Sunday, September 6, 2009

Speculating of Pu erh tea - a myth?



A recent chinese tea article appeared in time.com (titled Puer tea: China’s next hot commodity.  25 aug 2009 by Emily Rauhala).  An excerpt of the article as follows: 

“There is Champagne, France; Tequila, Mexico; and Parma, Italy — all places turned trade names known for their unique, high-quality foods. Now, if China has its way, there could be another: PuerThis lush corner of Yunnan province in China's south is home to one of the world's hottest teas. Puer tea may not look like much — it is typically sold in heaps resembling cow patties — but one mug of these aged leaves can fetch up to $1,000. The drink is touted for its health benefits and is loved for its light, earthy taste. It is already a hit in Hong Kong, where rare teas are a status symbol among the city's élite, and it is generating hype outside China, too. Three high-profile Silicon Valley techies recently tweeted and blogged their way through Puer tea tour of Yunnan. Dieters, meanwhile, are buzzing about rumors that Victoria Beckham, the svelte former Spice Girl, drinks Puer to lose weight.”

In spite of all the hype that pu erh tea will the next hot thing.  Let me give you my thoughts on this matter.

For discussion sake, lets take a 20 year old pu erh cake as a yardstick.  A late 1980s cake would fetch about US$400 in today’s market.  Buy a new pu erh cake (about $25) today and the money question is whether you can sell your tea cake for $400 20 years later (assume no drastic inflation or revaluation of the currencies).  The answer would be NO because there are now many tea collectors in the world that are keeping these cakes.  This is unlike the late 1980s cake that is now extremely limited in supply as there were few tea collectors then, and people that time drink than hoard their tea.  Good news are that your new tea, if kept in proper storage conditions, will see its price appreciate in 20 years.  I forsee  the price of our current cakes to be about 4-5 times the current value in 20 years time.    I see this as a fair price appreciation as the price would also justify the effort and space spent in properly storing this tea over a 20 year period.   I would like to stress that you must know how to store your pu erh correctly so that you will have aged pu erh  after a period of time.  Pu erh tea stored incorrectly will be worthless.

I am storing some pu erh tea (2003-08) for a 15-20 year period.  I wish to drink aged pu erh tea in 20 years time without paying too much for the tea.  More on  my tea collection next time.   

1 comment:

Anonymous said...

If the Pu-erh appreciated 4-5 times in 20 years that might be comparable to what some credit cards would collect in payments over that time if the balance took that long to pay off. It's a pretty good return on investment for capital that way, as long as it's not too imposing to store the stuff. --Spirituality of Tea