Supreme PLC on Monday confirmed its purchase of Typhoo Tea Ltd for £10.2 million.
The announcement sees Supreme, a Manchester, England-based manufacturer, supplier and brand owner, rescue the Bristol-based heritage tea brand from administration.
The deal includes Typhoo Tea’s stock and trade debtors, whose book value is £7.5 million. For the year ended September 30, the UK’s oldest pre-packaged tea brand reported revenue of approximately £20 million and an estimated pretax loss of £4.6 million.
Supreme breezed past Typhoo’s financial woes, explaining: ‘Typhoo Tea will operate on a capital light, outsourced manufacturing model, which the board believes can generate a gross profit margin of around 30%, with a much reduced overhead base’.
It is another move by Supreme to grow its non-vape portfolio, in light of the UK government’s crackdown on the smoking alternative. Supreme currently owns Elfbar and 88Vape, but aims to generate more than half its annual sales from non-vape products. Typhoo is expected to bring non-vape sales over the £120 million threshold required to meet this goal.
Supreme does not expect its latest acquisition to disrupt operations, but rather to increase ‘cross and upsell sales opportunities across the group’.
Typhoo supplies all major UK supermarkets, alongside its contracts with the NHS, Ministry of Defence and international customers. It will bring health food chain Holland & Barrett into Supreme’s retail network, which could bolster brands such as Clearly Drinks, which Supreme acquired in July.
Analysts at Shore Capital said in November that Supreme was ‘in good hands’, regardless of the outcome of its bid for Typhoo.
Supreme’s Chief Executive Officer Sandy Chadha commented: ‘The acquisition of Typhoo Tea marks a significant step in our broader diversification strategy and brings one of the most iconic UK consumer brands into the Supreme family’.
Chadha added: ‘I believe Typhoo Tea will thrive under our ownership, further benefitting from Supreme’s significant market reach and successful track record in creating brand loyalty, making us an ideal fit for this business’.
Supreme shares were up 4.7% at 174.89 pence each on Monday morning in London.
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