What Went Wrong for Typhoo Tea?

UK tea manufacturing stalwart, Typhoo have recently called in administrators from EY to oversee a possible rescue deal. The troubled brand is one of Britain’s best-established tea companies, having first started trading over 120 years ago.

Typhoo’s Chief Executive, Dave McNulty explained that a notice has been filed at court “which affords the company some breathing space to explore solutions”. Indeed, the process of administration creates a legal ringfence around the company’s assets, allowing it some respite from creditor pressure. However, despite calling administrators in, McNulty denies that the firm is in administration, instead referring to EY’s involvement as a “an ongoing confidential process”.

Whatever process Typhoo is currently undergoing, it’s clear that the company has been struggling for some time. It was only last month when Typhoo hired the former Burts Snacks boss, McNulty with the remit of turning around its ailing fortunes. Typhoo’s losses had grown from £9.6m to £38m by the end of September 2023, with their sales unhelpfully dropping by £8.4m during the same period.

Trespassers and damage

June of 2023 saw the company close its blending and packing site in Moreton, citing the “spiralling cost of energy and materials” for its decision to close the loss-making site. Unprofitable lines were axed from their offerings and almost 100 jobs were lost.

This cost-saving exercise didn’t go exactly to plan, however, when a group of “organised trespassers” broke into the closed factory and occupied it for several days. Typhoo spokespeople told the press that the trespassers had caused “extensive damage to its fabric and contents, making the site inaccessible”. With assets and products ruined in the process, Typhoo Tea’s exceptional costs for the year quickly jumped from £452,000 to £24.1m.

Historical issues

Recent years have not been kind to Typhoo. 2018 saw record high costs contribute to their profits slump to a £20m loss.

2020, meanwhile, saw pre-tax losses of £29.9m and proposals to cut jobs as a means of safeguarding the company’s future. By 2021, Typhoo had changed hands for the sixth time, being acquired by Zetland Capital.

Consumer trend changes

First opening in 1903, Typhoo have operated during what might well be the golden age of tea consumption. For some time, tea has been almost synonymous with Britain, despite being imported from warmer climes. Now though, a greater number of options has seen the market split. Coffee in particular has seen a surge in popularity in recent years, and has undoubtedly had an impact on tea manufacturers.

Market intelligence agency, Mintel, have projected that in just the 5 years between 2003 and 2028 we will see a global 8% decrease in tea being sold. Their recommendation for those in the industry being to diversify in the face of more and more drink options.

Competition and marketing

Over the last few decades, British tea drinkers have been divided between several large brands: PG Tips, Twinings, Yorkshire Tea, Tetley, Taylors, Clipper and multiple supermarket own brands dominate the sector. Perhaps in the face of dwindling tea sales there is no longer any need for so many major players in the sector.

With such a struggle to stand out from the pack, it would seem that a healthy marketing budget would be needed to remain visible, and while brands like Yorkshire Tea have been very proactive in this area, Typhoo have been relatively quiet.

In the 80s, Typhoo was a staple on UK TV screens, with big names of the period such as Su Pollard, Cilla Black and Frankie Howard appearing in ads with long-running slogans like “you only get an ‘oo’ with Typhoo”. Recent years have seen them fail to demonstrate to the public what sets them apart, with very little in the way of memorable advertising.

Current marketing

Typhoo’s current campaign revolves around recent revelations about the exploitation of female workers on tea plantations. Hot on the heels of a BBC expose showing sexual violence on tea plantations, Typhoo have made steps to finally differentiate itself from competitors by pledging to use better suppliers.

While it seems crass to view such an important topic in terms of marketing, it is a shrewd move from Typhoo. Trying to make conditions better for female tea pickers is a laudable aim that others should be aiming to copy. The problem for Typhoo is that the entire campaign has gone completely under the radar. In fact, before checking their website while writing this post, I had no idea of this issue, nor Typhoo’s part in trying to address the issue.

There is some mention of this on their teabag boxes, but almost half of the front is dominated by the much bigger slogan “is your tea fear free?”. This is a really vague marketing line for such an important issue and doesn’t tell the consumer anything. Sadly, despite it being a strong approach to take, the whole thing feels like somewhat of a wasted opportunity. That it’s actually highlighting something so concerning, only makes it more of a shame that it hasn’t been executed by a brand that might have pushed it more.

Changing perceptions

Unfortunately for Typhoo, it no longer seems to be held in the same regard as rivals such as Yorkshire Tea. Their Yorkshire competitors, fully aware of their standing among UK consumers, have used this liberally in their advertising. One recent ad saw a young Brit packing for his holiday, but leaving behind essentials so that he could fit ten boxes of Yorkshire tea in his bag, showing how indispensable the popular brew is to many.

Of course, it’s not easy to shift public perception of a brand, but some have used a perceived inferiority to help relaunch their products. Carlsberg, most notably, launched a fresh recipe in 2019 with the unflinchingly honest tagline, “probably NOT the best beer in the world. So we’ve changed it”.

By changing suppliers, Typhoo could have utilised a similar tactic to reinvigorate the brand. By admitting past inadequacies and explaining that a product has been improved, public curiosity is often piqued as to how it has changed and leads to giving it a second chance.

Don’t let your company fall behind by skimping on your marketing efforts

Typhoo’s situation is far from unique. All too often when a company is experiencing financial difficulty, the first thing to be sacrificed is marketing budget.

Without marketing though, how is the public supposed to be aware of what you’re offering? The best product in the world will only sit on warehouse shelves unless somebody is shouting about it.

At Forbes Burton, we understand the importance of strong marketing techniques. That’s why we offer free advice from accredited and certified marketing consultants. Whatever your company’s problem, get in touch to speak directly with a marketing specialist that can help.

Call us on 0800 975 0380, or email [email protected] for a free consultation to see how we can make your business visible again.