Author: Chen Zhi Tong
Spring 2009 brought unusual weather to Yunnan. As anticipated, following the great drought in Northern China, Yunnan also experienced a spring drought. This led to a strong, unforeseen spike in tea raw material prices. Global warming not only brought poor wheat harvests to northern China, it also created a steep decline to Yunnan spring Puerh production. This gives us insight into the future of markets for agricultural products, which will exhibit extreme instability. Following worldwide population growth, development of future water resources and sources of agriculture will be among the most significant problems for every country. Global warming will create intensed climatic change, which will become the greatest variable affecting the food supply. It also means new rules for the future of Puerh. This year's spring tea harvest has been reduced by approximately 30%.
In terms of the Puerh market, this year's drought was not actually a negative. The economy this year has yet to recover, and the market for spring tea could have produced new lows. The unexpected drought, however, created a wave of buying for mountain top teas. It appeared driven by climatic factors, but they were in fact just the fuse. The actual backdrop is a market in which a new pricing structure has quietly taken shape. This year the Puerh market has begun to mature. Famous mountain teas maintain their strength, breaking their link with plantation teas. Consumers will determine the future of the market, and tea mountain culture will become the primary factor driving the price of top Puerh teas. The market will no longer accept brand-based prices for large factory products that are higher than the raw material values. Consequently, large factories are gradually moving toward smaller scale productions and an emphasis on top quality. Hints of this can be seen in the series of made to order products promoted this year by Menghai agents. This is also a sign of the market pressures faced by these agencies.
The market conditions created by this year s drought are unlike those of 2007. The drought of 2007 produced comprehensive and irrational price increases. In particular, the scale of increase for plantation tea (taidi cha) greatly surpassed that of mountain tea. This was intricately linked with the market trend of price speculation for factory teas. The price increases created by this year's drought started with Banzhang and Yiwu teas. That is to say, famous mountain teas have driven the rise in prices of other raw materials. This type of inflation is relatively rational and appropriate. This year's most popular areas are still Banzhang and Yiwu, with other Menghai mountains following. Largely because the economy has yet to recover, the inner and outer river six famous tea mountains have accounted for most tea buying. The effect has been a large discrepancy between the strong and weak areas, but I believe that famous mountain teas will continue to account for even more of the market. The conditions this year have arisen in spite of the economy, so imagine what next year will bring. I am convinced that next spring tea prices will inevitably stand even firmer, and investment will show up even without being sought. The prices this year for mountain tea are basically just a signal of things to come and do not represent a high point. Instead of an end point, they represent the beginning of a new wave of tea buying. This is the biggest difference between this year and 2007. The shock this will bring to the market is easy to imagine.
The following points set the stage for this year's mountain tea prices:
1. Continued lower production and weak prices for large factory teas: Weak demand combined with the disappearance of speculative investment capital has left the factory tea market with no way to revive itself. Large factory productions have lost the inducement of short-term price fluctuation and have thus lost their major selling point. The primary cause is the fact that the price of factory products and raw materials are not rationally linked. Factory prices cannot properly reflect raw material prices. When the market was immature, factory products enjoyed a huge advantage over mountain teas. As the market has matured, the tastes of consumers have continuously risen and market information continuously circulates. This has all caused relatively thoughtful consumers to move toward high value mountain teas. This year many of the more perceptive tea sellers have moved into mountain teas, indirectly adding pressure to the mountain tea market.
2. Pu-erh tea drinking market rapidly taking shape: What motivates true consumers in the Puerh tea market to drink tea by Japanese style tea cup? I believe that in a mature market, tea drinking habits will in the end focus on famous tea mountains. For example, between the year 2000 and today, Yiwu tea has experienced absolutely amazing price growth. Because the price of raw materials has continuously risen, the price of aged, large tree Yiwu has also increased. Mountain tea price fluctuation is a function of raw material price fluctuation. This combined with the multiplier effect of aged storage means that price of stored mountain tea is relatively stable and should have good prospects in the future. Of course flow of mountain tea is not as transparent or fast, but easy and open fluidity also has its disadvantages - that is, steep price increases and equally steep decreases. Moreover, large scale plantation tea cannot compare in terms of ecology, quality, drinking experience, or even production quantity. In a. market gradually coming to be dominated by consumers, products lacking individual character cannot easily stimulate a new wave of purchasing. Even more significantly, numerous antique products with sky-high prices in today market are composed of raw material from famous tea mountains. All of this has combined to provide a new direction for tea sellers.
3. Large scale, uniform productions are not actually a product of mainstream tea culture: Tea is an extremely individualized product. The primary reason for this is that individual caste cannot be measured. Tea is not tobacco. It cannot be mass produced in the same way, because of the richness and variation in taste and complex culture it encompasses. None of this can be normalized to one single standard, so standardization does not necessarily represent a step forward for Puerh. Instead it represents a potential catastrophe for Puerh tea. I believe that pluralism is the essence of tea culture, which has allowed it to thrive for more than one thousand years. This is much like the hundred schools of thought during the Warring Kingdoms period (475-221 B.C.), which has long been praised by historians. Then emperor Wu of the Han dynasty only valued Confucian learning, creating a psychological trap limiting free thought.The value of uniformity is not humanistic. Variation will create an even richer tea culture. We can look forward to a future with many different Puerh tea products. This is much like the situation with high mountain (gao shan) oolong teas and the many types of Wuyi mountain cliff teas, which represent case where variation is the mainstream. Puerh tea's move toward identifying with teas mountains is hard to avoid.
4. Mountain tea production is relatively low, which will ensure it becomes a favorite of investment: Mountain tea output is relatively low, and the impact of climatic factors is even more significant. This is especially the case for the relatively high quality mixed ecology forests, primarily because many of the more difficult to reach tea growing areas are not highly managed. The better the management, the worse the quality of tea it produces. This is because the goal of management is to ensure higher production, rather than to ensure higher quality. When production increases, the strength of the tea (cha qi) decreases, and the flavor becomes thin and weak. This is why the tea from many of the well known villages of Yiwu has weak flavor. Consequently, many barren mountain teas have found favor today because they are not managed. Without management, there is no way to increase production and the overall flavor is naturally superior. This year's spring drought decreased production quantities and naturally resulted in higher quality and higher prices. Price fluctuation will naturally attract investment. Add in the factor of small production quantities and it is not at all surprising that mountain teas are the new favorite.
In terms of production areas, Banzhang prices are still the highest this year. Banzhang is just a village, however, and its actual output capability is limited. Comparing its prices to other Bulang mountain area villages, it is clear that speculating on a single village is not necessarily the best approach. Limited production will inevitably affect the purity of the mountain's raw materials and will limit the reach of Banzhang's influence in the market. One could say that Banzhang is a famous mountain, but it cannot be turned into a concrete product. In recent years, Banzhang has been painstakingly managed. Integrating Banzhang with other Bulang mountain large tree teas is, however, still a significant open question.
Also worth mentioning is Lao Man'e, whose raw material prices have been rather fierce this year, but Lao Man'e tea has always been known for its bitterness. Its camphor aroma is not as steadily present as in Banzhang tea, but its sweetness and degree of returning flavor (hui wei) are rather outstanding. The ages of the area's tea trees places them at the rarest levels. Their only weakness is that most Lao Man'e tea trees are a bitter tea variety. They are slightly inferior in terms of plant variety, but this is not enough to impact their value as a drink.
Production levels of famous tea mountains in the Menghai area are relatively high, unlike Yiwu mountain where production levels are fairly low. Aside from Banzhang, many Menghai tea mountains are not as well known Yiwu's six famous tea mountains. This plus the fact that Yiwu tea is very different in style from Menghai tea has led to a situation in which Yiwu prices are slightly higher than Menghai.
This year the six famous tea mountains have also undergone a price restructuring. Besides Yiwu mountain, Mansong tea has always commanded the highest prices. Mansong small tree production has increased, though, which is its greatest shortcoming. However, with its title "tribute tea," yearly production of several dozen kilograms of tea is not enough to go around and the tea is still in extremely high demand. Yibang tea is famous as a small leaf variety. The tea's ample kou gan (mouth feel) and fragrance are extremely exceptional. The depth its hou yun (throat charm) and its hui tian (returning sweetness), however, are not equal to large leaf varieties. This year's price restructuring has seen prices for Zhibang take the lead. Its prices are even higher than those of Yibang's Mangong. Tea from Mangzhi has always been relatively weak and, likewise, relatively cheap. This year's drought, though, has raised the overall sweetness and fullness of Gedeng teas. This can be seen as an incidental positive effect. This year's Zhibang tea is a prime representative.
In terms of output, Yiwu is currently the largest tea growing area. Based on development time and average tree age, Yiwu can be divided into areas developed during the Qing dynasty and areas developed during the Ming dynasty. Qing dynasty areas were primarily founded by people from Shiping. Examples including Mahei, Luoshuidong, and Yibi stand as representatives of this era. Ming dynasty areas are represented by redeveloped old, abandoned growing areas. Areas such as Guafeng Zhai and Yishanhei include numerous mixed forests that have gone wild. We can divide them based on degree of management as Han Zhai (stockaded villages), Yao Zhai, and national forest. Among them, Han Zhai are best maintained and contains the most small tree tea. Tea producing craft is also relatively stable, but tea harvesting is fairly difficult. Yao Zhai are relatively unmaintained in comparison. Although many of the tea trees are stunted, their ecology, age, and root-depth are all superior to Han Zhai trees. Consequently, over the past several years their prices have tended to exceed those of Han Zhai tea. The Yao Zhai themselves do not actually produce tea. Tea producing areas are usually not connected to the villages. Instead, the tea comes from the Yao peoples' skill at climbing into the mountains and picking tea. Wangong Zhai is a classic example. Essentially based above and below the Yao Dingjia Zhai area, Yao people go into the mountains and harvest tea. These are not growing areas they have planted themselves, but were left behind by previous generations. Ruins such as the old temple at Yishanmo stand as proof, as it is unrelated to the religious beliefs of the Yao. The tea growing at Wangong Zhai is relatively managed in general, but the overall ecological environment is still superior to the Han Zhai. Wangong Zhai prices this year stand below those of Guafeng Zhai, This plus the numerous mixed tea forests growing in the national forest area suggest that this area merits our continued attention.
This year Guafeng Zhai (Windy Village) has become the leading Yiwu tea growing area, standing side by side with the Mania area Guafeng Zhai. It is a classic Yao style village. From a bird's eye view, one can see that the village was clearly built differently from a Han village. Han villages are primarily built on mountainsides or where mountains are surrounded by water. They lie in areas that receive plenty of sunshine in order to facilitate tea forest growth. Yao villages, however, are different. From a bird's eye view, we can see that a Yao village is built at the bottom of a mountain. The mountains beside it are extremely steep and precipitous and nearby water rushes down. The mountains and water are intertwined without apparent reason. The Qi accumulates and doesn't disperse, which is completely unlike the Han Chinese fengshui concept of gathering and accumulating Qi. Arriving at Guafeng Zhai, there is no sign of tea trees. Guafeng Zhai is simply a collection and distribution point. The main river near Guafeng Zhai is the Lengshui river. Secondary rivers include the Jinchang and Tongqing rivers. Differing angles of sunlight help to create the numerous, rich tea flavors. We can divide Guafeng Zhai by flavor into Hongshui Guafeng Zhai and Qingshui Guafeng Zhai. Hongshui Guafeng Zhai is dominated by King of Tea Trees and Chaping. Qingshui Guafeng Zhai is dominated by the Baisha river area, with mother trees primarily coming from Edu and Heishui mountains. Today the highest prices in the Guafengzhai area are found at King of Tea Trees, which, along with Mangong Zhai, commands the top prices in the Yiwu area. I personally prefer the flavor of King of Tea Trees. This year Guafeng Zhai has stepped past Mahei and Luoshuidong to become the new leader of the Yiwu area. Guafeng Zhai began producing tea in 2003 and was formally introduced as a product in 2005. In such a short period of time it has come to surpass Mahei and Luoshuidong largely thanks to the Yao village area ecological conditions and the advantages of the mixed tea forests.
I have personally been traveling to Yiwu to gather tea for over five years. I am drawn here not by the Han Zhai, but primarily by the Yao Zhai. I cannot say that Han Zhai tea is worthless, but just that I am personally attracted to the flavor and kougan found in the Yao village areas. The Han villages of Zhangjia Zhai, Yangjia Zhai, and Dingjia Zhai are also very unique areas producing outstanding quality tea. Gathering tea in other Yiwu Han villages is relatively difficult, but occasionally they produce excellent results. The primary issues are that they became famous too early, are too well maintained, have too high output, and contain large numbers of small trees. If handled properly, they can nonetheless produce extremely pleasing tea. Price increases in Yiwu this year are not at all surprising. After several years of publicity, the Yao village areas are already known in the market. I believe that this year represents a starting point rather than an ending point. We can only wait and see where the future will take Yiwu tea.
The future direction of the tea market has already begun to take shape. It will become even more focused on quality and mountain culture. Sales volume of generic large factory products will continue to shrink. This trend is represented by Menghai Tea Factory, which has halved production this year. Menghai Tea Factory still has a clear advantage in terms of ripe Puerh, however, and in the future, it can be expected to introduce more small-scale, high quality productions. In a mature market, the future prospects for mass produced tea are worrying. I return to an old statement: Factory teas stored in Guangdong, especially from 2005 to 2007, have not been consumed. These old teas will continue to exert sales pressure on future factory teas.
We need to pay attention to whether these 2005-2007 teas develop aged tea price conditions. If the prices remain low, then the greatest enemy of new factory teas will be the factories' own products from past years, Puerh tea is in the midst of a structural reorganization, breaking free from the years of fevered buying and facing more rational consumers, I'm convinced that the future of Puerh remains bright.