Dubai's fledgling tea trading centre has bold ambitions and longer term could trade other soft commodities like coffee and spices, Sanjay Sethi, head of the Dubai Tea Trading Centre, told Reuters in an interview.
The Middle East is the second largest consumer of tea with some 250 tonnes consumed annually and sales are rising fast in the region which accounts for 24 percent of global tea imports.
Created in December 2004 the DTTC started receiving teas in March and has already transacted 1,000 tonnes of multi-origin teas from nine different countries. "We would be happy to grow the volume of teas routed through Dubai by 5-7 percent in the second year," said Sethi.
The DTTC is part of the Dubai Metals and Commodities Centre, a state-run free zone that aims to make the Gulf emirate of Dubai into a major centre for hard and soft commodities.
"The target is to increase the flow of tea through Dubai by 10-15 percent in the next three years to 70 million kg," David Rutledge, the DMCC's chief executive, told Reuters. It offers its members free storage for up to 60 days, preferential clearing at Dubai ports, financing, the use of blending facilities and a 50-year tax holiday, incentives which Kenya's rival Mombasa tea auction is struggling to match. Kenya is one of the three largest black tea producers in the world along with India and Sri Lanka. Its 36-year-old auction, the world's second largest black tea market, offered 305 million kg (305,000 tonnes) of African teas last year.
Unlike Mombasa, the DTTC is not an auction but a platform for buyers and sellers. It does not set prices nor take part in negotiations.
David Mugambi, chairman of the umbrella group East Africa Tea Trade Association, said on Friday Mombasa's tea auction could lose business to Dubai if it failed to match the attractive incentives on offer.
Sethi said Kenyan tea was still fairly nominal in the Middle East, but instead of viewing the DTTC as a threat Kenya's tea traders should look at the centre as offering an opportunity to build demand in the region for its teas.