The great Brexit cuppa calamity: UK boss of Typhoo Tea warns of the ‘disastrous’ impact of Leave vote – as the price of imports leaps by a scalding 50%
A price rise might well be reasonable. However.
Let’s make some reasonable enough assumptions. All his costs other than the tea itself are in sterling. So they’ve not changed (sure, maybe some of his paper is imported, but he also exports some production, call that a wash).
Mr Saha said the cost of importing an 80 kilo bag of tea had soared by 50 per cent – from £100 up to £150 since the beginning of the year – with much of the increase being blamed on the recent fall in the value of sterling.
We’ll be fair and say that half of that is from Brexit. Perhaps the price of tea is just moving anyway as well.
According to Amazon he sells that tea, when packaged, at £5.60 a kg. That’s, as far as I understand it the weight of the tea bags, not the tea. But let’s assume that it is just the tea.
So, his tea price has gone from 100/80 per kg to 150/80 per kg. From £1.25 a kg to £1.87 per kg. Sure, it’s a bit of a leap in raw material costs, no doubt about it. Call it 50 p a kg just to keep things simple.
So, his extra large bag of teabags can righteously go up to £6.10 rather than the current £5.60.
No, of course, that’s not how prices work, it’s whatever they think they can get out of us which determines them and so on. But a 50% rise in his raw material costs should work through to an under 10% increase in his selling costs, assuming that we want to use a cost plus model.
Anyone think he’s talking to the papers about an under 10% rise in prices?