Typhoo set to raise the cost of a cuppa ... and, you’ve guessed it, the boss is blaming Brexit!
THE boss of Typhoo faced a furious backlash last night after he warned that the price of tea bags would rise due to soaring import costs.
Chief executive Somnath Saha claimed the fall in the pound since the Brexit vote had been an ‘absolute disaster’ for his firm.
He suggested the growing expense of importing leaves from Kenya could wipe out its annual profits.
But he faced criticism from campaigners, who said businesses were using currency fluctuations as an excuse to raise prices. Typhoo, which has run adverts featuring celebrity cook Nigella Lawson, is the latest firm to either push up its prices or threaten to following the EU referendum.
On Friday, British Airways warned of price hikes while Apple increased the cost of its computers in the wake of the fall in the pound.
Tory MP Peter Bone said last night: ‘Despite all the predictions, Brexit has been good for the economy: growth is strong, exports are cheaper and people are investing in this country.
‘People like to use excuses to put their prices up and there’s plenty of that around at the moment. Sounds like an excuse to make more money to me.’
Tea is traded in dollars, and sterling is down around 18 per cent against the US currency since June’s Brexit vote. Mr Saha claimed the fall in sterling had cost Typhoo £250,000 a month.
‘This is having a very negative impact on our business and we are really suffering,’ he said. ‘It’s now come to the point where it’s not sustainable for us.’
He said costs had risen around 50 per cent since the start of the year and some of this would have to be passed on to consumers. A typical 80kg bag of tea cost around £100 in January, but this has now risen to £150, he claimed.
However, the Daily Mail’s analysis suggests that tea leaves account for less than half the cost of a tea bag. The rest goes on packaging, paper, fuel and other manufacturing costs, as well as staff who sell the product to supermarkets.
Although the price of petrol may be affected by currency fluctuations, costs such as staffing will not. And manufacturers can seek to offset price increases through innovation and investment at home.
Mr Saha denied that he was using Brexit as an excuse to raise prices. ‘Nobody wants to do this, but ulti- mately some of the costs will go to the shoppers,’ he told the BBC. ‘There is no other option. It’s very unfortunate. It’s nobody’s fault – it’s due to the economic conditions.’
Typhoo employs around 300 UK workers and produces 125million tea bags a week at its Wirral factory. Mr Saha said its owner, Indian giant Apeejay Surrendra Group, had been propping up the company since the currency changes. But he said Typhoo stood to lose almost all of its £3million annual profits if sterling’s decline was sustained.
The fall in the pound is a boon for exporters as it makes their products more competitive. Many experts believe it will boost our economy by reducing the nation’s trade deficit – the gap between imports and exports. However, companies which rely on imports are likely to come under pressure.
Typhoo’s announcement follows price rises by a string of other businesses including Apple, which increased the cost of some computers by as much as 20 per cent. City commentator David Buik said: ‘To pass on the drop in sterling in one hit is completely unnecessary and unwarranted. Apple are using Brexit and the drop in the value of the pound as a convenient excuse.’