ONE of Britain’s oldest tea companies is on the brink of administration as it faces mounting losses.
Typhoo Tea has filed notice that it intends to appoint administrators.
The brand has been given five days to find a buyer before it officially goes bust, The Sun understands.
Typhoo is using the process to explore rescue options, with administrators from EY lined up.
During that time it can continue to trade while a rescue buyer is sought and it won’t disappear from supermarket shelves.
It is understood that Typhoo could enter formal administration at the end of next week.
But the company could be bought during its notice period and avoid going into administration completely.
Or, it could still collapse into administration and then be sold.
Dave McNulty, chief executive of Typhoo, told The Telegraph: “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.”
The Sun has contacted Typhoo Tea for commment.
Typhoo’s sales fell from £34 million in 2022 to £25 million last year.
At the same time, losses rose from £9.7 million in 2022 to £38 million in 2023.
The brand was founded in 1903 by Birmingham grocer John Sumner and was once one of the UK’s best-selling tea brands.
The tea is sold nationwide in Asda, Co-op, Morrisons and Ocado.
Its current chief executive is Dave McNulty, the former head of Burts crisps, who was appointed last month.
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.
But it 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 addition, Typhoo suffered a break-in at its factory in Merseyside in August 2023, which involved “extensive damage” to machinery and tea stock.
This delayed the sale of the factory, which was eventually completed in June this year and contributed to its steep jump in losses.
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.
In September, the company reformed its supply chain and its recipe to tackle the issue of sexual exploitation on tea plantations in East Africa.
Typhoo moved from working with hundreds of tea growers to just a handful, chosen for their commitment to women’s safety.
It also appointed an ethical advisory board – ‘Fear Free Council’ – which has been established to ensure that its commitment to safeguarding women.
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.
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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