Story

The Full Story

Supreme is a 50-year-old Manchester FMCG distributor that spent four decades quietly compounding cash on a battery-and-lighting base, then in five public years compressed three transformations into one ticker. Sandy Chadha brought the business to AIM in February 2021 selling investors a vertically integrated value-FMCG platform. The narrative arc since has been driven almost entirely by vaping — first 88Vape e-liquid, then a 2023 ElfBar/Lost Mary distribution windfall that nearly doubled revenue, then the June 2025 UK disposable-vape ban that forced management to re-platform the company on weeks of notice. Credibility through that cycle has held up surprisingly well: management called the disposables risk early, pre-funded the diversification (Clearly Drinks, Typhoo, 1001, SlimFast) before the ban hit, and delivered FY25 inside its own raised guide. The current chapter is whether a deliberately rebuilt three-division platform — Vaping, Drinks and Wellness, Electricals and Household — can replace the disposable revenue without giving back the margin gains.

1. The Narrative Arc

The arc has three cleanly separable phases. Phase 1 (FY20–FY22): a cash-generative distributor running on batteries, licensed lighting (Energizer, JCB), 88Vape e-liquid, and early sports nutrition; revenue compounded mid-teens, EBITDA margin sat near 16%. Phase 2 (FY23–FY24): vaping became the engine. Revenue jumped 42% in FY24 to £221m and Adjusted EBITDA almost doubled to £38.1m, a near-step-change driven entirely by disposable vapes — own-brand 88Vape disposables plus the ElfBar/Lost Mary master-distribution agreement signed early calendar 2023. By FY24, disposables were 32% of group revenue (£70.7m). Phase 3 (FY25 onwards): management saw the regulatory cliff coming, pre-funded a re-platforming via Clearly Drinks (Aug 2024), Typhoo (Dec 2024), 1001 (Sep 2025) and SlimFast (Oct 2025), and absorbed the 1 June 2025 disposables ban with a successful transition to pod systems.

2. What Management Emphasized — and Then Stopped

The heatmap is the cleanest way to see the pivots. Quietly dropped: "COVID resilience" (FY21–22 only), and "international expansion" through Vendek/Republic of Ireland which was loud at IPO and is now barely mentioned. Quietly added: "M&A pipeline" went from a stated growth driver to the dominant vehicle — seven acquisitions in three years. Replaced wholesale: Disposable vapes and ElfBar were the leading words of FY24 commentary; by H1 FY26 they have been swapped for "pod transition" and "Drinks and Wellness." Stable: the 88Vape 10ml e-liquid hero product and the Energizer/JCB licensing model have been talked about every year since the IPO.

3. Risk Evolution

Three things stand out. First, the disposables-ban risk was on the page in FY22 and ramped every year — by FY25 it was rated the company's top regulatory exposure with the ban literally written into the risk factors. Management did not get caught flat-footed; they front-ran it. Second, lighting and batteries quietly migrated from "stable cash cow" to a structural-decline narrative — FY23 saw the first lighting revenue contraction in 15 years (-43%), and H1 FY26 disclosed Panasonic exiting the European battery market, forcing brand transition mid-year. Third, M&A integration risk has only one direction of travel. Seven acquisitions since 2021, and the H1 FY26 portfolio of brands (88Vape, Liberty Flights, Cuts Ice, Superdragon, Clearly Drinks, Typhoo, 1001, SlimFast) is materially more complex than the IPO prospectus business.

4. How They Handled Bad News

The FY23 lighting miss. Lighting revenue dropped from £27.0m to £15.4m — a category that had grown for 15 years. The CFO did not bury it. The FY23 commentary called it out in the first three paragraphs: "the first year of revenue contraction since the category commenced trading over 15 years ago." They named the cause (retailer overstocking after FY22) and forecast recovery in FY24 and FY25. Lighting did partially recover in FY24 (+7%) but then re-rolled in FY25 and was still soft in H1 FY26. The forecast was directionally wrong; the disclosure was honest.

The 1 June 2025 disposables ban. Disposables were £70.7m of group revenue in FY24 — almost a third of the company. Rather than hedge or downplay, management used FY24 and FY25 commentary to repeatedly flag it as a known forward step-down, raised the FY25 EBITDA guide to "at least £40m" in November 2024, then closed FY25 inside that guide, then reported H1 FY26 vaping up 13% YoY through the pod transition. The walk-from-disposables narrative was telegraphed and delivered. What was understated was the EBITDA-margin give-up: pod systems carry lower gross margin than disposables (H1 FY26 vape gross margin slipped from 33% to 31%).

5. Guidance Track Record

A 7 out of 10. Guidance has been cleanly delivered on every metric that matters — EBITDA, net-cash, mix-shift to non-vape, dividend policy after a transparent rebase from 50% to 25% of profits. The blemishes: a £240m FY25 revenue guide that came in at £231m, and a "lighting recovers" call that was directionally optimistic. Both misses were small; neither was concealed. The bigger trust signal is that the company called the disposables ban early, pre-funded the diversification, and absorbed a £70m product-line wipeout in one fiscal year without breaking covenants or cutting the dividend.

6. What the Story Is Now

The current story is no longer "UK vape distributor with a value-FMCG side-hustle." It is "Manchester FMCG roll-up with three roughly equal divisions — Vaping, Drinks and Wellness, Electricals and Household — pursuing earnings-enhancing UK consumer-brand acquisitions at single-digit EBITDA multiples and integrating them onto a vertically-owned distribution and manufacturing platform." Seven deals in five years. About half of annualised revenue is now non-vape after the SlimFast addition in October 2025.

De-risked: the binary disposables-ban event has passed and pod-system revenue is growing; net cash is intact; dividend policy is on its post-cut footing; the platform has demonstrated it can absorb and integrate a distressed acquisition (Typhoo, bought from administration with £4.1m of negative goodwill).

Still stretched: EBITDA margin guidance of 15% for FY26 is a material step down from the 17.5% FY25 print, and pod systems structurally carry less gross margin than disposables did. Lighting and batteries are now in clear secular decline (Panasonic exiting Europe, lightbulbs lasting longer). The investment case rests on Drinks and Wellness scaling from £48.8m in FY25 to a credible £75m+ run-rate, and the next two or three M&A targets being as accretive as Clearly Drinks proved to be.

What to believe: that management can keep buying small UK consumer brands cheaply and putting them through the Manchester platform — they have done it seven times, the cash conversion is real, and the disclosures have been straight. What to discount: that vaping returns to growth as a profit pool. The pod transition holds the unit volume, but the high-margin disposables era is done, and the remaining margin recovery has to come from elsewhere.