The vapes and batteries maker Supreme has emerged as a savior, purchasing the collapsed 121-year-old Typhoo Tea in a remarkable £10m rescue deal. This acquisition holds significant implications for both the tea industry and Supreme's diversified strategy. Typhoo Tea's journey to administration last Wednesday raised concerns about the future of this historic brand. However, Supreme's timely intervention and confirmation of talks last week led to the successful completion of the deal on Monday.

Acquisition Details and Valuation

Supreme will pay a total of £10.2m to acquire Typhoo, with the brand's stock and trade debts valued at £7.5m. This transaction showcases Supreme's confidence in the potential of the Typhoo brand. During the year to 30 September, Typhoo generated revenues of approximately £20m, while facing a pre-tax loss of about £4.6m. The new owner plans to operate Typhoo on a "capital-light, outsourced manufacturing model" to enhance profitability. This strategic move aims to address the challenges faced by the brand in recent years, including declining sales and mounting debts.

Historical Background and Challenges

Typhoo Tea has a rich history spanning 121 years. However, in recent times, it has encountered several difficulties. The collapse was preceded by several years of declining sales, which put significant pressure on the company's financial health. Additionally, a break-in at Typhoo's Wirral factory last year added to the woes. Insolvency specialists at Kroll were appointed to oversee the administration process and find a suitable sale deal. It is understood that the business has fewer than 100 employees, highlighting the need for a strategic restructuring.

Expansion Strategy and Brand Fit

The acquisition of Typhoo Tea is part of Supreme's broader diversification strategy. After buying the soft drinks business Clearly Drinks earlier this year, amid a planned government crackdown on disposable vapes, Supreme is now venturing into the tea market. Sandy Chadha, the Supreme chief executive, believes that Typhoo Tea will thrive under Supreme's ownership. The company's significant market reach and successful track record in creating brand loyalty make it an ideal fit for Typhoo. This acquisition is expected to bring new opportunities and growth prospects for both brands.Supreme's move to rescue Typhoo Tea not only saves a historic brand but also showcases its ability to adapt and expand its operations. The company's strategic vision and financial strength have enabled it to make this significant acquisition and position itself for future success. With the implementation of the "capital-light, outsourced manufacturing model," Typhoo Tea is likely to regain its former glory and become a valuable asset within the Supreme group.