Bags of Pu'er tea

Bags of Pu’er tea idly laying around and aging – a sure way to gain value for your tea investment.

Tea has been China’s most famous export product for hundreds of years. Fortunes have been and still are by cultivating and trading this green gold. Green is not the only color of tea money as there are also white teas and black teas not to mention some other even more imaginative colors. With so many colors in tea palette it is no wonder that at times some teas are more desired than others after all fashion does change and tea is no exception of this.


The art of Pu’er tea was mastered during historic Tang Dynasty but it was only during the latter part of modern Bush dynasty when Pu’er price rose tenfold and made Chinese tea farmers to think they are emperors of the world. In similar frantic manner people of the west drank Pu’er up in hopes of lowered cholesterol or curing hangover and were a major cause for the price bubble.


The real reason for skyrocketing Pu’er prices were market manipulators who  hoarded the tea and drove the prices higher on purpose. Just like in any other price bubble the initial evidence on rising prices convinced everyone inside the tea industry that Pu’er is the Golden Horse. Especially tempting was the fact that Pu’er ages like a fine wine making older Pu’er more valuable – a perfect product to invest in. Investment was exactly what Pu’er was for many Chinese as the Chinese government limits investment choices for citizens. Investing into Pu’er was much more lucrative than keeping the money under mattress.


The bubble worked like a charm as farmers and market middlemen started to store Pu’er making it scarce. There was lot of great tea sitting on shelves and great many people abroad willing to pay just a bit more to get some of this miracle drink. Every year the price was higher and fortunate were those who had been clever enough not to sell their harvest the previous year. Stocking up meant that loans had to be taken in order to finance storing as well as increasing the production.


Sometimes it is ok to pay too much, but it only works if it happens in a small market segment. This small segment includes people who want to distinguish themselves from ordinary people. The best way to do this is to pay so much that others can’t afford to pay.

As the Pu’er production increased the high-end market segment got saturated and more clients could only be found from middle-class. Middle class people mean lower prices and suddenly the prices didn’t go up like they used to do. Fire sale of tea stock started and prices sank. Today you can get good Pu’er tea with only fraction of a cost.

In the end the increased Pu’er harvest didn’t find that many foreign buyers as expected and then there were all that stored up Pu’er in warehouses all across Yunnan, which spiralled prices even further. Banks were expecting to be paid back all those loans. The loans were taken to increase production, but there were no money to be made in Pu’er tea so everything was lost. If banks couldn’t get money, they took farms and land because land is always worth something. Thousands of farmers and merchants have left the Pu’er business so the prices are slowly rebounding. It remains to be seen if some day all that stored Pu’er is again worth its weight in gold.

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