The Secondary Pu’erh Market & A Few Pricing Factors

The secondary market is defined in this ebay guide on collectibles terminology as: “the buying and selling of collectibles previously sold on the primary market by retailers to collectors.” . Even though it is a consumable, the pu’erh market is also a collectible market and has a very active secondary markets in the east. In the west there’s a somewhat constant exchange of goods and money in an active secondary market, albeit much lower volume. This market is mainly composed of other drinkers (or people who bought pu’erh to invest) reselling their tea. Sometime it is because they no longer like the tea or bought too much or maybe they are trying to make a profit. Long-time tea drinkers like Wilson or Geraldo set up sites and eventually became pseudo vendors, but most of the western secondary pu’erh market are hobbyists selling off odds and ends in places like facebook groups, teachat or steepster.

Plastic Bin.

Pricing Factors

Vendors that deal in older tea keep pu’erh yearbooks around, where they can look up a certain tea and a price (similar to a blue book). These books are designed as a reference to help verify the authenticity of certain teas and have pictures of things like the wrapper, the cake, the nei fei, and nei piao. While there are a lot of pricing factors that can go into what they’ll sell the tea for, the initial basis of the pricing is usually determined by what the listed price is in these books. That sort of labeling and pricing is a topic on its own, so for the sake of simplicity we’ll be skipping that and looking at a few other factors…

A Used Cake – So you had one session and the tea isn’t for you? 7 grams is just under 2% of the total cake, so if the cake was $100 you can pro-rate it and sell it for $98. Makes sense, right?? Not so fast… A used pu’erh cake is kind of like a used car. A new car loses 15-20% of its value the moment it is driven out of the dealership. Assuming nothing goes terribly wrong (i.e. car crash), then 15-20% each subsequent year.. The same concept holds somewhat true for pu’erh and usage. Even if not much has been consumed, the tea will probably need to be marked down far more than just 2% as soon as the tea is unwrapped and that tea pick makes first contact.

Messed up Wrapper or No Wrapper – You may dislike it, but pu’erh behaves like a collectibles market. Tea quality itself is not the only factor in determining what a tea could go for, and can be reduced to a minor factor in some cases. Things like missing wrappers can significantly reduce the value and I’ve seen allegedly legit undrank, full cakes of famous teas going for half or less of the purported retail based off of being naked..

Paperless Raw
Paperless Raw.

Storage  – Scott Wilson of Yunnan Sourcing has pointed out that the Kunming-stored versions of many of the famous cakes sell for more than their comparatively more humid cousins in southern China. Storage condition definitely affect the resale value of the tea.. It’s also important to know that just being stored in one place doesn’t necessarily ensure its been stored well or its value. Within all storage locations there is a huge range of variability. There can be good storage from Malaysia as well as poor, overdone storage from Malaysia. One thing that tends to hold true in the aged tea market is that HK traditional storage tends to depress and lower the resale value. This is most obvious when looking at the prices of famous productions.

Who’s Selling – I’ve seen some people trying to resell Yunnan Sourcing or other western vendor bought tea for essentially the same price that Yunnan Sourcing sells them for. This isn’t likely to generate much interest, unless people have some extra incentive to prefer their cake, such as selling smaller samples, domestic shipping or if their storage is somehow considered preferable. Yunnan Sourcing is a known and reliable quantity, why not just buy from them?

Depending on who’s selling and their reputation, you’re also taking a risk on an unknown reseller. Everyone will say their storage is good, but it’s a real risk especially when samples are typically not available. All of this means that the reseller will usually need to mark down their tea in order to provide an incentive to purchase directly from them. It also means the more reputable and known the reseller, the less they’ll need to succumb to marking down the tea. Someone with a good reputation who is known around the tea community like Wilson will be granted considerably more wiggle room than a forum lurker who has been storing his tea in his parent’s basement in Nevada.

Auction vs. Retail – This isn’t too relevant for people that are buying strictly from western vendors, but auctioning off tea is pretty common in Taiwan or other parts of Asia. Teas being auctioned off in a standard English-style auction (not blind) the tea will nearly always go for a bit less than the retail price. Why would you pay more for something when you can easily acquire it for less?

Scarcity – A huge factor. Let’s say there is a popular tea being sold by a vendor for $50. Before that particular tea sold out, consumers would just buy directly from the vendor or if it were being sold in the secondary market it’d probably need to be marked down, to say $40. Eventually that tea sells out and the stock is just owned by people that bought it. The situation flips when the tea becomes unavailable.. The secondary seller has more power to charge more due to the lack of availability and depending on the market for the tea is more likely able to get away with selling it for a profit.

Things get crazy when certain parties monopolize the stock of a tea. They they can control the scarcity of it (see Chensheng Hao & LBZ), hype the tea up, and try to drive prices up.

  • Very Important Note. Everyone should also be extremely suspicious of vendors or people selling who uses any of these reasons to sell tea for less than its supposed retail. They can easily be used as a ploy to sell you subpar tea. Oh, this 1980s 7542 costs $100 because of X and Y reason….. Please don’t fall for that..
  • For a seasoned buyer, the secondary market can be a good place to find certain teas without paying the retail price.

One response to “The Secondary Pu’erh Market & A Few Pricing Factors”

  1. Heh, regarding auctions in Taiwan…

    Unless that tea is a “famous tea” in an open auction, Easterners are very reluctant to pay more than $300 for a tea. If you want fancy tea, buying tea from taiwan auctions is a great way to save money. Just understand that the older it is, the more storage is a factor, as as far as I’m aware, there are few gushu teas on auction at around ten years that have good storage.

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