Colombo Tea Auction
The first historical mention of a tea auction is “the London Tea Auction” which was held as early as 1680. It was developed gradually and by 1950, one third of the world tea production was auctioned in London. Its Sri Lankan equivalent, Colombo Tea Auction commenced activities in 1883.
The Colombo Tea Auction has humble beginnings.
The first auction was moderately successful; only one lot of tea was sold due to receiving bids of a lower price range than expected. But everything has a first; suppliers and tea-lovers believed this and persevered in making the tea auction a reality. With their hard work, by 1885 auctions were conducted in a regular manner in Colombo.
The Ceylon Chamber of Commerce was set-up in 1839. Members of the Chamber initiated the “Colombo Tea Trader’s Association”. Having tea traders’ best interests in heart, the association developed a formal procedure for tea auctions. Today, the Colombo Tea Auction is crowned as the oldest active auction for tea, as the London auction has been discontinued.
The Colombo Tea Auction has evolved from one-day-per-week, held at a single place, to three simultaneous auction venues, on two days of the week. The new “Tea House” is in Navam Mawatha, Colombo 2.
Groundwork for tea auctions commences two weeks prior to the auction date. Tea samples of two ounces each are gathered, and delivered to the potential buyers via the tea brokers. The buyers then appraise the tea samples by their appearance, aroma, taste and texture. These characteristics decide the bidding price for the next auction day. This preparation is carried out by the tea tasters who are entrusted with the vital mission of preparing a vast array of tea varieties for the auction. Due to the rising demand from the customers who favour different tea types, the officials are tasked with handling a large selection of samples, which is not an easy task. In the year 2020 alone, even with the pandemic more than 265 million kilos of Ceylon black tea and other varieties were traded in the Colombo Tea Auction.
Tea auctions are held every Tuesday and Wednesday of every week year-round, breaking only for the New Year and Christmas celebrations. Close to 6.5 million tea kilos are auctioned off weekly in the Colombo Tea Auction.
Annual production of Ceylon tea is close to 300,000 metric tons; out of this 90% is exported globally via the Colombo Tea Auction. Its capacity to handle 6,000-7,000 metric tons of tea per week is astonishing. The Colombo Tea Auction houses eight representatives of tea brokers and a considerable gathering of buyers to carry out an “out-cry” auction which remains the tradition from the first auction held in 1883.
The Colombo Tea Auction boasts of an efficient and standardized process. After the Colombo Tea Traders Association (CTTA) formalized the rules and regulations in 1894, terms and conditions as well as the bylaws were formally ratified by all parties relevant. It is the responsibility of the CTTA to watch over and update them accordingly.
With more than 150 years of experience in brokering and auctioning tea, the Colombo Tea Auction had to pause a while when the world was hit by COVID. They have been able to conquer the situation by adopting an e-auction - the first online tea auction in Sri Lanka - on the 4th of April 2020.