(Bloomberg) -- For more than a century, buyers and sellers shouted out orders for Darjeeling tea at auctions in India before they were shipped to high-end purveyors in Europe, Japan and the U.S.
Now, the prized black tea is poised to enter the digital age, with Darjeeling trade moving online from June. India harvested 1.19 billion kilograms of leaves in 2015—and less than 1 percent of that was Darjeeling, which is only grown in selected areas, similar to the rules on famed French wines.
"Electronic auctions will give the champagne of teas a wider platform by allowing more buyers access, and fetch better prices for the growers," said Rita Teaotia, India's Secretary of Commerce.
After sacks of tea leaves arrive at Kolkata's massive warehouses, samples are drawn and passed out to buyers for tasting, accompanied by descriptions such as lot size, garden name, grade and so on. When selling begins, buyers flock to a central bidding hall as the auctioneer calls out the name of each lot. Rarer, small quantity varieties sell out within minutes.
About a third of Darjeeling production is usually earmarked for private sales to agents, who buy leaves destined for the shelves of Harrods and other luxury retailers. Prices for such transactions are a closely-guarded secret.
"It is crucial to have more people access the high-quality teas to increase competition," said Subodh Paul, president of auction house Paramount Tea Marketing. "Online auctions will be good for the producers and good for the industry, it will encourage bidding wars and drive up prices."
Other tea varieties such as Assam or Nilgiris started moving to online auctions in 2008. Now, almost half of India's tea output—the world’s second-largest after China—is sold this way. In addition to teas, spices such as turmeric and cardamom, and a range of other produce are already sold online.
Buyers from six auction centers across India will be able to bid for Darjeeling once the e-auction, run by the Tea Board of India, goes online. Essentially, it's a website where buyers log in to enter bids. Some don't think, however, that this is good for Darjeeling tea.
"Darjeeling tea has always been considered a specialty, an exclusive produce," said Anshuman Kanoria, vice chairman of the Indian Merchant Tea Exporters Association, who has participated in auctions for 30 years. He also runs Balaji Agro International, one of the largest exporters of Darjeeling. "Tea is not a commodity like copper or aluminum to be sold in an online auction."
Darjeeling was the first Indian product to be awarded the Geographical Indications of Goods, or GI tag. The label certifies the teas as coming from one of 87 gardens within a small, defined area in northeast India. Some Darjeeling varieties are among the world's priciest teas. Two years ago, a select lot of Silver Tips Imperial from the famed Makaibari estates was snatched up for $1,850 per kilogram by Japanese, British and American buyers. These premium teas are made of two tender leaves and a bud plucked early in spring, and usually sold to consumers at 10 times their wholesale price.
While tea trading may be entering the digital era, cultivation and production will probably take longer to catch up. Tea farming remains a labor-intensive process where leaves are plucked by hand. Records at many estates is still hand-written. Fairer competition and higher prices, driven by bringing the auction process into the 21st century, will benefit everyone, according to Teaotia.
"Online auctions will bring more transparency and give more visibility to these fine teas," she said.
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