London Tea Auction - the last auction

June 20th 1998 - New York Times

LONDON— From the rise of the East India Co. in the 17th century through the glory days of the British empire to the country's subsequent decline, tea growers from what is now the Indian province of Assam and the plantations of Kenya and Zimbabwe have come to London to sell their tea at auction.

But modernity catches up even with the time-honored traditions of the tea trade.

The balance of power in the tea business, as in politics, has shifted from the capital of the old colonial power to producing countries like India and Sri Lanka. And the rise of electronic dealing methods over the telephone or the Internet has sapped most of the bidding interest out of the London auctions.

So the hammer came down on more than 300 years of commercial history on Monday when the Tea Brokers Association of London conducted its final auction. On the block was an assortment ranging from Indian Assam and Darjeeling teas to Sri Lankan Hellbodde and Chinese Keemun.

"It's an end of an era for the tea trade and the City of London," said John Leeder, commodities director of R. Twining & Co., a firm whose days as a blender of fine teas are almost as old as the market itself, dating back to 1706

 

Robin Harrison, a senior executive of the tea brokerage firm Thompson Lloyd & Ewart Ltd., who has been conducting auctions for 18 years, expressed regret over the passing of his "little piece of theater," as he called it. But, he added, "the world changes, and you have to change with it."

The sale provided all the evidence that might be needed to explain why the market's two remaining brokers were abandoning the auctions. Fewer than 30 buyers from companies like Tetley and Brooke Bond bid for the 400 tons on offer, and many of the lots were simply removed from sale for lack of interest.

But the bidding erupted in a sentimental frenzy for the final extravaganza, a sale of 20 lots of fine teas with the proceeds devoted to charity.

To the gasps and applause of an estimated 200 onlookers, major British tea houses bid for chests of tea as if they were Old Masters.

The final sale, a 44-kilogram chest of Hellbodde, was won by Taylors of Harrogate Ltd., after a bidding duel with Mr. Leeder of Twinings, for the brisk sum of £24,420 ($14,680), or £555 a kilo

 

That was 10 times the best price anyone could recall in modern times, but Jonathan Wild, managing director of Taylors, called it "a snip at the price."

He said, "It's historic, the last chest of tea sold at the London auction."

Few people could have predicted the lasting importance that the market would have when the East India Co. held the first auction in 1679, selling three casks of "dust of thea" from China for £1 and 11 shillings.

As Britons took to the new drink, the auctions became weeklong affairs. A catalogue for one of the East India Co.'s quarterly sales in 1798 contained 635 pages of offerings, with each chest of tea inspected and sampled by company experts.

Even after Britain's tea-producing colonies won their independence, the weekly London auctions remained a focal point for the global industry.

As late as the early 1970s some 15 percent of the world's tea was traded in London.

Today, however, though Britons remain the world's biggest tea-drinkers, improvements in shipping and containerization have made London's inspections increasingly irrelevant and have encouraged buyers to go directly to the producers.

"If you're buying tea for the United States, it's much better to buy it in Colombo and ship it to the U.S.," Mr. Leeder said. The producing countries have also learned from their past masters. Drawing on the London model, they developed their own auctions, and it is those that drive the market today.

The boom in communications has merely hastened the trend, as British buyers trade with producers via telephone, fax and e-mail. Last year, the London auction handled a mere 20,000 tons, only one-seventh of Britain's consumption and a negligible amount of the worldwide output of some 2.6 million tons.

In that sense, tea has become just like other commodities. The close of the tea auctions follows a recent decision by the London International Financial Futures Exchange to abandon floor-based trading in favor of electronic dealing.