North East alcoholic tea start-up Noveltea is being liquidated after the hotly tipped start-up suffered a revenue slump and mounting costs during the pandemic.
Insolvency specialists from FRP have been appointed to Tea Venture Limited, the company name behind Newcastle's Noveltea which was founded by former Newcastle University students Lukas Passia and Vincent Effroth in 2016.
Mr Effroth, who left the firm earlier this year, and Mr Passia went on to star on the BBC's Dragons' Den where they turned down investment offers for their spirit-infused tea, created via a cold brewing process. The idea for the alcoholic tea earned the firm the backing of the North East Venture Fund (NEVF) managed by Mercia; the Government’s Future Fund and thousands of private backers via the crowdfunding site CrowdCube.
Read more: Vianet hails turnaround amid challenging hospitality market
In late 2020 Noveltea secured £1.4m from those investors in a move that followed a major deal with German celebrity Dagmar Wöhrl for €450,000 worth of backing. At the time, the entrepreneurs said they aimed to create 20 new jobs at their Newcastle base as they looked to expand the success they were enjoying in the UK, Germany and China.
Prior to that Noveltea had secured more than £877,000 from three crowdfunding campaign,s in 2017, 2018 and 2020 - the last of which gave the business a pre-money valuation of £6.8m. The founders had also talked of floating on the Stock Exchange to get a good return for investors, or engineering an exit through an acquisition by a drinks giant.
However, BusinessLive was told the business had more recently struggled to recover from the impact of the pandemic on the hospitality market, and on materials costs. One of Noveltea's largest European customers filed for insolvency during the summer, putting increased pressure on profitability.
Despite efforts to promptly sell the business - which had designs on breaking into the US market - no viable offers emerged and Noveltea creased trading with the loss of seven jobs. The liquidators are now marketing the brand and its intellectual property - estimated to be worth £8,223, - along with more than £156,000 of stock.
Documents filed at Companies House show the business owed around £772,000 to a range of creditors including suppliers in the North East and in Germany, and some of its investors.
Allan Kelly, partner at FRP and Joint Liquidator of Tea Venture Limited, said: "The Noveltea brand brought an innovative concept to the drinks market. But, the business was still in the early stages of its growth and was unable to withstand the immense pressure of rising input prices or reach the revenue growth it needed. We are now marketing the assets for sale, including the business’ intellectual property and brand."
READ NEXT:
