The CEO of North East tea merchants Ringtons has told how the historic business is emerging from a tough year in which rocketing costs triggered a 39% fall in profits.
The Newcastle business, which imports and packages tea for all the major supermarkets and is the go-to brand for hotels and customers as far away as Japan, has published accounts for the year ended June 2023 showing a 14.2% lift in turnover to £80.6m. Ringtons - which also sells its own range in shops, online and through doorstep delivery vans - had previously warned that increasing costs were impacting trading and, as expected, operating profit fell by 39.1% to £2.78m.
Shareholder funds grew by 5% to £33.06m and the overall profit for the year was £1.98m, down from £3.66m. A dividend of £400,000 was paid out in the year. A breakdown of overall turnover showed tea packaging turnover increased 18% and within the Ringtons brand sales rose 5%. Within the beverages and coffee division, sales rose 35%.
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CEO Simon Smith said that the family firm’s strategy, in which money is set aside ‘for a rainy day’, had put it in good stead for weathering challenges, including the pandemic and last year’s cost increases, rising inflation, the cost-of-living crisis and rising wages bill. Ringtons last year raised its prices, while also trying to keep increases as low as possible.
Mr Smith said the fall had been expected and that the company’s current position is much stronger. The firm, which employed 562 people in the financial year, saw a strong Christmas period and completed a rollout of new single packs of 50 tea bags, reducing packaging and giving customers the option to buy no more than they need.
Mr Smith said: “The major reason for the turnover rise is price increases. The majority of the price increases has been in the tea packing division because the price of all things - tea, packaging, energy and labour have all increased significantly and the prices were passed on. We got a great deal of support from our customers for that.
“The profitability came down with a bump last year; that was all to do with starting our reinvestment programme into the business. We stepped back from that during Covid, and when there were overall rising costs throughout the whole business and we weren’t passing them on in that period, so the profits reduced 39% but it’s still profitable.
“It’s been a tough period but we traded well. The Ringtons doorstep business and ecommerce, typically during periods of cost-of-living crisis, customer loyalty proves to be extremely strong. The Christmas season which is essential to us was good – not quite as good as the previous year but very sound.
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“We are experiencing much better results now, this year I can happily say. We are once again investing in all areas of the business.”
Ringtons is investing in new tea packing equipment, coffee equipment, and new sales offices and vans. It is also overhauling its IT system. Mr Smith said it is, however, proving difficult to switch its fleet of 229 delivery vans to electric vans due to availability issues.
The four fifth-generation family members who have joined the business as associate directors – Elliot Smith, Nadia Johnson, Tom Smith and Brigitte Keatings – were all appointed as full company directors following the year end in July 2023. They are working closely with the fourth generation directors in a planned transitioning period.
Mr Smith also paid tribute to the workforce, adding: “The Ringtons team across the business have continued to make the major contribution in the company’s success. It hasn’t been an easy period for anybody but all Ringtons team members they have all been totally committed as ever and they really make the difference.”