Supreme plc, the Manchester-based supplier of vaping supplies, drinks and fast-moving consumer goods, said it bought Typhoo Tea Limited out of administration for £10.2 million in cash, extending its drinks business and diversifying away from vaping.

The company said the deal would includes Typhoo Tea’s stock and trade debtors with a book value of £7.5 million and would enhance its adjusted earnings. It said it expects the integration of the business to proceed without disruption to existing operations or customer service levels. 

Sandy Chadha, Chief Executive Officer of Supreme, said: “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. 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.”

The purchase builds on Supreme’s £15 million purchase of Clearly Drinks earlier this year.

“Having established our Soft Drinks division earlier in the year, we believe the addition of Typhoo Tea and its highly complementary blend of great value and premium tea brands, creates tangible cross sell and product innovation opportunities in the near-term, alongside avenues into credible UK retailers that Supreme has been looking to partner with,” said Chadha. 

Established in 1903, Typhoo Tea was the first pre-packaged tea brand in the UK and has since expanded its product offering from traditional black and decaffeinated black teas to now include white and lemon instant flavours, herbal and fruit tea infusions, and a selection of coffees across a portfolio of brands including the iconic Typhoo brand but also QT, Lift, and Heath & Heather. 

Typhoo Tea supplies all the major UK supermarkets and discounters as well as health food store Holland & Barrett. Typhoo Tea also distributes products into both the Ministry of Defence and the NHS, alongside servicing international customers across North America, EMEA and Southeast Asia.

For the year ended 30 September 2024, Typhoo Tea generated unaudited revenue of approximately £20 million and a loss before tax of approximately £4.6 million.

Under Supreme’s ownership, it is anticipated that 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. As with previous transactions, Supreme expects the acquisition to be adjusted earnings-enhancing.

“Kettles will be whistling in celebration at Typhoo HQ now that an historic British brand will stay on the shelves,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown: “The deal with Supreme had been brewing for some time, and there will be relief that the details have been poured over and the acquisition has been agreed.”

“Typhoo has faced a super-tough time not just because of falling sales, but the production issues which beset the company after trespassers caused damage at its plant on Merseyside. For staff, there will be relief that many jobs will be saved, particularly just before Christmas. However, it’s highly likely that Supreme will want to steam ahead and find efficiencies to cut costs and try and coax the company back to profit.”

“It’s clearly got a bargain brew for Typhoo by buying the brand out of administration. It has loyal custom it can build on, but also will spy new opportunities given tea’s wellness image to tie into the ambitions of its supplements and multivitamin arm. There are clearly opportunities ahead to appeal to health-conscious consumers and future Typhoo product launches look likely focus on this trend.’’