When I investigated the teas that western vendors tend to sell (tldr: young raw pu’erh), the topic of pu’erhs value over time was brought up. In that post, I found that the average cost of a young raw pu’erh listed on western vendor’s sites tended to be less expensive than the semi-aged (7-15yrs+) or ripe teas that were listed. You shouldn’t read too much into this as it’s an imperfect comparison. The most obvious flaw is that the source material isn’t the same. There’s no quantitative way to measure the quality of the leaf, which makes the question of value over time tricky to answer. This article kicks off a series of posts looking at the pu’erh market.
- Value and price are the key terms.. I’m not addressing the question of pu’erh improving with age.. Price and quality are obviously linked, but they aren’t the same and can sometimes vary quite a lot.
A blogger, Peter Lista crunched some numbers of teas sold on teas sold on Yunnan Sourcing and White2Tea and published them. The post is worth reading even if the results weren’t conclusive. For Yunnan Sourcing’s catalog, Peter found that there was a reasonably high correlation of tea price and age. The findings were reversed for White2Tea, a vendor oddity due to their focus on pressing more premium and higher priced pu’erh under their own label.
Big Brand/Factory Pu’erh
Teas made by Dayi and Xiaguan are in a different market from smaller scale boutique productions and tier B factories. Most of these teas are large batch productions and there is a well-established market. For instance– you can look up these teas and verify its identity in a pu’erh yearbook. The tea productions are more liquid, and there’s natural resale value baked into these teas. The older versions also sell for an arm and a leg, helping to stir on the pu’erh collectors wet dream.. This all contributes to make established factory pu’erh a natural vehicle for investment.
Crunching the Numbers for Popular Recipes
I crunched the numbers on two of the most popular numbered raw pu’erh recipes for Dayi, the 7542 and 8582 as well as their ripe recipe 7572. They’ve produced recipe tea consistently since the 1980s, including these three. The older versions of these are well known and run into the thousands and tens of thousands depending on their condition. The pricing I used the listed jian prices for Menghai recipes on Donghe whose data runs back to the early 2000s.
- For simplicity’s sake we’re ignoring the possibility of fakes and storage.
- It’s important to note that these prices are a proxy for making comparisons and not meant to imply any sort of exact price or that you can acquire the tea for exactly this price.
- See the full data/spreadsheet.
Current Prices of Different Years of 7542, 8582, & 7572
The Older Versions of these Recipes are More Expensive
All three teas show a very clear trend — older versions sell for considerably more than the younger versions. The price correlate heavily with age. From our dataset which ranges back to 2000, if we pick 2003 (the earliest year where we have data for all three) they sell for anywhere between 7.48 (7572) to 33.14 (8582) times the price of their youngest cousins. This number would grow even more if we extended the time frame out just a bit further.
We don’t have quantitative data of what the early 2000s teas cost when they were young.. But — if you bought a tong or jian of any of these teas before 2007, you’re probably very satisfied. If you bought one of these before 2004, you’re even more satisfied.
Most anecdotes of people who bought these teas in their youth indicate that these teas could be purchased for considerably less than the ~$20 required to buy young versions of these recipes, making the actual profit rather hefty.
The Growth Over Time Mainly Disappears When We Look At 2010-2017
While the growth is impressive if we look back to 2000, everything looks much different if we reduce our timescale to just 2010-2017. In fact– 2010 tea isn’t much more expensive than 2017 tea. 2010 7542 for instance is even slightly cheaper than the 2017 7542!
2010 Recipe Teas vs. 2017 Recipe Teas. Average Prices
| Tea | 2017 | 2010 | % Increase |
| 7542 | $21.71 | $19.78 | -9.76% |
| 8582 | $8.75 | $11.32 | 22.70% |
| 7572 | $14.39 | $16.14 | 10.84% |
Two conflicting interpretations on Modern Recipes..
- The optimist: The 7542 and 8582 are not the cutesy boutique pu’erh that are ready to drink at birth. A little bit of price fluctuation is normal and in the long-term they will improve with age and good storage. This should coincide with an appreciation in value as they hit certain pre-established landmarks of aged tea (i.e. 7 years, 14 years, etc). For instance, if you look at the 2009 prices of each tea they are higher than 2010. A 2010 Dayi 7542 pro-rated cost $20.. Are you really telling me that in 13 years, that same tea made by the biggest, most reliable factory won’t be much, much higher!!?
- The skeptic: They just don’t make em like they used to. In the early 2000s Dayi had far less competition and better access to higher quality material. The quantity of good pu’erh is finite. Now, Dayi is producing for a bigger market at higher volume, increasing the supply, and lowering the price and potential value of the tea down the line. Back in the 1990s, they only made a few different teas. Now the numbered recipes are at the bottom of the food chain… Even if the tea improves with time it will never be as scarce nor as sought after as the early to mid 2000s productions. Terrible investment.
Batches Can Vary in Price
A more minor point I’ve mentioned in the past is that there can be a significant difference in batches. This varies and sometimes there’s not much of a difference between batches, but occasionally one batch can rise quite a bit above the others.
2005 8582 504 Stands Out as an Outlier
| Tea | Recipe | Cakes/Jian | g/cake | $/g |
Price per 357g Cake
|
| 2005 8582 501 | 37000 | 84 | 357 | 0.1889 | $67.45 |
| 2005 8582 502 | 34500 | 84 | 357 | 0.1762 | $62.90 |
| 2005 8582 504 | 72000 | 84 | 357 | 0.3677 | $131.26 |
The Growth of the 7572 is a bit Flatter
Raw pu’erh is generally acknowledged to transform more with time than ripe — Dayi is also well known for their ripe pu’erh. It seemed foolish to ignore such a big category of tea.
Indeed 7572 from 2004 and earlier are substantially less expensive than their raw cousins from the same year. Even though Dayi has made both ripe and raw pu’erh for a long time, the most expensive productions of the year inevitably end up being raw. This also supports the idea that (generally speaking) ripe pu’erh tends towards bigger productions and won’t necessarily have the larger upside that raw does.
So… Does Big Factory Pu’erh Increase in Value with Age?
We need to look back at our optimist and skeptic interpretations. There’s good reason to believe that these represent solid investments. But it’s also concerning that the value is relatively stagnant for some of the more recent productions. These big Dayi recipes have proved to be a good investment in the past but that doesn’t necessarily mean they’re a slam dunk in the future.
Personally, I think there’s truth in both the skeptical and optimistic predictions and I subscribe to a bit of both perspective. Having had the privilege of consuming a few older 7542s and 8582s, they certainly don’t make em like they used to. Even disregarding aging, quality is lower and quantity is higher. I believe it is wishful thinking to assume that your 2012 8582 will rise to the same value of 2003 or 2004 8582 when it is 13 or 14 years old.. That being said, these teas are built for aging and demand should increase as they do age and people consume them.
My own thoughts: the younger productions (2010-2017) will slowly creep up in value without ever growing quite as fast as their predecessors.. Investing in these standardized recipes (not special productions) over the long-term is probably the equivalent of a safe, conservative investment.
Special Productions, Landmark Years, Tier B/C Factories
I intended to include these in this post, but it’s frankly too big a topic to tackle in a short format. These will be topics for future articles. Within this dataset we can see some evidence that the landmark year, i.e. 2004 signify big changes in the market. Special productions also behave differently than these recipes.
We can also assume that a high-production, well known factory like Xiaguan can be tracked similarly.. What about other factories like Haiwan or Mengku productions. Should Dayi be looked at as the standard torchbearer/model for these other factories or a higher standard of factory tea? More of all this later.
24 responses to “Does Pu’erh Increase in Value? Part 1. Big Factory Pu’erh Recipes”
Very interesting article, thank you, James!
Taking the risk to appear as an idiot, what is “Donghe”? I imagine you refer to this: http://www.donghetea.com/
This is a big/famous dealer so you consider as a good reference for price?
You got it! Sorry about that. I’ll add the link into the article’s body.
Cheers,
-James
If you’re talking about price increases, then the “skeptic” position should be differentiated into two positions:
1. Even if Dayi & Xiaguan are making them like they used to, because they have increased production and people are just collecting them & not drinking them now, unless demand increases a lot in the future, prices after adjusting for inflation shouldn’t go up so much. Can you get & post total production data through the years?
2. The “they don’t make ’em like they used to” argument is given by those “usually moonshiners” who can’t get their hands on Dayi stuff to resell for profit or who sell gushu material. It is like saying Volkswagen doesn’t make good cars; until we note that VW owns Audi, Porsche, and Lamborghini. Dayi could certainly buy anything they wanted to; not vice versa. Gushu are mostly abandoned plantation trees; they were frequently chopped down to plant rubber trees etc. Moonshiners who don’t even know what puerh tea is; what a joke.
Hi kyf,
Thanks for the comment. Fair points.
I agree and would love to see some production data. If anyone has a link to something of that sort, please do contact me as I’d be very interested to look at it.
I also agree that Dayi should have great access to quality leaves (if they want them). Whether or not the consumer is better off buying their premium productions or something from certain boutiques I think is a bit more debatable.
Cheers,
-James
It is an amusing bias among some people for sheng over shu and “boutique” over factory. The bias was probably brought back by people rushing to Kunming to learn about puerh, not realizing that Yunnan natives and most Chinese don’t drink puerh and don’t know what puerh is. Puerh is traditionally consumed by people in HK, Southeast Asia, Tibet & Mongolia. Processing puerh has secrets; probably different for each kind of export. Local Yunnan tea farmers sell maocha and don’t know how to process it. If a moonshiner (or tea tourist) goes to Yunnan to boutique tea, he will usually come back with a random mix of green or oolong tea cakes using Yunnan leaves, but not puerh tea cakes. The confusion is deepened by the fact that green or oolong teas are better for drink it now and puerh is not.
Some other confusing facts. Kunming is not the distribution center of puerh tea. Places in Guangdong are. Most local Yunnan and Chinese people don’t know what puerh is either and usually prefer green & oolong over real puerh tea. So the cakes you get in Kunming may be green & oolong cakes using Yunnan leaves. Tea vendors who have built relationships in Kunming may be reluctant or unable to go to Guangdong. To get real puerh tea one has to deal with Guangdong dealers & not Yunnan farmers.
Other confusing facts. High maocha prices mean better leaf quality? Well, farmers don’t know/care what the maocha is for; green, oolong, or puerh cakes. But the high priced maocha have probably been processed as green tea & for drink it now. Puerh producers/drinkers should probably stay away from tea made with high priced maocha.
High aroma or fragrance? Floral/fruity? Again, that’s for green or oolong tea. Puerh drinkers don’t drink puerh for that.
Just to make it clear so that everybody can understand. There are lots of tea leaves in Yunnan. Farmers used to prefer selling them as loose leaf green tea if they could because high grade green tea fetched more money because that’s what people in Yunnan & China prefer drinking. These leaves did not go into puerh cakes. Now that drinking tea from tea cakes have become fashionable, people go to farmers asking for “high quality” tea leaves. Farmers don’t know don’t care. These days they’ll sell to whatever tourists come asking as long as the prices are right. These leaves get sold as maocha for puerh. So maocha prices seem to have skyrocketed. But these are green tea pressed into cakes. Not for puerh tea; and probably never have been.
But if you say that you’d prefer green tea cakes pressed with high priced maocha over real Puerh tea, then most Yunnan natives and Chinese tea drinkers will agree with you.
This is another “skeptic” position: why real puerh prices will not go up much in the future. Because most people don’t like drinking or don’t understand real puerh tea. They like drinking tea from tea cakes because that’s what’s fashionable right now from all that marketing. But they are actually drinking green tea.
Thank you James, very interesting.
I wish there was a metric for the aromatic quality of a tea, so you could quantify the median and the mean aromatic quality per year and relate that to price.
But that’s just because I like statistics 🙂
Thanks Sven! I am also a fan of data.
Should be a few more interesting data-driven posts this year.
After Sabremetrics for baseball now developing Metreacs? 😉
Be advised that given standards of value is contingent.
A retailer can sell a tea for a certain price. A casual seller can not.
Also, when it comes to factory teas, units like tongs, and especially boxes, are what is liquid and have realizable value.
As far as new factory tea vs old factory tea, this is entirely a function of marketing. Marketing has to be spread over more teas today than it did for yesterday’s tea. Factory tea also generally has lower correlation of prices to quality. I also think that factory tea will eventually collapse when China finally stops its credit expansion. At the end of the day, valuable factory teas will probably be restricted to roughly 1992 and before production and there will be more of a focus on actual storage quality. To a degree, special teas from later will also be decent financial instruments–your ’97 water mark, big green trees, the good bok choys, etc. However, I think things like the 2005 7542 stuff will eventually decline in value. Other things like the uber expensive 2006 dayi productions will also decline, simply because the prices are out the Pluto for what they probably are.
Also, looking at that aflatoxin brouhaha, that may also deflate interest in drinking factory teas, especially, since many really need that fermentation to be enjoyable…
This is a very well written post, I admired the quality and clarity of your writing here as I read the post.
I suppose some value in older teas shakes out in part due to scarcity eventually. Most tea doesn’t really survive. In terms of money, puerh is a shaky investment because of the storage. So the tea has to first, survive, and then second, taste amazing. Just these two things are the biggest hurdles for anyone holding tea with hopes for the future. Lately I keep thinking of the wise Floridians who bought iron cakes and tuos, teas that will survive as long as they don’t need to float.
Thanks and agreed. Yeah I think for most western hobbyists it’s not really a terribly important topic. Not to mention that reselling is no walk in the park either.
Personally I think the big “gold rush” of the early 2000’s for Puerh is now settling which is good for those who actually like to drink it rather than invest it. Its not a clear economic picture as some mass produced teas such as the V93 Menghai productions have shot up in price over the years which I think is mainly due to demand rather than any notions of “boutiqueness”.( You cant keep a good tea down!!) However you will always get little niches in the market where small producers will hype their production or “middle men” will use classic re-branding techniques to unsettle or pump up the market.
A fact that there is very little ancient arbor to support the amount labelled as such, i.e. more ancient arbor tea is produced every year than material to make it, is enough to realise that we should be both questioning and skeptical on the value placed on individual productions. The true value is after all in enjoying it and if I’ve paid under $20 for a bing and enjoyed it with friends then a $20 dollar bing is worth the same as a $100 bing. I think this is something the Puerh retail world is catching onto and hence using some of this idea about experience as part of re-branding and keeping the market afloat by similiarly trying to “sell an experience”, however something that might yet have a sting in the tail for anyone buying to invest in the long term in tea.
Therefore forget about the value, “drink not think” as the best investment is memories and experiences. Something which I love about teadb itself in sharing experiences and keeping the chaqi flowing!!
Hi Jonny,
In essence I think I agree. These investigations are more for fun and curiosity than to inform any real buying for myself or people that identify as pu’erh drinkers.
Cheers,
-James
It may or may not be surprising how large scale industrial productions can often do quality and safety control better than mom & pop operations. For example, how well Coca Cola has been doing quality and safety control despite bottling billions of cans & bottles all over the world. Lots of things can go wrong. For example, the Perrier recall: http://www.nytimes.com/1990/02/15/business/perrier-widens-recall-after-new-finding.html?mcubz=3
But if one wants romance, adventure, or hip with tea, nothing is better than getting “ancient” “arbor” or “wild” tea leaves. There is no telling what you’ll be getting; tea leaves from outside Yunnan province or outside China itself are very probable. Everything can be pressed into tea cakes; including non-tea leaves : http://www.capitalfm.co.ke/lifestyle/2017/08/31/kenyas-purple-tea-taking-world-one-cup-time/
Way back in the 90’s a colleague of mine was working on DNA testing of Durum wheat for semolina and pasta flour as a similar thing was happening in the “hip” world of pasta which involved the Mafia doctoring flours. Some of the flour was found to be from South America and Asia and not Italian at all. The pasta and flour industry caught onto a trend of “hip” young things making their own pasta at home and hence the marketign of “adventure and romance” was born. My colleague had to undertake the research secretly because of the risks from big criminal players in the market.
I think we are all aware of the risks of buying fake tea and MarshallN’s post makes good reading http://www.marshaln.com/2016/11/fake-dayi/ .
However without control fakery only adds to the value of genuine tea on the market whilst similiarly de-stabilising the market so its good to see that some of the big producers are tightening up on this. Its unfortunate that its the drinkers that suffer most from it.
That’s right. The silk road goes back a long ways. Most “Italian” olive oil is not Italian at all.
Very nice read. My conclusion; as Jonny states “drink, don’t think”. Live in the moment (which many find hard to do). Let the experience and your taste buds tell you what is good or bad and not the age or the price.
re: modern 7542 prices – as suggested, this tea is expected to need ageing/maturation before drinking. I believe that the combination of better authentication management and published common knowledge about 7542 aging potential has reduced the overall demand for young 7542 – at least enough to minimize speculation and under-supply during early years.
I’m pretty sure that for any 7542 that hits semi-aged status (15-20 years, or less for humid storage regions), the price will start to increase a lot faster. The reason is that demand for consistent, good quality aged cakes will likely continue to increase and the Dayi branding/reputation of 7542 will only maintain this cost investment despite the apparent likelihood of using lower-quality material.
Of course, any well-aged Puer (not just 7542) should fetch a higher price than when it was young – after all, that’s what makes Puer most special!
Could be. Will be interesting to see what happens over the next 10 years..
Thanks for this, James.
The comments of kyf are definitely sound.