days.
Typhoo said at the time that they caused “extensive damage” and made the site “inaccessible”.
The company had been trying to sell the factory, in a deal which eventually went through in June 2024.
But Typhoo said the incident made up the bulk of £24 million of exceptional costs that year, and that it had “materially” affected its day-to-day running.
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.
Since 2021, private equity firm Zetland Capital has been its majority shareholder.
It hired the former head of Burts crisps, Dave McNulty, as its new chief executive in October, while also launching a shake-up of its supply chain.
The overhaul was intended to stop sexual violence against women working on tea plantations in east Africa, and resulted in reducing the number of plantations in its supply chain in the region from 300 to just three.
Falling sales
Typhoo has been facing slowing sales, with the popularity of coffee, energy drinks and even bubble tea overtaking the traditional cuppa.
The volume sales of ordinary tea were 53.7 million kilograms in 2021 and decreased to 51.0 million kilograms in 2022, according to Mintel.
It forecasts that the UK tea market will see a slight increase in value sales by 1.1% to £884 million over 2023-2028, despite a forecasted decline in volume sales.
The cost of living crisis has also meant that households are switching from big brand teabags to cheaper, supermarket own-brand alternatives.
In March 2023, it was revealed that the firm was to shut down its site in Moreton in June that year with the loss of up to 90 jobs.
It also discontinued some unprofitable lines, “to focus more efficiently on value accretive and profitable lines”.
The company was also hit by supply shortages, which were linked to disruption of shipments through the Red Sea.
What does going into administration mean?
WHEN a company enters into administration, all control is passed to an appointed administrator.
The administrator has to leverage the company’s assets and business to repay creditors any outstanding debts.
Once a company enters administration, a “moratorium” is put in place which means no legal action can be taken against it.
Administrators write to your creditors and Companies House to say they’ve been appointed.
They try to stop the company from being liquidated (closing down), and if it can’t it pays as much of a company’s debts from its remaining assets.
The administrator has eight weeks to write a statement explaining what they plan to do to move the business forward.
This must be sent to creditors, employees and Companies House and invite them to approve or amend the plans at a meeting.
A Notice of Intention is used to inform concerning parties that a company intends to enter administration.
It is a physical document which is submitted to court, usually by directors aiming to prevent a company from being liquidated.
Like with a standard administration process, a Notice of Intention stops creditors from taking out any legal action over a company while they try and rectify the business.
Other firms that have filed for bankruptcy or administration
Typhoo is not the first firm to file for administration or go bankrupt in recent years.
Homebase tumbled into administration earlier this month with The Range stepping in to buy 70 sites before administrators Teneo then put the remaining stores on the market last week.
Carpetright filed a notice to appoint administrators in July.
The chain was bought in a rescue deal by rival Tapi but shut the vast majority of stores and cut more than 1,000 jobs.
TGI Fridays closed 35 locations after it crashed into administration.
More than 1,000 staff lost their jobs at TGI Fridays after a deal to save the well-known brand failed to 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 firm, warned it may go bust unless it could quickly raise new funds.
The brand has been facing slowing sales as it tries to target a younger audience.
The Fourpure brewing company placed itself into voluntary administration to “protect itself from market pressures”
In Good Company, the business that owns Fourpure and another craft beer brand called Magic Rock, said the move will “protect the brand from future liability, and tough commercial realities in the drinks and hospitality industries”.
Wilko plunged into administration in August last year as PricewaterhouseCoopers (PwC) failed to find a rescue bidder.
The brand name has since returned to the high street though after closing 400 stores.
The Body Shop collapsed into administration in February, with 82 branches closing thereafter.
However, it was pulled out of going bust after being bought out by growth capital firm Aurea earlier this month.
Paperchase, M&Co and Cath Kidston have all fallen into administration since the start of 2023 too.
Last month, cosmetics company Avon filed for bankruptcy after multiple lawsuits and financial struggles.
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