Indian tea markets to go digital
Tea for 10
INDIA’S TEA MARKET is going cyber, with physical public tea auctions being replaced by electronic trading instead.
India has been flogging tea at auction since 1861, and shifts one million tons of the stuff every year. Going digital should be a welcome move when dealing in such vast quantities, but the smaller companies and tea brokers are concerned that the move will leave them high and dry.
The decision to switch to online trading was recently taken by the Indian Tea Board as a way of boosting tea prices from their decade long slump. They believe that the move will ensure fewer transaction costs, achieving higher trading volumes and fairer prices. Also, since buyers will be able to bid from anywhere, the board reckons it would most likely increase demand, therefore hiking up the prices. Selling the tea via a digital platform would also simplify matters as far as automating complex lists of tea catalogs, cutting down on mountains of paper, not to mention time and hard earned cash.
The tea giants like Tata (which owns Tetley tea) and Hindustan Unilever (PG Tips), and together control over 45 per cent of the whole of India’s tea market, have been pushing for an electronic system for quite a while now, as it would mean that they would be able to cut down on labour costs.
The middle-man brokers would also be cut out of the whole equation, allowing the plantations and factories to sell directly online. In a sad twist though, it would make it easier for big buyers to slurp up all the stocks, making it almost impossible for the little buyers to pool their petty cash to buy individual batches, which the big companies consider a costly and unnecessary pain to ship.
It’s not the first time that the idea of digital tea trading has been brewed in India, but when it was first attempted back in 2005, the trading platform set up by IBM for the Indian tea Board was so full of bugs, that the whole idea had to be scrapped. Poured down the sink, so to speak.
This time, the Indians seemingly have the good sense not to take a chance on IBM again, and are instead going for an exchange to be designed by NSE-IT, part of India’s own national stock market.
The first electronic tea auctions will take place in Calcutta this December, and if all goes according to plan, the software will diffuse out to other centres soon after. Doesn’t sound too bad, when it all boils down to it.
Tea for 10
INDIA’S TEA MARKET is going cyber, with physical public tea auctions being replaced by electronic trading instead.
India has been flogging tea at auction since 1861, and shifts one million tons of the stuff every year. Going digital should be a welcome move when dealing in such vast quantities, but the smaller companies and tea brokers are concerned that the move will leave them high and dry.
The decision to switch to online trading was recently taken by the Indian Tea Board as a way of boosting tea prices from their decade long slump. They believe that the move will ensure fewer transaction costs, achieving higher trading volumes and fairer prices. Also, since buyers will be able to bid from anywhere, the board reckons it would most likely increase demand, therefore hiking up the prices. Selling the tea via a digital platform would also simplify matters as far as automating complex lists of tea catalogs, cutting down on mountains of paper, not to mention time and hard earned cash.
The tea giants like Tata (which owns Tetley tea) and Hindustan Unilever (PG Tips), and together control over 45 per cent of the whole of India’s tea market, have been pushing for an electronic system for quite a while now, as it would mean that they would be able to cut down on labour costs.
The middle-man brokers would also be cut out of the whole equation, allowing the plantations and factories to sell directly online. In a sad twist though, it would make it easier for big buyers to slurp up all the stocks, making it almost impossible for the little buyers to pool their petty cash to buy individual batches, which the big companies consider a costly and unnecessary pain to ship.
It’s not the first time that the idea of digital tea trading has been brewed in India, but when it was first attempted back in 2005, the trading platform set up by IBM for the Indian tea Board was so full of bugs, that the whole idea had to be scrapped. Poured down the sink, so to speak.
This time, the Indians seemingly have the good sense not to take a chance on IBM again, and are instead going for an exchange to be designed by NSE-IT, part of India’s own national stock market.
The first electronic tea auctions will take place in Calcutta this December, and if all goes according to plan, the software will diffuse out to other centres soon after. Doesn’t sound too bad, when it all boils down to it.