2019 Pu’erh from Western Vendors are More Expensive Than Ever. Three Ways to Look at Price.

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I’ve been updating a spreadsheet on pu’erh prices on release for the past few years in order to get an idea of tea being offered to western consumers and any possible trends. The well-known popular narrative is that fresh pu’erh prices have gone up and this certainly seems true in the data. Last year the prices looked about the same as the previous year. And when and how much the price has gone up depends on how we look at this and there’s a handful of different ways to look at the data and options available (I do three here).

#1 The Median Production Price Trend Over Time

The two basic methods I use to look at the median production price are:

(a) Taking the median price from all the vendors that pressed a minimum amount of teas and averaging the vendor medians together.

(b) Taking the median price from all the vendors that pressed a minimum amount of teas. Make vendor specific adjustments depending on their historical record of pressing and then average the adjusted medians together.

Using either of these approaches, the 2019 prices are the highest of the nine years we’ve tracked (anything before 2011 is guaranteed to be even lower). The price jump though can be somewhat different depending on whether we do (a) or (b). If we just take approach (a), then the price rise is around 27.5%. This is a really big price jump and the largest we see in our data since 2013-2014. However if we take the vendor adjustments (my preferred method), the price rise is a bit lower at 21.4%. Both of these are very significant leaps for a single year and the largest leaps in our data since 2015-2016.

2011-2019 Averaged Vendor Median & Adjusted Average Vendor Median

Year	Avg Median $/g	Avg Median Adj
2011	$0.08	$0.12
2012	$0.14	$0.15
2013	$0.18	$0.18
2014	$0.29	$0.25
2015	$0.23	$0.21
2016	$0.26	$0.29
2017	$0.30	$0.30
2018	$0.29	$0.28
2019	$0.37	$0.34

#2 Eye Test of Vendors Median Production

If you have a harder time conceptualizing approach #1 where we do actual calculations.. We can give the old fashioned eye test to the 2017-2019 prices of five vendors. This excludes Chawangshop, who has yet to release any tea for 2018 or 2019 spring.

2017, 2018 and 2019 Median $/g Per Vendor

Vendor	2017 Median $/g	2018 Median $/g	2019 Median $/g
Yunnan Sourcing	$0.19	$0.18	$0.24
White2Tea	$0.45	$0.45	$0.55
Crimson Lotus Tea	$0.36	$0.34	$0.50
Bitter Leaf Teas	$0.22	$0.17	$0.16
Tea Urchin	$0.38	–	$0.42

We can easily see that four of five vendors had a more expensive median tea in 2019 than in either 2017 or 2018 which lines up with our averages from above.

#3 The Median Cake for Each Vendor

A final way to look at vendor pricing is to look at the median cake for each vendor. These days pressing 200 gram mini-bings is more the norm than throwing back the clock to 357 or 400 gram bings is and I’ve included both cake sizes.

Average 2019 Cakes by Vendor

Vendor	# Teas	Median $/g	Average 200g Cake	Average 357g Cake
Yunnan Sourcing	28	$0.24	$48.00	$85.68
White2Tea	12	$0.55	$110.00	$196.35
Crimson Lotus Tea	8	$0.50	$100.00	$178.50
Bitter Leaf Teas	16	$0.16	$32.00	$57.12
Tea Urchin	5	$0.42	$84.00	$149.94
Average 2019 Medians (Adj.)		$0.34	$68.00	$121.38
Average 2011 Medians (Adj.)		$0.12	$24.00	$42.84

My initial reaction is that young pu’erh from the western labels really isn’t cheap at all. Bitter Leaf and Yunnan Sourcing (who has always been competitive on price) offer the most inexpensive median options at $0.24/g and $0.16/g. In whole cake prices, this is $57-86/357g or a $32-48/200g cake for the cheapest vendors.

It also shows how incremental change can really add up. 10-20% price bumps for maocha each year will give you a really big price bump in under a decade. Only 8 years previously, Yunnan Sourcing’s median tea was $0.07/g!!! And while it is quite possible that business practice and/or markup explains a bit of this, it is a minor factor compared to the magnitude that production prices have risen. This bump is almost certainly due to a combination of factors but the upward trend is real.

[Added on 12/17] One plausible explanation for part of the price rise is that the western market is willing to pay higher prices for tea and vendors have responded to that by sourcing higher-priced material which may be higher quality.

Dataset

The dataset now includes Bitter Leaf Teas, who I grabbed harvest information dating back to 2016. They now have a long enough track record of making tea that I thought it’d be wise to include them. A few of the other vendors like pu-erh.sk and Essence of Tea deal in different currencies which make them more challenging, hence their omission. The data is just for spring harvest, products that are 100 grams or larger. All of the work is also visible on the shared spreadsheet. It was compiled in November 2019.

I’m not going to cover the full extent of the limitations here, but it’s important to remember what the data and scope. This is not a definitive study of price and the pu’erh market. It is a glimpse into a very minor sub-section of the pu’erh industry.

An obvious thing to remember is that this is western vendors.. Consumers exist in different socioeconomic backgrounds than vendors selling to the east do. By nature it leans towards boutique productions and there is no attempt to measure quality.

Applying This to Vendors or Productions Not Featured

One way to apply this is by seeing how vendors or individual productions compared with some of the median teas of other vendors. Take a new vendor like Tea Encounter for example.

Tea Encounter 2019 Productions

Year	Vendor	Size	Tea	Launch Price	$/g
2019	Tea-Encounter	357	Baiying	$109.86	$0.31
2019	Tea-Encounter	357	Bangdong	$54.80	$0.15
2019	Tea-Encounter	357	Guafengzhai	$94.36	$0.26
2019	Tea-Encounter	357	Laos	$36.19	$0.10

We can just use the eye test to see that most of the teas fall under the median price for 2019 tea. Their most expensive tea is right around the overall average, with the other three coming in under.. The averages confirm this, coming in around $0.21/g, relatively inexpensive.

Comments

20 responses to “2019 Pu’erh from Western Vendors are More Expensive Than Ever. Three Ways to Look at Price.”

December 15, 2019

Janet

Nice analysis! Also nice factual illustration of which vendor is premium and which one is budget. YS vs W2T vs EOT. I would also add Bana

Reply
1. December 15, 2019
  
  James
  
  Thanks Janet! I think Bana Tea is a good vendor and option to buy tea from. The reason why they’re not included, is that while they do sell some of Vesper Chan’s productions they tend to be a bit less prolific about offering current year tea than the vendors here.
  
  It’d be interesting to see where they fit compared with the vendors mentioned though. My guess is that they’d be priced perhaps closeish to W2T’s median.
  
  Reply
December 15, 2019

seaquote

This is interesting, because some believe we’re in a bubble again. Farmers can’t sell all of their tea anymore.

Reply
1. December 15, 2019
  
  James
  
  It’s possible. The prices have risen a lot since the last bubble. I’d be curious how much tea is being sat on and not being consumed as well.
  
  Reply
December 16, 2019

RichD

You might want to do a simple inflation adjustment (CPI) to convert these all into current dollars, though the picture is pretty clear and won’t change much. I was wondering if changes in the exchange rate (relative to the Yuan) are contributing, but if anything, the dollar was much weaker in 2011 than it is today. Of course, all of this can be influenced by the mix of teas in the dataset. If more teas are being carried from places that are relatively more expensive, that would affect these medians. If there are enough observations, you might consider a regression with fixed effects by region.

Reply
1. December 16, 2019
  
  James
  
  I’ve considered doing some sort of a measurement on regions specifically and seeing if say Yiwu teas have risen over time here. A lot in the end has to deal with what the vendor has to press, since they can still press cheaper Yiwu or more expensive Yiwu tea.
  
  I think one plausible contribution is that the western market is willing to pay higher prices for tea and vendors have responded to that.
  
  Reply
  1. December 16, 2019
    
    Psyck
    
    In the previous decade, with high double digit economic growth and correspondingly high inflation in China, it made sense for tea prices to also rise at a fast pace – as reflected in the puerh bubble. As you say, the current price rise seems to be more to do with vendors testing the limits of how much the consumers are willing to shell out.
    
    Reply
  2. December 17, 2019
    
    RichD
    
    Basically, I think we are trying to parse out whether prices are rising because of an increase in demand or a decrease in supply (meaning cost increases for sellers). I don’t think we have an answer, we are just observing equilibrium prices. A bubble is usually thought of as an increase in demand driven by expectations of price increases.
    
    Reply
    1. December 17, 2019
      
      James
      
      Right. I agree that it isn’t too clear whether it’s an increase in demand or decrease in supply. I appreciate the thoughts Rich. Interesting to think about.
      
      One aspect that isn’t explored in the article is that the young pu’erh supply overall from these western-facing vendors is increasing.. Most vendors may sell out a few productions, but for the most part last year’s productions are still available.
      
      -James
      
      Reply
December 17, 2019

Psyck

What constitutes being a “Western Vendor”. You mention Chawangshop in your article but aren’t they an Eastern Vendor, run by an oriental and based in the orient. It would be nice to have a list of Eastern Vendors who sell pu’erh worldwide to compare with the list of Western Vendors in this list.

Reply
1. December 17, 2019
  
  James
  
  Chawangshop is at least somewhat western facing and partially run by someone from eastern Europe. At least their online store is. If there were an eastern vendor selling that fit the criteria (consistent productions over 3+ years, USD) I’d include them.
  
  I’m open to including other eastern vendors. Who do you think I missed?
  
  Reply
  1. December 17, 2019
    
    Psyck
    
    Unfortunately I’m not knowledgeable enough to answer that question. I was merely looking for suggestions from the community in regard to this.
    
    Reply
    1. December 17, 2019
      
      James
      
      While I agree it’d be interesting, I think it’d be really difficult to get that data so I’m curious which ones you had in mind. The vendors included all have multiple (typically at least 5) productions a year where I was able to dig up the original item price in USD directly from the vendor’s website.
      
      I don’t think comparing factory tea to these necessarily makes sense (although it’d be interesting to see). Perhaps something like XZH, but digging up even a single label would take quite a lot of work to do reliably.
      
      Reply
      1. December 17, 2019
        
        Psyck
        
        I didn’t have anyone in mind and you are right, I wasn’t looking for data on factory or non-easily accessible teas. However in spite of it being a one item list for now, it may be interesting to add whatever data you can put together for CWS to the list, even if they don’t release new pressings as often.
2. December 17, 2019
  
  James
  
  Chawangshop actually is on the list. Just not in the table for 2017-2019 FYI (they only have released teas under their own label in 2017).
  
  Reply
3. January 9, 2020
  
  Honza
  
  We keep the tea cakes and some maocha from 2018 and 2019. There is too much new tea around and so we keep our stock of new sheng pu now. So it´s fair we are out of this now 🙂
  
  By the way, most of the areas in 2019 not really risen prices compare to 2018 for the spring harvest, if so then very little.
  Regards,
  Honza
  Chawangshop
  
  Reply
  1. January 9, 2020
    
    James
    
    Hi Honza,
    
    Thanks for the comment. You’re certainly right about there being so much new sheng pu.
    
    At least from the data, what is being offered looks to be higher priced than 2019. It is quite possible that this is due to other factors beyond specific area maocha prices.. But the prices being passed down to western consumers seem at least as high as ever.
    
    -James
    
    Reply
    1. January 23, 2020
      
      James
      
      [From Robert, deleted in Server Error]
      Thank you for a thought provoking post.
      I think that Honza’s comments above add weight to the conclusion that the price increases are occurring from the Western consumer demand-side and by the vendors included in the analysis.
      1) There is too much new raw on the market so suppliers are sitting on it. 2) The Spring first pickings price by region remained consistent with 2018 prices. Both of these factors indicate that a price increase is not due to the supply-side.
      Therefore one must look to the demand-side to understand price increase. 1) Western consumers have embraced the puerh tea culture and will pay higher prices. In this case the consumer perceived value is tied to its price (in economic terms consumer value is different from product availability, quality, and price). 2) The Western consumers are demanding higher quality and/or more exclusive (less available) products year over year. For example, ‘ancient arbor single tree’ pressings being similar to what has occurred in the single barrel whiskey market. 3) Finally, vendors see the growing market size and changing trends in their consumer base and want to take advantage of the trends to increase their margins. For example, more new consumers jumping onto the puerh bandwagon and existing Western consumers willing to age their own inventory.
      I think all of these demand-side factors are contributing to the increase, but I personally believe that the main contributing factor is that the vendors are pushing the price point. When YS sees consumers paying twice as much for cool hipster boutique Instagram labels that aren’t twice as good they feel safe in also increasing prices.
      Thanks again
      
      Reply
December 18, 2019

Ingz

Hello James. Thank you for all your efforts on shedding light on our favourite leaf and drink.
I truely believe they are sourcing higher Quality – like China is rightfully labeling it bio does a good Job on initializing Standards and educating and surveilling tea production since it yields higher Prices and obviously is a market with high potential. a bubble starting cant be outruled.

Personal question here: Whats your take on Will from Farmer leaf? I feel intrigued by his Teas.

Reply
1. December 19, 2019
  
  James
  
  Hi Ingz,
  
  Thanks for the comment. I generally agree that quality has risen for the most part. That being said, I don’t think it is solely responsible for the increase in prices. For instance I think $100 spent on a fresh cake 7-10 years ago goes further than it does today.
  
  I can’t say I’ve tried anything from Farmer Leaf since they switched their name from Bannacha. My impressions I get from others are generally positive and I think William does a good job with the content he makes.
  
  Cheers,
  -James
  
  Reply