In 2005, after observing half the world’s tea sailing past its modern port, the government of Dubai in the United Arab Emirates expanded the DMCC (Dubai Multi Commodities Centre) to trade tea. The DMCC now accounts for 60 percent of global tea re-exports, often adding value en route.
“Dubai is at the center of the tea-trading world, uniquely positioned between the growers to its east, and the big markets to its west, allowing us to attract leading tea brands to use the city as their trading hub,” said Sanjeev Dutta, executive director of commodities at DMCC.
DMCC has “invested heavily in our tea center, allowing us to process and store almost double the capacity of five years ago,” he said. Last year, DMCC traded 53 million kilos of tea, arriving from many origins. DMCC also processed 6.33 million kilos at its 250,000 sq ft (24,000 m2) facility.
The DMCC, founded in 2002, has transformed the desert region into an international trade center for gold, diamonds, pearls, and tea. Soon the center will also begin trading coffee. DMCC works closely with the Dubai International Financial Center, operating the world’s top free trade zone with a dedicated online platform for registering possession and ownership of goods traded in Dubai.
Dutta explained that 5 million metric tons of tea are traded between producing and consuming nations every year. “It is important to better understand what the future holds for our industry and how to meet this demand,” said Dutta.
Growing Local Tea Market
“Tea is an integral part of the UAE’s culture and we see an upmarket in tea consumption in the UAE, especially for exotic teas that are gaining prominence in the country. Similarly, volumes are gradually increasing with the growing number of high-end tea outlets (shops, cafes, and high-end super-market ranges). As a result, tea trade and consumption, when compared year-on-year, have remained positive,” he said.
That is one reason why in 2016, DMCC introduced Shai Dubai into the market, DMCC’s own tea brand is a signature, high-quality flavored tea in six blends.
Globally, the hot drinks category is forecasted to grow at 2.9 percent over the next five years, in constant retail value terms, according to Euromonitor International.
“In contrast, the Middle East and Africa region will account for 11 percent of the total global retail value by 2022, growing at an impressive 5 percent over that same period – according to Euromonitor,” said Dutta. The wider region, including Gulf Cooperation Council (GCC) states, is clearly proving to be the front runners in terms of emerging consumption markets, he said.
DMCC processes teas from the major producing countries and serves as a link between the producing countries in Southeast Asia and Africa and the consuming countries in Europe, CIS, and beyond.
“We established the Tea Centre in 2005 to primarily facilitate and strengthen the tea trade in Dubai; but also, to create liquidity and to provide a platform for tea merchants and producers to hold stock through our warehousing facility and other value-added services,” explains Dutta.
To entice exporters to use the facility for stockpiling tea, a fee of only $250 is charged (AED950) for loading and offloading a 40-foot container with up to 45 days’ free storage. An additional 21 days’ storage is free for finished goods (value-added products). A storage fee of AED1.42 ($0.40) per metric ton per day is charged beyond the 45 free days.
In 2017, DMCC blended, filled, packed, or packaged 6.33 million kilos of tea.
Trade zone tenants consist of 15,000 companies registered in 170 countries. There are 66 towers in the industrial and residential complex, which permits 100 percent foreign ownership; provides a 50-year exemption from corporate tax, income tax, and tariffs; and permits foreign traders to return to their home countries with unlimited capital, profits, and currency.
“Our tea center provides a comprehensive platform for companies looking to set up in Dubai with immediate access to a purpose-built infrastructure, business services and a growing community of producers, exporters, traders, and entrepreneurs,” said Dutta.
At a time of political uncertainty in global trade, he said, “we do not believe that direct trade between countries will hamper the importance of Dubai in the global tea trade industry. Dubai’s incredible infrastructure and key location – as a crossroad of the world’s major markets” make it indispensable, he said.
“Our market share will remain consistent for the foreseeable future considering the importance of UAE’s position as an export route for the majority of the tea-producing nations,” he said.
Every two years, the DMCC hosts an international forum that brings together industry experts to address every aspect of the tea supply chain. In 2018, the forum dates are April 24–26 at The Address Hotel at the Dubai Marina. Registration is now open.
“The 7th Global Dubai Tea Forum is designed to welcome industry leaders from all across the globe to address the opportunities this will bring and how we best together prepare for the next wave of growth,” said Ahmed Bin Sulayem, executive chairman, DMCC.
The forum audience includes buyers, blenders, machine manufacturers, raw materials suppliers, producers, and exporters. A tasting competition for The Golden Leaf India Awards will take place on the show floor with winners announced April 26. A special auction of the best teas will be hosted later in the year by The United Planters Association of South India (UPASI).
The event begins at 7 p.m. Tuesday, April 24. An exhibit floor opens daily with stands manned by representatives from 15 firms.