Businessman a phoenix rising from the ashes of tea factory

Jan 30 2008 by Tony McDonough, Liverpool Daily Post

Tony McDonough meets PAUL NEEDHAM, managing director of Lancashire Tea

WHEN the tea factory of which Paul Needham was operations director burnt to the ground in the summer of 2005, he describes the following months as the most traumatic of his life.

The Gold Crown factory, in Kirkby, was destroyed by the blaze in just 2½ hours, according to the fire brigade report.

But, less than a year later, Needham had picked himself up and, along with fellow Gold Crown manager, Lynn Hitchen, set up Lancashire Tea, in Newton-le-Willows.

With the help of £100,000 from Merseyside Special Investment Fund (MSIF) it launched on April 1, 2006.

“It was probably the scariest thing we had ever done in our lives,” said the 50-year-old father-of-two, who is managing director. “We remortgaged our homes and put everything we had into setting up the business. I have never been this exposed in my life.”

The gamble appears to be paying off. Lancashire Tea, which is a blend of 12 teas from Kenya, Malawi, Rwanda and Sumatra, is now available in every major supermarket chain in the North West, as well as in hotels, delis, cafés, farm shops and tourism outlets.

And, in recent days, the company has achieved a breakthrough. Sainsbury’s has agreed to stock the product in 389 stores nationwide. This could take turnover this year up from around £600,000 and through the £1m barrier.

Needham is convinced Lancashire Tea is superior in quality to all the other major brands on the market – including its rival in the so-called “war of the cosies”, Yorkshire Tea.

“What you find you get with many brands is an after-taste that can have a bad effect on your tongue if you drink it all day,” he said.

“We use a very high quality blend with around 70% of it coming from Kenya (supplies are guaranteed for the coming months despite the political upheavals), it produces a very strong colour and a very smooth taste.

“We believe we have the best premium tea in the market. It has been tested in the North and the South, and tastes just as good with hard water and soft water. Other brands have to produce different versions for different parts of the country.”

The trick, of course, is to convince the tea drinking public of the quality of the product, and it is in advertising and marketing where Needham believes the firm faces its biggest challenge.He said: “People use the products they are used to. My wife uses Persil washing up powder and it would be very difficult to persuade her to switch to Bold. So if someone has always bought PG Tips, why should they change.

“In the UK you have PG Tips and Tetley who would both claim to control around 25% of the market and then you have Yorkshire Tea with about an 8% share.

“Despite our turnover growth we have not been able to hit profit yet and that is partly because we don’t have the budget for major advertising campaigns on television.

“If you look at Twinings, they have put Stephen Fry on their TV advert and immediately their products are stocked across the country.

“We have to rely on other things – getting pieces in newspapers, travelling to fairs around the county and word of mouth.”

In an attempt to promote the brand, Lancashire Tea is opening a chain of tea shops across the county with the first one opening in Wigan at the end of last year. Three more are planned in the coming weeks for Blackburn, Accrington and Leigh.

If successful, these may be followed by a second chain of “nostalgic” tea shops called Gracie’s – named after the famous Lancashire songstress, Gracie Fields.