Supreme Share Discussion Threads

[ggplyr] 02/12/2024 06:19

A lot higher than I was expecting.

But if they are right, 30 percent gross margin,with outsourcing the manufacture so virtually no capital. That's 7.5m gross profit a year.
No idea what distribution costs will be though. A box of tea bags is similar size/volume to sci Mx protein but lower a lot lower gross profit in £s. So I assume distributions costs per mile are fair bit higher

[boonboon] 01/12/2024 23:30

Sounds like a decent deal. I wonder which retailers they are?creates tangible cross sell and product innovation opportunities in the near-term, alongside avenues into credible UK retailers that Supreme has been looking to partner with.

[scubadiverr] 01/12/2024 22:39

https://www.cityam.com/typhoo-tea-rescued-out-of-administration-in-10m-deal-by-vapes-giant/

[texaspete2] 29/11/2024 14:00

Supreme gets a mention several times on the bbc website in connection to the Typhoo story, helps raise the profile of the business

[nfs] 29/11/2024 12:03

Surely the Typhoo tea deal is the just going to be the brand name and maybe a few specific assets? The Manchester mega warehouse presumably would host any machinery required. I see it as an add in to fuse together with the other drinks brands. Mike Ashley did the same sort of thing with Dunlop, Slazenger etc. into Sports Direct

[boonboon] 29/11/2024 10:59

I expect, if it does go ahead, we will get some rationale from either the rns or a video interview.

[boonboon] 29/11/2024 10:55

Net profit to the group is what's important. They even mentioned on the call that lighting gross profit is somewhat inflated due to a change of contract and shipping method.

[ggplyr] 29/11/2024 10:44

Transport and shipping costs aren't part of cost of sales, so it won't do anything for gross profit.
Does anyone know of any other stand alone tea UK based tea company, so we can take a look to see if typhoos gross profit is normal or on the low side?

I trust in Sandy's judgement as well by the way, but I still like to understand the logic.

[boonboon] 29/11/2024 09:45

Right take away the majority of overhead costs and absorb into supreme.Reduce transport costs by shipping to retailers together with other products like soft drinks and vapes.That would be a good margin improvement.Then use the brandname to launch new products like ice tea.I think it will have to be a smallish purchase price though.

[gb904150] 29/11/2024 09:37

I trust Sandy's judgement. If he thinks he can make Ty-phoo tea profitable I bet he can.

Bit by bit they are adding more brands and integrating them into their distribution platform and with incredible efficiency.

They are a consumer champion, an insurgent and a challenger firm.

The way I see it they are moving up the value chain. Rather than distributing other peoples' brands and products they are starting to want to own and grow their own.

Rather than making 10% they will be able to make 20-30%. Little by little they become more and more like Unilever or P&G with an entire portfolio of brands.

All funded by cashflow and by the £50m(?) debt facility if needed. i.e. genuine organic growth.

All presided over by Sandy who owns such a significant stake in the business he wouldn't dilute his shares unless there was compelling value.

It all adds up to a tidy long term shareholder journey.

Meanwhile, at any point in the future big tobacco might snap up 88Vape as they try and hit their % targets for NGP's.

The future's bright...the future's Supreme!

[adamb1978] 29/11/2024 09:29

Happy to trust SUP with this one given their prior track record.

Big brand name too

[actscap] 29/11/2024 09:01

They relocated manufacturing and production to a third party. Perhaps Sandy brings in house. He has demonstrable form in turning around struggling businesses, namely sci mx which is going from strength to strength.

[ggplyr] 29/11/2024 08:56

According to the accounts of typhoon they already got rid of poor performing product lines.

Clearly is profitable, and has gross profit margins of 30-35%. It was paying very imhogh interest and management charges to the holding company which fall away under supremes ownership. Supremes added value came from cross selling clearly drinks to other retailers it has relationships with (Sainsbury's now stocks perfectly clear). Also it can manufacture Sci Mx drinks there now, and believes it can grow the business.

It's not obvious what the value of typhoo tea is. It's unprofitable, and has been for years, low gross profit margin. Tea is a declining market.

Maybe there are huge efficiencies to be had that aren't obvious from the accounts. I can't see them paying much for it if they buy the whole company.

Maybe they just take the brand, get someone else to manufacture the core products to, and try launch something like icetea.

[boonboon] 29/11/2024 08:20

Clearly drinks was £15 million with a similar turnover. It also had property assets and was profitable.Will be interesting to see what the purc price is, if we do buy it.

[playful] 29/11/2024 08:04

Bought in today whilst enjoying my typhoo tea!

[ggplyr] 28/11/2024 17:44

yes, it does not look like a good business. gross profit % of around 15%.
take off distribution expenses and its 6% operating profit if you assume all the admin expenses fall away, which I really doubt.

That said, this is what Supreme have done several times over successfully. and given its EBITDA is negative, i can't see them paying a great deal for it.

[actscap] 28/11/2024 17:18

We'll know more soon enough, but it reinforces supreme as a fmcg company NOT a vaping company. Vape will be the cash cow for many years to come, but won't be as material if the ongoing diversification continues.

[actscap] 28/11/2024 17:14

Would complement the soft drinks vertical. A lipton ice tea for the value end perhaps. Think they'd prob launch some trial offerings, perhaps a new brand emerges

[actscap] 28/11/2024 17:08

Could tie in nicely with the nutrition and wellness business too - lots of medicinal and herbal tea possibilities, creation of wellness packages similar to sci-mx nutrition/protein bar and drinks packs.

[actscap] 28/11/2024 17:05

Recall sci-mx was unprofitable when sandy took on

[beckaroo] 28/11/2024 16:32

Typhoo does look like a bad business. It hasn't made a profit since 2017, looks like a one brand company and sales of regular black tea have been falling for years. It looks like it would take some turnaround.

[boonboon] 28/11/2024 14:46

Interesting. Wonder if it's the brand name to make ice tea with clearly drinks?It made a huge loss so not sure we'd want to take it all on.

[a day in the life] 28/11/2024 14:37

Exclusive: Typhoo Tea, one of Britain’s oldest tea companies, is close to being sold out of administration to Supreme, the London-listed manufacturer and distributor of fast-moving consumer goods. An announcement is likely to be made by administrators at Kroll today or tomorrow.

[boonboon] 28/11/2024 14:26

Agreed it's potent starting from a low base, but would be good ifA) we can leverage the Spain distribution to include more products from our range, be it own label vaping or other products like sports and nutritionB) replicate it in other geographies (he suggested we are in discussions for this)

[ggplyr] 28/11/2024 13:39

@boonboon, its probably a bit early to get too excited about spain.
Sandy said hed be happy if he could do 15% of what we do here.
Gross profit for elf and lost mary is 5m for the half, so 10m for the year.
15% of that is 1.5m per year. Then there are overheads, (not part of supremes existing, and id only be guessing how much they are).
Its a joint venture with at nearly 50/50 split.

So that's PBT of a max of 0.75m, so while not immaterial, its not game changing either.

Its one to watch for sure, but at the moment its unproven.