Belfast Telegraph

English Tea Shop expects revenue growth as it prepares to enter new markets

English Tea Shop is shrugging off the effects of Brexit, with revenues set to grow 25% this year and the firm planning to enter 25 new markets by 2021.

Suranga Herath, c hief executive of the luxury British company, told the Press Association he is optimistic about business prospects in the years ahead, despite uncertainty over potential trade restrictions after the UK leaves the EU.

"We have worked out scenarios - in fact that is something that we did soon after Brexit - but none of the scenarios are showing us any great concerns in terms of tariff and nontariff barriers," he said.

"The products we deal with are not something that could be taxed heavily or would be blocked heavily."

The company - which sells in stores including Harrods, Selfridges and hotels such as The Grange and Strand Palace - currently sources tea and herbs from farms in over a dozen countries, which are then manufactured at its plant in Sri Lanka.

While some of that tea is shipped directly from Sri Lanka, to countries like the US, Russia and Belgium, the vast majority is routed through the UK before being exported to markets including Canada, Japan and more than 24 EU countries.

Mr Herath said the company is not considering changing its distribution model to avoid having to ship from the UK if new tariffs were introduced, but he assured that the business could "adjust very quickly" if it needed to divert tea shipments from its Sri Lankan plant to other international ports.

However, he said no other shipping route provides the same benefits as the one that is currently running between Sri Lanka and Britain.

"The UK has been a tremendous hub ... from Colombo we have a transit of 14 days to the UK, which is very surprising.

"We don't have that kind of a transit to any other European port. If you look at the cost and the time ... we still believe in the UK as kind of an advantage."

The English Tea Shop is now charging ahead with expansion plans, raising the number of markets in which its teas are sold from 55 to 80 by 2021.

It most recently struck deals to start exporting to countries including Iceland, Iran and Chile and is currently in discussions to enter the Mexican market as well.

The company is expecting a 25% jump in revenues over the next financial year, up from £8.45 million in 2016/2017, and hopes expansion plans will help double sales by 2021.

Pre-tax profit grew 48% in 2016/2017, reaching £449,422 from £300,116 a year earlier, according to unaudited figures.

Costs have recently increased, due in part to a jump in transport prices and the cost of organic teas, but while "shipping has become a bigger issue than Brexit," Mr Suranga said profits have not suffered.

"What has happened, I think, is the brand has really established itself strongly. We haven't really felt our bottom line getting hurt, the freight costs have kind of lowered profitability... but then we have more profitability in some of our other segments.

"But overall for the group our results have gotten better."

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