Losses have continued to mount at Typhoo as its turnaround attempt failed to stem falling sales, but the historic tea brand’s new boss told The Grocer a transformation was now underway at the business.
It follows a tumultuous year for the company with a change in ownership and management team as London-based PE firm Zetland acquired control in July 2021 and, last month, Clipper Teas co-founder Mike Brehme stepped up as executive chairman to replace outgoing CEO Des Kingsley.
New accounts at Companies House revealed “extremely challenging” trading in the 18 months to 30 September 2021 – with the financial year end shifted back from March following a restructuring.
Despite consumers pantry-loading during lockdown, Typhoo said the shift to online shopping, closure of non-essential shops and the restrictions in the out-of-home market held back growth.
In addition, the new strategic direction – which saw product rationalisation and the exit of lossmaking contracts – meant revenues in the 18-month period of £54.6m were just £1.4m higher than those generated in the previous 12 months.
However, losses improved thanks to the restructure at its Merseyside factory boosting operational efficiency, with pre-tax losses of £10.5m compared with £15.9m in 2019/20.
Typhoo has been in the red for the past four financial years in a row, with losses since 2017/18 totalling more than £76m as sales tumbled from £70m-plus to current levels.
The business, which dates back to 1903, has been hit by a raft of issues over recent years, including spiking raw materials costs, Brexit-related uncertainty, currency headwinds and a wider decline in the black tea market.
Typhoo also blamed its pursuit of an “aggressive” growth strategy focused on its own-label business for an increase in complexity, reduced operational efficiency and depressed margins.
Brehme told The Grocer the change in ownership and related investment was an important moment for the business and would allow it to focus on its recovery with “new vigour”.
“We are very pleased with the progress Typhoo is making,” he said.
“Whilst there is still work to be done, the transformation of Typhoo Tea is underway and we are seeing the recovery of one of Britain’s best-loved brands.”
He added the turnaround would focus on international as well as domestic growth across its portfolio of brands, including Typhoo, Heath & Heather and London Fruit & Herbs.
“In the current tough inflationary economic climate, Typhoo Tea’s unique range of pack sizes and formats are proving to be highly successful, as more shoppers seek out incredible value without compromising on quality,” Brehme said.
“Over the past year Typhoo has undergone an organisational transformation, remaining focused on our commitment to ethical sourcing and the consistent high quality of our tea. Supported by this new team, I am optimistic about the future of Typhoo Tea.
“With the continued backing of our existing and new shareholders, our vision remains that Typhoo Tea continues to be an integral part of British life, complemented by a renewed focus on our other brands.”
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