Is this the turning point of Pu-erh price

Is now the turning point of Pu-erh (unrealistic) price

pu erh tea bamboo packaging smallMany tea consumers have been flabbergasted by the price tags of certain Pu-erh teas during the recent years.

The dynamic in the Pu-erh’s production and consumption has also shifted during this period and a storm is brewing.

Following are some of changes that have occurred.

The increase of the production

The production of Pu-erh teas has been expending significantly during the last 30 years or so, fueled by the increase in the interest and demand.

It is reported that 50.8 tons of Pu-eh tea was produced in Yunnan in 2010, this increases to 162 tons by 2020. Unparallel to the consumption increase, many tea merchants have stockpiled their teas in the warehouses based on this believe and expectation: ‘sale whatever can be sold and the leftover will increase in value with time’.

This believe is based on:

  1. the fact that he more a Pu-erh tea (provided it is a good quality tea) is aged the better the quality
  2. the price surge of certain aged Pu-erh teas during the end of last century and early this century

The current decline of the disposable income

China is currently going through an economic down turn. Many have expected the economic to bounce back post-Covid and the recovery is not near as robust as expected. The unemployment rate is high and still climbing and the ones with jobs are having their pays cut. With the fast shrinking disposable income, following phenomenon are observed:

  • Pu-erh consumers start buying cheaper, more realistically priced Pu-erh teas,
  • many Pu-erh consumers have their own stockpiles of Pu-erh teas at home for the purpose of buying new at the relatively lower prices to age ( to avoid buying expensive aged ones later). When the budget is tight, they turn to these stockpiles to avoid buying.

The sharp drop in sales of the Pu-erh market and the desperate need for cash

The Pu-erh market in China is experiencing an unprecedent drop in sales - a bust of a Pu-erh bubble if you like. The shops are empty and many are closing down. The still operating small and medium tea merchants are desperate for cash to keep the businesses afloat.

One of the Pu-erh commentators summed up as such: Pu-erh was like gold when the demand was high and the supplies were limited; the stockpiles of the cakes now are not more than money on paper, or local produce just as how the Pu-erh tea started.

The current state and the future 

The current state of the Pu-erh market in China is that the demand for good quality Pu-erh, such as the Gu-Shu Pu-erh from the quality regions/hills is still high. The supplies of other teas have definitely exceeded the market buying capacity.

Whether this will result in a complete Pu-erh tea price crush depends on many factors. The outlook is however not looking bright.

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Pu-erh Dai-Di-Cha vs Gu-Shu-Cha

Some terms

wild Pu-erh tea treeTai-Di-Cha (台地茶): Pu-erh teas produced from tea trees of cultivated tea fields/gardens

Gu-Shu-Cha (古树茶): Pu-erh teas produced from the forest ancient tea trees that are of at least 100 years old.

The admiration of Gu-Shu-Cha Pu-erh tea and thus the sky rocketed prices

There has been a recent economics report by CCTV (China) on the current Pu-erh tea prices in comparison to that of last Year as such:

  1. Tai-Di-Cha increased by 20%;
  2. mid-age tea tree teas increased 20-40% (presumed from tea trees of less than 100 years old, but not Dai-Di-Cha) 
  3. Gu-Shu-Cha increased 100% (price doubled)

Gu-Shu-Cha Pu-erh tea myth

A different report also by CCTV last year reported the following findings.

How much of the Gu-Shu-Cha Pu-erh on the market is real Gu-Shu-Cha

It is estimated that the volume of actual Gu-Shu-Cha Pu-erh tea produced each year in the Yunnan province is about 4% of the total Pu-erh tea production:

  • Total Pu-erh production volume about 139,000 tone, harvested from 6,200,000 MU (or 413,333 hectares) of the Pu-erh tea fields.
  • Gu-Shu-Cha production is about 5000 tone, from only about 650,000 Mu (43,333 hectares) of tea fields according the estimate of the local authorities. (The yields of the Gu-Shu trees are relatively lower than that of the Tai-Di-Cha.)

A survey of the local market (to supply mainly to the tourists or retailers outside of the region) in Yunnan however reported 95% of the products sold on the market are claimed or labelled as Gu-Shu-Cha.

False claims

It is clear that many false claims are being made.

The unreasonable profit margin is the drive

There are various benefits of consuming Gu-Shu-Cha Pu-erh teas. Driven by the obsession of consuming Gu-Shu Pu-erh by certain consumers, the price gap between the Gu-Shu-Cha and none Gu-Shu-Cha has been increasing to the point that it is not longer reflecting the quality/value difference. (More information at the question section of this article.)

The Pu-erh tea production in the Yunnan Province of China has been and still is largely family based. The families own the tea fields/ trees, especially the Gu-Shu-Cha tea trees in the forests as the result of the long history of family-based tea farming and production. Driven by the ludicrous profit, the tea farmers are naturally drawn to maximise the yields of their Gu-Shu-Cha Pu-erh.

Difficulties to regulate

Many tea merchants label their products as Gu-Shu-Cha Pu-erh tea when the claims are not backed by facts through various practices, from straight false labelling Tai-Di-Cha as Gu-Shu-Cha, to mixing Tai-Di-Cha with Gu-Shu-Cha and label it as Gu-Shu-Cha. As intangible as it is, here are the gaps to allow the fall through:

  • There are no feasible and practical evaluation methods available to systematically verify if a Pu-erh tea is Gu-Shu-Cha or not at the sales point.
  • The Gu-Shu-Cha Pu-erh tea trees in Yunnan are not systematically certified and recorded. The local authorities sample and identify the areas (buy not individual tea trees) of the Gu-Shu clusters and report on estimates. The actual Gu-Shu-Cha Pu-erh tea status is finally decided and labelled by the tea farmers, often based on a good guess or suggested by older family members. This allows a major opportunity for false identification, exaggeration and even deliberate false claiming.
  • Packaging. As suggested, 95% of the Pu-erh tea sold on the local market are marked as Gu-Shu-Cha, largely done by the packaging paper they are wrapped in. There is however no local regulation to associate a packaging with a product. It is effectively as such, any local tea farmers can approach a printing business to request to put on anything information on the wrapping paper without any backing of the claim. The is the cause of the peculiar phenomenon in Yunnan: the base price of a real Lao-Ban-Zhang ( 老班章, the most pricy Pu-erh of the current market) Pu-erh is $2000/kg, while there are numerous full cakes (357g) labelled as ‘Lao-Ban-Zhang’ sold on the market, some as low as $6. The merchant explained the only association of the tea with ‘老班章’ is the words printed on the wrapping paper. Her words are, people see the words ‘‘老班章’’ and buy.

Confusion from the consumers end

The consumers’ love affair with the Gu-Shu-Cha Pu-erh teas has been fuelling the price hike. At the same time, the endless variations of Pu-erh teas have made it almost impossible for even experienced Pu-erh consumers or experts to distinguish between a real Gu-Shu-Cha Pu-erh and a none Gu-Shu-Cha at the purchase point, let alone a beginner.

For example, there has been a blind test conducted recently. Two Pu-erh teas, one from an over 100 years old tea tree and the other less than 50 years were sample by 4 participants. The Pu-erh experience of the participants range from a consumer of just 12 months to a Pu-erh shop owner of over 12 years in Yunnan. The participants universally picked the younger tea tree tea as Gu-Shu-Cha based on it taste. Opinion of experts: the quality of a tea is more determined by how the tea trees are managed and the environmental conditions of the tea trees than the actual tea tree age. In other words, the age of a tea tree is not indicative of its quality automatically.

Questions to be asked

There are therefore a few questions to be asked:

  1. It is believed by the Pu-erh tea experts the main difference between a Gu-Shu-Cha Pu-erh and a non-Gu-Shu-Cha Pu-erh is in their tastes. There are no other significant differences in other aspects such as health benefits and functionality if everything else remains the same. The questions is therefore if a consumer is not experienced to detect the subtle difference in their tastes, it is cost effective to pay the much higher price for something that is not noticeable?
  2. How does one know if a purchase is an actual Gu-Shu-Cha Pu-erh?
  3. It is believed with the continuous improvement in the knowledge and techniques of Tai-Di-Cha cultivation, the quality of Tai-Di-Cha actually improves all the time. It seems to me that Tai-Di-Cha is a good alternative to Gu-Shu-Cha, value wise, without taking the consideration that the relief of the stress on the ancient Pu-erh tea trees due to the high demand.

 

 

 

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The age of a Pu-erh when there is not a production date

As we all know, often the first thing we check on a compressed Pu-erh is the date on the back of its packaging – age equals the value and quality in many Pu-erh consumer’s mind. A date on the back Yunnan Pu-erh teawas however not required until 2007 as part of the local government's attempt to regular the Pu-erh production industry. So how do you decide the age of a Pu-erh produced before 2007 with a blank back like the one in the image?

A production date was regarded as not essential for Pu-erh teas until 2007, mainly due to there is not an expiry date for Pu-erh teas – the more they are aged the better, and the traditional way of how they were produced – in the villages and families. During the recent decades, various methods have been used to ‘fake’ Pu-erh’s age for the purpose of fetching a high price on the market. There are various aspects associated with an aged Pu-erh, such as tea colour and texture etc, each one can be manipulated up to certain point. The multiple aspects and dynamic nature of Pu-erh teas make judging their actual age hard, not only for the beginners buy also for many experienced Pu-erh consumers.

To establish some standards, the local governments in the Yunnan Province introduced the 12 points of information, such as the production date, the manufacturer and location etc, to be printed on the back of a Pu-erh product (apart from Maocha) in 2007 to offer consumers some references.

For the products produced before 2007 with a blank back, one can only go back to the very basics of aged Pu-erh teas drawn from experiences: colour, aroma, taste, texture and aftertaste.Buy Pu-erh tea

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