Now Typhoo says it will increase prices

A cup of tea is often hailed as the solution to all problems. But now, the cost of a morning, or afternoon, cuppa is set to go up as a result of Brexit.
First prices of the love-it-or-hate-it spread Marmite were hiked, with Morrisons raising prices by 12.5 per cent in response to rising wholesale prices as Britain prepares to leave Europe.
Now, tea may be the latest food and drink product to go up in price.
The chief executive of Typhoo tea has warned that he will have no choice but to increase prices.
Somnath Saha said: “This is an absolute disaster for a company the size of ours.
“The very sharp fall in the pound means the impact is at least a quarter of a million pounds a month for us. This is having a very negative impact on our business and we are really suffering. It’s now come to a point where it’s not sustainable for us.”
Typhoo makes around 125 million tea bags every week at its British manufacturing base in Moreton on the Wirral.
Not only is Typhoo sold across Britain, but it is also an export product.
Black tea is a valuable global commodity, which is traded in dollars. But with sterling falling in value since the June referendum, costs are rapidly rising for Typhoo, given that the vast majority of its sales are in the UK market.
Some companies have actually benefited from the fall in the price of the pound, particularly those who are heavily reliant on exports.
However, Typhoo has one raw imported material and costs of purchasing that have risen because sterling has been devalued.
Typhoo is a historic firm which been trading for more than 100 years. Currently, it gets most of its black tea from Kenya, which it then blends and packages in the UK.
The firm also packages most major supermarkets’ own-label tea.
As well as traditional tea, Typhoo makes a wide range of herbal teas, sourcing ingredients in euros.
Tea production is a business which has low margins, relying instead on high volumes to turn a decent profit.
At the beginning of the year, a 80kg bag of black tea could be purchased for somewhere between £90 and £100. But, following Britain’s decision to leave Europe, the cost of the same size bag is between £120 to £150.Typhoo, and other tea makers, are having to pay much more to make the same product.