In a significant shift, Supreme has acquired Typhoo Tea for £10.2m, positioning itself towards a diversified business model.
- Typhoo Tea, once a leading tea brand, faced administration following a steep decline in sales and mounting debts.
- Supreme intends to integrate Typhoo’s assets without disrupting current operations, aiming for a strategic fit to their existing capabilities.
- The takeover is expected to bolster Supreme’s cross-category sales, utilizing its extensive retail network.
- Supreme sees potential growth in gross profit margins from Typhoo under its leaner operational framework.
Supreme, a company primarily known for its products outside the drinks industry, has executed a £10.2m acquisition of Typhoo Tea. This acquisition is part of Supreme’s strategy to diversify its portfolio into the drinks and nutrition sectors. Typhoo Tea, a venerable name in the UK tea industry, had recently entered into administration due to a significant drop in sales—a decline of 26% to £25m last year. Additionally, the company’s financial troubles were exacerbated by a swell in losses, rising from £9.7m to £38m, with debts reaching nearly £70m.
Supreme’s takeover includes acquiring Typhoo’s stock and trade debts, which have a book value of £7.5m. Supreme has stated that this integration should not impact its current operations or service levels provided to customers. The acquisition aligns with Supreme’s broader diversification strategy, enhancing its foothold in the UK’s retail landscape and boosting annual non-vape related sales to over £120m.
According to Supreme’s projections, under its management, Typhoo will potentially achieve a gross profit margin of around 30%, aided by reduced overhead costs. Supreme’s CEO expressed optimism about the synergy between the two companies, noting Typhoo’s blend of affordable and premium products as highly complementary. He believes that Typhoo will benefit from Supreme’s market reach and ability to build brand loyalty, which could lead to innovative cross-selling and new product development.
Supreme envisions expanding its market presence by tapping into reputable UK retailers and creating sales opportunities across various product segments. The CEO highlighted this acquisition as a natural extension of their growing soft drinks division and a strategic fit within their existing product lines.
Supreme’s acquisition of Typhoo Tea signifies a strategic leap towards becoming a diversified entity with broader market reach and potential growth in profits.
