article: For chief executive Somnath Saha, the economics of tea are simple and brutal. Typhoo Tea produces 125 million tea bags a week at its factory in Moreton, Wirral, which have just one ingredient - tea leaves, and they are imported. Black tea is a global commodity, traded in dollars. Following the fall in sterling since the Brexit vote, costs have soared for this renowned brand as 95% of its sales are in the UK. "This is an absolute disaster for a company the size of ours," says Mr Saha. "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." The news comes amid warnings of rising prices in the grocery sector, and with supermarket chain Morrisons increasing the cost of a jar of Marmite by 12.5%. There are plenty of winners from the fall in the value of sterling. But Typhoo Tea is a graphic illustration of what it's like for a business with one raw imported material. Typhoo has been trading for more than a century. These days, most of its black tea comes from Kenya. It's then blended and packaged on site. The company also packages own-label tea for most of the major supermarkets. In addition, it produces a range of herbal teas and those ingredients are sourced in euros. It's a high-volume, low-margin business. The cost of the ingredient depends on the quality of the leaf. A typical 80kg bag of black tea could be bought for £90 to £100 at the beginning of the year. The company says that same bag now costs £120 to £150 at the weekly international auctions. In other words, it is paying an awful lot more for the same amount of tea. "We don't have big enough margins between us and retailers to absorb all these costs. We're looking at how to mitigate some of them, from our labour, overheads and marketing costs, which will affect the growth of the business and employment in long run. But some of these currency costs will have to be passed on, as neither us nor the retailers can absorb any more cost increases," Mr Saha says. Like other suppliers, he is in discussions with the supermarkets about price rises. He denies posturing to try to secure a better deal. "Absolutely not. This is a really serious situation for us. Nobody wants to do this, but ultimately some of the costs will go to the shoppers. There is no other option," Mr Saha says. "It's one of the favourite drinks of this country. It's very unfortunate. It's nobody's fault - it's due to the economic conditions." Typhoo Tea is owned by the Indian conglomerate Apeejay Surrendra Group, which Mr Saha says has supported the UK business for the last few months. But he warned that if the fall in the pound was sustained, his business would be
summary: The cost of a cuppa will have to rise, according to the boss of Typhoo.