The Bubble Bursts for Pu’er Tea

“Since the beginning of this year, the price of Pu’er has soared, reaching its peak in May at 20 times higher than last year’s price. In terms of returns, Pu’er is a better investment than stocks or gold, isn’t it?” a tea collector in Guangzhou said.

“In the first four months of this year, the price of Pu’er rose three- to fourfold. That included fresh Pu’er that was marketed only last October; its price grew by 80%, to 1,600 yuan per kilogram from 900 yuan,” the man said. “So although the prices of the Pu’er tea dropped suddenly early this month, many still believe it’s only a matter of time before interest in the tea becomes stronger again.”

The puer market this year has been crazy. Read this article to get some idea. There has been a lot of speculating and a lot of cheating going on at every level in the market. Puer has always been very under priced in the relationship to other Chinese tea, now the reverse is true. Prices are falling, now the the puer bubble has burst, but they will certainly not return to the price levels that most buyers are used to paying. The good, honest producers are struggling to find some equilibrium. One of the people that went with me to the country in Yunnan had been studying this issue as her doctoral work in anthropology. The traditional tea makers are trying to find their way in a very old market that has over night become the focus of powerful economic forces.

It is a double edged sword for them. The influx of money has been very helpful for a previously poor community. Still, these old communities are struggling to maintain their traditional way of life.

The most serious problem is the short supply of raw materials. The best puer comes from tree/bushes that are hundreds of years old. The yet is also low. Consequentially, there is a lot of maocha produced outside of Yunnan finding it’s way into the local makerts. The price for Yunnan black tea and green tea has also skyrocketed because the fresh leaves from that market are being diverted to puer production.

The tea coming into Yunnan from other provinces can’t be sundried and doesn’t originate in the bactoria rich rain forests of Yunnan so will not age like real puer. The microbes being lost by heating the tea to stop the oxidation process. Fakes are hard to discern.

I believe the puer market will survive, but it is a shame that such a cloud has gather over this tea. I’m glad I was lucky enough to spend a lot of time looking at the situation on the village level. I will write more about this in the weeks to come as the story continues to unfold.