Typhoo Tea has been rescued by vape maker Supreme which will buy the company for £10m.
The 120-year-old teamaker fell in to administration in November as its sales slumped and debts rose.
The new owner said the deal would keep Typhoo “in British hands”.
Manchester-based Supreme makes the e-cigarette brand 88Vape and distributes nicotine and home products to supermarkets.
“Typhoo is such an iconic brand,” said Supreme chief executive Sandy Chadha. The company said the decision to buy it was a mix of “sound business rationale and personal affinity”.
It added that the deal was part of Supreme’s strategy to branch out into other areas. Currently the company works with soft drinks, gym supplements and multivitamin gummy brands, as well as non-food items such as batteries and home lighting.
Supreme distributes to stores including B&M, Home Bargains, Sainsbury’s, Tesco, The Range and Poundland, as well as HM Prison and Probation Service.
It said it would “enhance” Typhoo Tea’s current “asset-light, outsourced model”, and that it can increase gross profit, but “with a much-reduced overhead base”.
Susannah Streeter, analyst at Hargreaves Lansdown, said Supreme had gotten a bargain by buying the firm out of administration, and that now “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 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,” she added.
Typhoo fell into administration after its pre-tax losses rose from £9.6m to £38m. Its sales fell from £33.7m to £25.3m, according to its latest results which covered the year to the end of September 2023.
Its debts became more than the value of its assets, and costs related to a break-in at its Wirral plant added to its woes.
But Supreme said buying the company was a “significant step” and that Typhoo would “thrive” because of the brand loyalty customers had to the tea brand.
Although priced at the cheaper end of the tea market, and despite a rebrand attempt, Typhoo had been suffering from what analysts say is a wider downturn in sales of black tea.
A cuppa remains a daily staple for many in Britain, but competition from the likes of coffee, soft drinks and herbal tea have eaten in to sales.
However, despite many people cutting back on living costs as prices rise, Typhoo remained one of the biggest names in tea along with PG Tips, Tetley and Yorkshire Tea.
But supermarkets introducing their own-label brands has also led to the decline of the big names.
