Author/photos: Chen Kam Pong
Moving into 2011, the US has begun printing money in the hopes of reviving its fragile economy. Because many international transactions are based on US dollars, numerous products continue to rise in price. The price of commodities including gold, silver, bronze, and oil continue to rise. Superficially, these increases appear to be the result of scarcity. In reality, though, some people simply have more money in their pockets. The purchasing ability, and value, of money is falling.
Consequently, at the end of last year numerous economists predicted this year would see soaring prices. Purchasing the necessities of life requires more money than ever before. Sadly, wages are not increasing at the same rate as prices, which means pay is actually falling.
Puerh Tea Rises in Value with Age
Do these economic changes have anything to do with Puerh? Of course they do. Puerh is priced based on its age. Even without inflation, the price naturally increases with the passage of time, assuming the tea has not been stored improperly or damaged. Two years ago the dual-sided tsunami brought on by the collapse of the new tea bubble and the financial crisis failed to bring down the price of old Puerh. At most, prices stayed at the same level for a time. Now, however, as economies begin to recover, prices of slightly undervalued older teas are again shooting upward.
New teas are produced each year, but current prices of new raw Puerh are much higher than those of 10 years ago, although still within the range of acceptability to new tea drinkers, Plantation tea prices have risen from a few dollars to over ten dollars a cake, while arbor teas have risen from more than ten dollars a cake to more than fifty. Compared with the price of aged Puerh, which is measured in hundreds of dollars, new Puerh remains much more affordable. However, consider inflationary factors and the increased standard of living of the people of Yunnan, which leads them to demand greater profits. Is it possible that the price of new teas will not rise?
Raw Puerh cakes produced in 2011 are more expensive than ever before. In this situation, consumers are naturally led to select Puerh that has been aged for several years, for example, tea produced between 2006 and 2007. This tea has already been aged four to five years and is no longer the bitter raw tea it was when first released. Higher quality teas have begun to receive even greater favor favor consumers, who do not object to paying prices several times higher than when they were produced. It is evident that Puerh tea must be aged in order to possess market value. High-quality Puerh that takes on fine flavor after careful storage will definitely be more expensive than when first produced. A key question is just how high can the price of aged Puerh go? As the age of the tea increases further and its flavor comes closer to the ideal of old Puerh, the ability of the market to sustain its price also increases and the price continues to rise. I have never seen a true ten or twenty-year-old cake sell for twenty-some dollars (excluding fakes).
Because age improves the flavor of Puerh, it increases the value and selling price of the tea. I am certain that fellow tea drinkers understand this point. As inflation intensifies and currencies are devalued, new tea prices are also continuously increasing. This also affects once-affordable personally stored teas, as the relative cost increases. In other words, several years ago one month's pay was enough to purchase 200 new tea cakes, but now the same pay buys fewer than 200 tea cakes of similar quality. Assuming tea drinkers still decide to store tea, the amount they are actually able to store is reduced due to inflation.
Looking back at the history of Puerh, however, we discover that high-quality aged Puerh was never cheap. I am referring to tea that has been properly and sufficiently aged and can be immediately consumed. Early tea stored by collectors seems cheap only because the collectors willingly parted with the money to purchase the tea. With the passage of time, we now believe the tea purchased in the past by collectors was cheap only because the market price of tea has increased.
If sellers do not promptly increase prices, for a moment aged Puerh tea may feel cheap. This is simply the result of incorrect pricing. This situation corrects itself quickly as consumers discover the bargain. The seller sells a significant amount of the tea within a short period and soon discovers that the sale price is below the market price. As stored quantities gradually fall and funds are recovered, the seller is no longer willing to sell the tea at a low price and the price increases. Consequently, I have found that most of the time Puerh tea is sold in the market prices are not cheap.
Aged Stamp Teas Have Never Been Cheap
I first came into contact with Puerh tea between 1992 and 1993. At the time, Red Stamp tea cakes had already been aged 30 to 40 years and sold for more than $200 USD per cake in Hong Kong. A good starting salary for an average Hong Kong college graduate at the time was around $1000 a month with teachers earning around $1300. Let's consider these ordinary non-specialized office workers, Buying a single Red Stamp tea cake would require 20-25% of a month's salary. Isn't that expensive? In the same manner, spending a similar proportion of one's salary today for an aged tea cake is also quite expensive.
Tea drinkers today see a $200 stamp cake as extremely cheap only because today Red Stamp teas sell for upwards of $15,000 per cake. They are no longer 20-25% of an office worker's monthly salary, but instead 10 to 20 times an average salary. Consequently, when the price of Red Stamp teas went above $10,000 a cake, I found it rather unbelievable.
We should not forget, though, that Red Stamp tea is no longer the 30 to 40-year-old tea of those days. Today, it is 50 to 60-year-old tea. Each cake consumed means one less cake exists in the world. Of course the price increase, but is this scale of increase reasonable? Opinions clearly differ with respect to this point.
Aged Qizi Bing Teas Have Never Been Cheap
Moving on, let's discuss the relatively younger Qizi Bing teas. I recall that thick paper Qizi Bing teas such as Thick Paper 8582 and 73 Qing Bing Small Green Stamp were selling for $80 to $100 in Hong Kong in 2000.
Older Qizi small green stamp teas sold for $190 -$230 per cake. This price was beyond the reach of a college student (myself at the time). At that time, I scraped together a month's pay from tutoring, nearly $300. I could only use this money to purchase some new teas, including Yi Chang Hao and new Qizi Bing teas, which I took home to store hoping to one day taste their aged flavor. This is much like today, as tea drinkers purchase 2010 and 2011 teas to age.
Today, in 2011 those inexpensive teas have aged for ten years and now have market value. Each of them is now worth upwards of $100 a cake. After over a decade of experience with Puerh, I have learned that no Puerh over ten years old is cheap. The value of these aged Puerh teas is the value of time.
Cheap is Actually a Misconception
Starting in 2000, I began buying more and more tea, collecting various styles and types of Puerh. At the time, a ten-year-old aged Puerh cake cost approximately $50 to $80. Today in 2011, the retail price of a ten-year-old tea cake is between $80 and $100. The price is higher due to inflation and currency devaluation.
From these prices, we can see that the market has always had a certain capacity for and recognition of ten-year-old Puerh tea, and prices have been relatively stable. Because these teas have already begun to become quite drinkable, there are naturally those willing to pay for them. Some consumers buy tea to immediately drink or to give as tea gift sets. Assuming they do not have any aged tea of their own, they must purchase tea cakes in the market that have been stored by tea sellers.
The teas I purchased in 2000 cost less than $10 per cake. The teas had just been produced, making it necessary to wait a number of years before drinking them. This is exactly akin to tea drinkers today purchasing new 2011 teas. Ten years have passed. If we wish to purchase a tea cake produced in 2000, we must spend $80 to $100. On the surface, it appears I have earned no small sum of money (sadly, I did not store a large quantity and would only earn several hundred dollars if I sold it today).
However, from another perspective, I have only saved the additional money I would have to spend and have earned the cost of storing the tea. There are costs associated with storing tea. Tea sellers require warehouses, capital, employees to care for the warehouse, and must pay real estate taxes for the warehouse. Moreover, the calculation of whether the tea cake will satisfy tastes of tea drinkers in ten years involves certain risk. If the tea is improperly stored by tea caddy, the tea seller's investment of thousands of dollars can come to nothing at any time.
Personally storing tea seems like a way to save significant sums of money. Tea drinkers do not need to spend $100 ten years later to drink tea that is $10 or less now. In fact, though, tea drinkers have expenses each year. It is just that they are intangible and difficult to detect. Tea drinkers spend money to purchase tea that is then stored for ten years. That money could have been used to see a movie, travel, or eat out, but instead is spent to buy tea. The tea that is purchased also takes up space. This space could have been used for a bookshelf, but instead is taken up by tea cakes.
Of course, the pleasure of aging tea cannot be simply measured in term,s of money. Each year we can taste our teas with Japanese style tea cups and see how they have aged, waiting expectantly for the changes next year will bring. We can also discuss and share our experiences with other Puerh enthusiasts. These pleasures are indeed difficult to measure. I waited anxiously in the past for a 1993 Zhong Cha Brand cake in my collection to age> hoping to possess an old Puerh tea.
Cheap Puerh Tea Can Only Be Saved for the Future
Based on the above discussion, we can see that ten-year-old high-quality Puerh tea has always enjoyed a certain value in the market. This is true in 2011 and will still be true in 2021 and, likewise, 2031, Its cost is approximately 5 to 10% of the monthly salary of an average office worker (in Hong Kong).
Consequently, if fellow tea drinkers wish to drink low cost Puerh tea, for instance, a $7 aged Puerh, the only solution is to store it themselves, I am certain that no one, including private collectors, would be willing to sell a 10 or 20 year old tea for such a low price.
In 2004, a tea friend asked me to suggest a high-quality tea worth collecting. I told him that 2003 Golden Dayi was quite good. Because he had just begun drinking tea by purple clay tea cup, he was unable to taste the potential of this tea. Instead, he believed that Golden Dayi, which had sold for 30 RMB a year earlier and was now priced at 50 RMB in 2004, was too expensive. I told him, however, that this is quality tea and is worth buying at any price under 100 RMB. He took my advice and purchased a case (48 cakes) of Golden Dayi. As I'm sure more than a few fellow tea drinkers are aware, 2003 Golden Dayi today sells for over 600 RMB per cake.
Even though he purchased a case of this tea at a low price, I am sure my friend would not be willing to part with this tea today at a price significantly below market value, for example, 200 RMB. The crucial issue here is that, were he to sell the tea, he could not buy back the Golden Dayi at such a low price. In addition, after he carefully stored the tea, spent his money and time, and took the risk of aging the tea, the quality of the tea has improved. If he were to sell the tea after six to seven years to other tea drinkers at such a low price, it would feel entirely unfair. This illustrates that even collectors not in the tea business are unlikely to sell their aged Puerh at a low price after it has improved with age, that is, unless the collector is short of money.
In simple terms, Puerh aged ten years or more has never been cheap. Because it has been stored for personal use, quantities tea-year-old Puerh of individual collectors are limited. Collectors are unwilling to sell their tea, so naturally the price will not be low. Tea stored by professional collectors may be kept in greater quantities. However, most of this tea is held by investors who do not lack money. It will not be sold unless the price is right. Finally, tea stored by tea companies, with rent, interest, and risk calculated into the price of a tea cake, will not be sold at a low price. As we see, quality aged Puerh tea has in fact never come cheap.