Mombasa auction registers first sale of premium teas

Tuesday February 4 2020

Finlay Mombasa Ltd employees arrange various types of tea for testing at the company’s laboratory before they are packed for export.

Finlay Mombasa Ltd employees arrange various types of tea for testing at the company’s laboratory before they are packed for export. PHOTO | FILE | NATION MEDIA GROUP 

ANTHONY KITIMO
By ANTHONY KITIMO
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The decline of international market for the cut-tear-curl (CTC) black tea has pushed Kenyan exporters to premium tea as the next best bet for the industry.

The first tea auction of 2020 at the Mombasa Tea Auction registered the first premium orthodox tea export by Empire Kenya EPZ Ltd to Sri Lanka.

But managing director Thushara De Silva has called on the government of Kenya to “initiate trade agreements with our source markets since they charge 15 per cent tax for packaged tea, which is discouraging export of packaged tea.”

Empire Kenya’s orthodox tea shipment to Sri Lanka is specially branded with packaging depicting the Big Five animals associated with Kenya for marketing and the promotion of the country’s tourism.

The company plans to export orthodox tea to Sri Lanka, Russia, Poland and Guinea.

This year’s auction started with high sales compared with corresponding sales of January 2019. The first week at the auction posted improvements both in volumes and prices with more than 10.5 million kilogrammes of tea sold at an average price of $2.38 compared with 9.1 million kilogrammes in the first auction in 2019 at a price low of $2.33.

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Pakistan and Afghanistan emerging top buyers of East African tea in 2020.

This year, tea players have positioned themselves to trade more on premium orthodox tea than CTC black tea whose price is in decline in the international market.

According to just-released figures, Kenya and Uganda were top tea suppliers to the Mombasa Tea Auction last year with Rwanda tea registering the highest prices during the same period as traders had a radical shift from CTC black tea production to premium orthodox tea brand.

Kenya offered 372,158,988 kilogrammes of tea in 2019 with an average price of $2.24 per kilogramme followed by Uganda which supplied 73,955,883 kilogrammes at $1.16 per kilogramme.

Regional outlook

Rwanda tea fetched the highest average price at the regional auction market at an average price of $3.05 per kilogrammes while Tanzania and Burundi teas were brought at an average price of $1.30 and $2.50 per kilogrammes respectively.

Most East African tea companies currently market their tea in different food expos such as Gulf Food expo in Dubai and in Prodexpo in Russia and also make direct sales.

Due to the increasing number of companies intending to venture into orthodox tea, the East Africa Tea Traders Association (EATTA) has renewed its push for a review of the African Growth Opportunity Act (Agoa) to allow them access the US market.

Supply chain

EATTA managing director Edward Mudibo said the US remained the biggest market for accessing Kenyan teas using middlemen.

“Kenyan tea has been ranked one of the best globally but it is being repackaged by different countries, but Kenyan traders will benefit if they can access of the US market,” said Mr Mudibo.

He added that all other commodities which are trading under Agoa have continued to increase in export value every year.

Mr Mudibo said talks were at an advanced stage to start auctioning premium tea at the Mombasa auction where only CTC teas trade.

He said that once the required supply is attained by more companies getting involved in sell of premium teas, the association will start a programme to market and auction orthodox tea.

“At the moment, companies trading orthodox tea sell direct to its markets abroad since the volumes to auction on weekly basis have not reached the required threshold, but we are holding talks to set required standards even as we encourage more suppliers to maintain consistency in supply,” he said.

Companies dealing with premium tea have already formed Kenya Specialised Tea Association to popularise the products such as purple and green tea products.

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