A Tea Addict's Journal

Entries from June 2014

Price dislocation

June 25, 2014 · 15 Comments

I remember when I first started drinking puerh seriously almost ten years ago, a common argument that you see around the internet (Chinese, mainly) and among drinkers is that it’s cheap, so it’s worth bothering with. Oftentimes the comparison was with longjing – one jin of longjing was probably somewhere in the ballpark of 1200-2000 RMB back in the day, whereas the equivalent of good quality puerh was only a few hundred RMB. It was simply a lot cheaper to drink puerh, and so even if you have no intention of aging the tea, of dabbling in the aged tea market, of wanting to drink that taste, you can still enjoy good quality tea for a lot less money.

Fast forward ten years, the price for longjing has probably doubled in this period. At the same time, however, the price for newly made, good quality raw puerh has probably risen by about tenfold. Old tree teas from famous areas harvested during the spring now routinely command 2000+ RMB (and often much higher) per 357g cake. The value argument for buying new puerh to drink compared to other types of teas in the market has simply vanished in the past ten years. Yes, there are much cheaper cakes out there. You can still find, albeit with some difficulty now, cakes that sell for under 100 RMB a piece, but those appear far less frequently than before, and you can rest assured that the chances of finding quality tea among that pile of nameless and faceless cakes is quite low, much worse than before.

The interesting thing here is that prices for teas you can buy off websites that sell teas in English have risen by much, much less than what you can find in the markets here. Prices for some vendors have edged up a bit compared to previous years, and they have, just as mainland vendors have done, used tricks like making smaller cakes to make the sticker-shock less shocking. Nevertheless, it seems to me that there is a sort of glass ceiling for prices for new make puerh that is somewhere in the ballpark of $150 USD a cake. You almost never see that price point breached. Even for older teas, I very rarely see things that cost much more than about $200 a cake, which severely limits the options of what can be sold. In casual conversations with a few vendors about this, it’s pretty apparent that the market simply isn’t really ready to pay this kind of prices for tea, and when they do, it’s overwhelmingly in samples sales only, which doesn’t amount to much.

When you think about it, this necessarily means that something is going on with the quality of the leaves going into the cakes. One would be to lower the cost basis by using leaves from cheaper regions, but by and large, cheaper regions are cheaper for a reason. Laoman’e is cheaper not just because it’s less famous, but it’s seen as less age-worthy because it’s bitter. Vendors can also mitigate the rise in cost by using leaves from lesser trees from the same region. Whereas gushu teas are very expensive, you can often find leaves from younger trees (50-100 years old ones, or even younger) that cost a lot less.

It’s not just the price of raw materials that went up. Labour costs for everything in China has gone up. When I stayed in Beijing in 2006 for a year, the going rate for a teashop girl (and they’re almost all girls) was about 600-700 RMB a month, plus room and board. These days you’d be lucky to find someone for much below 2000. So while it is most certainly the case that the raw materials of the tea going into the cakes have gone up in prices, everything else has adjusted up too. You also have to remember that whereas in 2006 one USD was worth about 8 RMB, these days it’s only 6.24 RMB, which means everything, automatically, has gone up by about 25% before you even lift a finger.

The situation is definitely worse in the cases of vendors who have high cost structures – the need to maintain a brick and mortar shop, the need to buy long haul international plane tickets (and shipping the tea back to their home base), so on so forth. If the price for the tea they can sell hasn’t gone up much, and if the cost of any of these other things haven’t gone down much (they haven’t) then the only place they can squeeze out a profit is to lower their cost by using cheaper raw materials.

This kind of inflation is of course a direct consequence of China’s rapid economic development. There are very few things in our normal day to day life that has price rises of this sort – the only thing that we normally buy that goes through severe price fluctuations is oil. Even then, it’s only in the US where the gas prices reflect real changes in oil prices – in most developed countries tax is such a big part of the price of gasoline that the net effect of oil price changes resulting in an increase in pump prices is smaller. In other words, none of us, on a day to day basis, buy anything in our daily life that has shifted in cost and price as much as the puerh we’re buying.

So whereas in 2006 if someone posts on an internet forum, saying they want to buy a decent cake of tea for under $50, there were a lot of decent options, these days if you want a cake for under $50 that will age well, chances are you really have to scrape the bottom of the barrel, and even then the likelihood of finding something good is slim. As I’ve mentioned previously, the best bet is for teas that are 1) from before 2010 and 2) from vendors who don’t know current prices, and even then, one has to be very selective. Trying to find a new 2014 tea that’s under that price? Well, as a point of comparison, my new 2014 Dayi 7542 that I just bought cost me a bit over 30 USD. Dayi, of course, commands a premium over other brands, and I didn’t bother bargaining for one cake, but the fact is this cake, 10 years ago, would’ve cost about maybe 4-5 USD a cake. High prices are here to stay, so while it pains me to say this, as consumers we have to be aware that a dollar now is not like a dollar a few years ago, and we need to adjust our expectations accordingly. Otherwise, all you’ll get offered to buy are from the trash heap that nobody would want to buy in China itself.

Categories: Information
Tagged: , ,

Notes from Beijing

June 16, 2014 · 3 Comments

Writing after a trip to Beijing, I visited some old friends and made some observations of what’s going on here

1) Maliandao is growing up – literally. There’s another one or two new tea malls that have popped up – with rather empty storefronts. I think it is safe to say that at some point the malls have oversupplied the amount of space people really need/can sustain. While some stores that were around when I lived here in 2006 are still here, going strong, many others have died. Some others yet have migrated out of Maliandao to other places in the city – usually these are the higher end places that do more of their own custom pressings, etc. Some of my old contacts are now no longer there, and some of my tea friends in the city also no longer visit Maliandao.

2) Among the stores that have stayed is Xiaomei’s, an old friend whom Hobbes has blogged more about than I. I go see her pretty much every time I visit Beijing. The amount of tea she has stocked up in her store grows every time, to the point where now it’s just a narrow corridor going in with boxes on the sides.

You might also notice junior there, learning the trade (and yes, drinking tea) at the tender age of one. She’s been busy having a family too, now the mother of three. Time flies! Alas, she has no more of the Yisheng cake, but some of her old pressings are still available (though, oddly, not all on her Taobao store). I bought some, as it’s not bad and for teas that are about seven years old, not a bad value.

3) White tea is still the tea of the month. It all started with the tieguanyin craze, some ten plus years ago. Then people caught on to puerh, and that went on for a while (still going on, sort of). And then you have the black teas – things like jinjunmei were sold at astronomical prices, and now every other store in Maliandao seems to sell white tea, from Fuding and other places. Xiaomei has also started doing a lot of white teas from a few years ago – puerh raw material prices are such that business is difficult to do, as you need to spend a lot of money on inventory. For smaller operators like her, that’s a big risk. White teas are cheaper and the sales more reliable, so she, like many others, have gone and pressed white teas into cakes (that’s what some of the cakes for sale on her Taobao shop are). I tried a couple, which were not bad, including this one. She gave me a couple for me to store in Hong Kong and compare, and I’m supposed to report back in ten years. I guess we’ll see.

4) New teas, as we all know, are increasingly unaffordable. The bargains are still in lesser-known brands from 5-10 years ago, preferably from secondary sellers who are selling what they bought up a few years ago. The thing with buying from official vendors is that while you’re sure of its authenticity, you have to pay (usually) the MSRP, which the producers raise every year to make it possible to continue selling young teas. So you have the situation where 5 year old teas are now easily over 600-800RMB a cake, even if it’s relative crap. New make old tree teas easily bust 1600 RMB a cake these days retail, regardless of region. To protect their market, they have to raise prices for older teas to be above that, otherwise nobody would buy them. So, the key is to find those bargains from a few years ago, and try to snap those up. Not easy to do when you only have a few days in the market, but in the long run that’s where the value is.

5) Dayi’s new 7542 is interesting. They have loosened their compression a bit, so the cake isn’t a hard-as-stone disk anymore. We’ll see how that experiment ends. I bought one just for laughs.

Categories: Teas

Some need for disclosure

June 6, 2014 · 4 Comments

A reader recently wrote me asking me about this “Hong Jing Tian 100 Years Old Tea Trees” puerh. Leaving aside the very obvious question marks of why decent tea leaves would and should be used to make cooked puerh in minituo form, the question was actually about what was in the minituos themselves. I’ll let the original email do the explaining:

I figured that since the tuos seem to have been shaped by one person, a sort of tea master, it had some care to it. The description doesn’t say that the puerh contains any additional herbs. I didn’t really
think that the tea contained rhodiola rosea, I thought the name is maybe a marketing thing or taste inspiration. $11 bought me 10 mini tuos, and I consumed 1 tuo in a 150 ml gai wan style yixing pot in short steeps. The thing is, I think that rhodiola is really in there, I got incredible, somewhat uncomfortable heart and gut heat that lasted for hours, chased the whole 10 steeps I did with a half glass of milk, and this is a shou, mind you. I’m certain rhodiola is in there.”

Rhodiola rosea is an herb that’s used in Chinese medicine, and in Chinese it’s called hongjingtian. It’s slightly bitter but turns sweet, and is used to, among other things, help circulation and aids those with a weakness in breathing, etc. It’s a stimulant, basically. Vesper Chan, who is the owner of the Best Tea House in Hong Kong and presumably the “Mr. Chan” referred to in the product description, does indeed sells cooked puerh mixed in with this herb, so I’m pretty sure that this herb is in these minituos as well. Mind you, Mr. Chan doesn’t actually produce anything himself – he at best commissions someone else to do it.

The real issue here is that the inclusion of this herb in this tea is not mentioned anywhere in the product description. My reader who emailed me at least knows what hongjingtian is, and just thought that this was a poetic name for a tea. The fact that it might be mixed in never crossed her mind, and of course it made her quite uncomfortable. I’ve actually tried a similar product at the Best Tea House before (in brick form, rather than minituo – and seems like they sell them in cakes these days), and didn’t like it for pretty much the same reason – it made me felt rather uncomfortable afterwards. At least I knew what I was drinking.

I suppose it is ok for people to do experimental things with teas – some of you might remember some years back, crab’s feet, another herb, was added to puerh. That stuff also did funny things to me, and after about a couple years of lots of products with crab’s feet in them, they disappeared from the market. I’m pretty sure anyone who stocked up on them back in the day are still trying to sell their stock, or just tossed them.

It is absolutely necessary for a vendor to 1) research what they’re actually selling, and 2) if it contains anything that is non-obvious and also of material significance, such as an unnamed herb in the tea, then it should absolutely be disclosed clearly in the product description. If I didn’t know Chinese, I would never know what this Hong Jing Tian is – you’d think it’s a brand name or something. Even an educated buyer like my reader here thought it was just a marketing name, not what’s actually in the minituos. If someone, say, had an allergic reaction to it, or if they’re taking medication that would be interfered with by this herb, well, the consequences could be a little more serious than just a fast beating heart. It’s generally recommended that one should not take Chinese medicine if one were taking any western medication. Here in Hong Kong, doctors routinely remind patients not to do both at the same time, because unintended and sometimes serious consequences can follow. In most cases, they have no idea what the reactions might or might not be, so it’s just a good blanket policy.

It’s also worth remembering that in Chinese medical tradition, an herb is almost never taken alone (mind you I’m no expert on this matter – perhaps some readers can elaborate more). They are usually given in a prescription that mixes a number of herbs together that neutralize each other’s toxicity and negative effects while enhancing their medical value, at the same time targeting the patient’s underlying problems. Herbs that might work for one patient can be deemed too strong or inappropriate for another, because of differing body constitution. Taking herbs on their own, especially in unknown dosage (we have no idea how much rhodiola rosea is in this tea after all), is not something you’d do with a western prescription drug, so why do people think that doing so with herbal medicine would be ok? I never really understood the desire to mix medicinal herbs with tea, or the sale of these exotic herbs as drinks on their own – unlike tea, which is a proven beverage over hundreds of years, many of these herbs are relatively newfangled as standalone drinks. In this case, I even suspect the inclusion of the herb might be because the base cooked puerh really isn’t all that great, and the addition of rhodiola rosea is there to give it a fuller flavour and a better aftertaste. It’s also selling at quite a premium – $11 for 10 minituo is an extremely high price to pay – that’s $11 for 50 gram of cooked puerh, meaning a cake equivalent would be $77. Most of us would balk at that price for even a cake of supposed premium cooked puerh.

So I guess buyer beware, and to sellers out there – please do your homework and tell consumer what they ought to know. There are more online vendors than ever, most of them simply middleman between Asian vendors (like Vesper Chan) and the Western consumer. Some know a lot about what they’re selling, others, well, less so. Just because they travel there a few times a year and buy stuff and take pretty pictures doesn’t automatically make them good vendors. Choose wisely.

Categories: Teas