Colombo Tea Auction

The first Tea Auction in Colombo was held on 30th July 1883 in the office of Somerville & Co., down Queen Street now renamed Janadhipathi Mawatha. Prior to this, many tea plantation people shipped Ceylon teas to the London Tea Auction or sometimes directly to overseas buyers. The Auction itself was only modestly successful with only one lot of Kabaragala un-assorted tea selling for cents 45 a pound whereas the other 4 lots remained unsold due to either lack of bids or due to bids received not meeting the Broker’s expectations.

Despite debacles, Somerville & Co. and the other brokers persisted and were able to conduct auctions on a regular basis from 1885. In 1894 the Ceylon Chamber of Commerce (CCC) set up the Colombo Tea Traders’ Association to formulate rules for the conduct of the Tea Auction. They promoted the common interest of buyers and sellers in the Colombo market.

With modest beginning, Colombo Tea Auction (CTA) grew to be the largest tea auction in the world in terms of the number of lots sold. Mombasa in Kenya has for several years been the largest tea auction in terms of the volume of tea traded.

CTA saw many changes over the years meeting changing circumstances. Auctions were originally conducted in the CCC Building in Chatham Street on one day of the week on a regular basis in one auction room. As more and more tea was being sold through the Colombo Tea Auction and the number of lots increased the auction split over to the second day. With the further increase in the number of lots the CCC Board Room was converted into a second auction room.

The new CCC building at Nawam Mawatha made provision for two custom built auction rooms, but in the course of time this too proved to be insufficient and today the Colombo Tea Auction is conducted on two days of the week concurrently in three auction rooms.

Today with tea factories increasing the number of grades to meet buyer demand the number of lots are correspondingly increasing placing a further strain on the system. As it is an auction on two full days namely Tuesday and Wednesday results in a severe strain on buyers having to taste, grade and evaluate up to 12,000 different lots of tea during the other days of the week, so that they could be prepared to bid for teas at the next week’s auction.

COVID19 changed the 137 year old Colombo Tea Auction from its famous outcry system to a digital auction system. Once again, the industry showed its resilience by rising to the occasion in digitalizing the auction in a very short period of time, which was facilitated by the Colombo Tea Traders' Association (CTTA) and supported by the Colombo Brokers' Association (CBA) and CICRA Holdings.

With no auctions for two weeks due to partial shutdown to prevent the spread of the novel coronavirus in the country, the industry has been scrambling to take the online route to ensure continuity of supply and demand and cash flow. The e-auction enabled sellers and brokers to catalogue teas electronically and buyers to bid online. 

Online auction has been spoken about in Sri Lanka many years, but the industry had failed to reach an agreement. However, given the COVID-19 pandemic and the need to keep the economically-important tea industry going, the trade and brokers united. E- Auction was possible after multiple discussions between various stakeholders, mock runs and training by electronic platform provider CICRA Solutions.  According to CICRA Solutions, over 300 buyers have registered on the online system along with eight brokers.

The Sale No. 12 of 2020 which was scheduled as a manual auction for 24/25 March 2020 eventually commenced on 4 April 2020 as an electronic auction and was concluded on 8 April 2020. The first auction took five days as the users had to be trained so they could adopt the technology. With the users being trained on several occasions, today’s e-Auction is held for two days per week.