Tea Market News 2020

As you can guess, this year is the “special” for any business due to the Covid 19 which affected worldwide economy in span of few months.

When Kunming got locked down back in January , obviously not only restaurants and cinemas had to close , but also the tea shops and so the tea market. This was the hardest hit for tea business people , because closing was happening just at the beginning Chinese New Year when shops usually make money from tourism , which wasn’t happening.
Some tea market owners were more than generous and give to shop owners 1 month rent relieve , yet same haven’t been applied to many other places. At the end of February and beginning of March some shops were starting to open and so the tea markets , but of course with restrictions. The one , probably most paranoid one , was that shop owners originated from Hubei province weren’t allowed to open their shop at that time yet , despite not leaving Kunming since the outbreak. Those people had to still keep the burden of being stigmatized by locals for another month.

QR code generated and printed on entrance to any public place was an obligatory and tea markets weren’t exception. When you enter you need to use your wechat app ( similar to Watsap ) to scan that code , that will keep tracking on people who entered in. Also when you leave the premises , similar OUT code needs to be scanned. Those who don’t have the app, would have to sign in to registration book with ph.number.

Of course the mandatory body temperature measuring and wearing the masks were introduced as well.

The masks were the exactly the main problem when market had opened , because how you supposed to drink tea with covered mouth right? That had slowly changed to wearing it only in entrance and walking without it freely inside of the market. At the end of the May  ( almost 2 months with no case of Cov19 in Kunming ) probably 80% people were not wearing masks in market at all.

Another , and very important issue was that due to the movement restrictions , the tea pickers weren’t able to get to the tea villages and tea gardens. Tea farmers have limited work force containing mostly the family members so for harvest seasons they hire people from other villages. During to the lock down ( transferring restrictions ) many villages just closed the gates for any outsiders in order to protect their place from imported cases of Covid 19.

Yiwu Lock Down
Tea pickers gathering on the road gate entering to the Yiwu village which was locked down due to the Covid19 pandemic.

That really had affected the harvest volume and so the prices of mao cha as well as the continuous bad weather trend happening few years in row now. Very dry season due tot the climate change as well as not suitable agriculture strategy  ( too many gum trees planted ) has caused that tea trees grow sprouts much later , almost close to the rain season starts or some of them even die ( dry out ) . As it happens, not many farmers are so hard working and work on water supply solution for their $$$$$ tea trees or some places have no any possible solution due to the hard accessible location.  As we mentioned in other article before , it is easier for them just share the picture of dried out tea tree on social media and then cry about it with a “hashtag” – Prices will go up this year because of that.

DryLand
Dry soil in tea garden

To add that , Yiwu got hammered by heavy rain with hailstone almost size of the egg. Damaged local villager’s houses ( roofs ) and of course trees got hit hard as well. How badly , we don’t know, yet we have heard farmer saying that it will higher the prices as well. We can assume that was just another excuse , rather than necessity to do so.

So how is all that affected tea exporters like us? Certainly I can not say for other , just behalf of our business, but it went this way:

1.Paranoia – with the first outbreak in January, the paranoia started to spread in forms of posts / threads on forums and social media with content of ” is it safe to order tea from China now? “. Long debates , assumptions , claims which put off the purchase many people without any effort to check more relevant information. This wasn’t only about the tea , as some people claimed that virus can be transmitted on dry tea leafs , but export from China in general , because was believed / rumored , that virus can withstand long time in low temperatures and dry conditions in airplane cargo section ( and longer than 78h ). As a respond to that , the WHO posted statement on their official Twitter account.

Statement of WHO about safety of parcels during the Covid 19
Post form official Twitter account of WHO about safety of the parcels from China during the Covid 19 virus outbreak.

2. Shipping  – once we have got trough this paranoia wave , the second problem had emerged. Due to the travel restrictions , countries lock down and also shopping from China decrease , the cargo movement has been paralyzed. As we were told by our logistic company, around 90% flights were cancelled and that of course caused chaos , long waiting queues of parcels waiting to be loaded from cargo bay in airport and shipped to destination country. Parcel we have sent by AIR to Europe had reached to customer in 3.5 month. It was just sitting at the airport for 3 months in queue.

It took a few months before airlines start to react on that issue and found a solution as they realized how much money they are loosing by keeping business without any incoming money. They started to use their charter flights to deliver the parcels not only in cargo section but also the passengers area ( since there were no passengers to board ). Since then, things had started moving a bit , slow , but at least something.

The shipping fees had increased ( as we called Covid 19 fee ) , and for some countries quite significantly ( like US +12$ per parcel ). We had to start to use also other , more expensive shipping options , which we hadn’t use before due to the high price. Those Express parcels were re-routed to the no queue export hubs for faster shipping and surprisingly we could deliver parcels to Europe within few weeks.

3.Economy – when things started to brighten up a bit , the toll for the worldwide lock down ( people not making money ),  had to be paid. As you can imagine , people just had no money to spend and even enthusiastic tea drinkers had to open up their old storage or buy some small amount from local vendors where overall price with shipping fee was within their emergency budget.

Seeing and experiencing all that , one wouldn’t even have motivation , need for buying fresh mao cha and press cakes for business. Yet, we purchased a bit of 1st harvest of Lao Wu Shan  and waited what 2nd harvest would bring. The and of the May farmers started to post pictures on local social medias about the tea trees started sprouting again and second harvest should be better than the first one….

New concepts of processing

Not entirely the new but I’d say more variations of existing concepts of processing emerged. One of them would be longer withering time for white tea with following “ti xiang” ( high temp “roast” ) at the end of the drying process. We don’t know the exact details of temperatures for this case, but in certain white teas the Fujian concept of promoting aroma and sweet taste are noticeable in the cup. This type of processed tea leaf is nice to drink and good seller, yet not suitable for further aging.

New concepts of marketing

Also not so new, yet recently shows up on local tea markets more than before is Gushu Bai Cha – the white tea from old arbor tea trees. Not all cases , but in general what it they offer is just old tea leafs ” lao ye ” from whatever arbor tea trees , processed as white tea…which means almost no work ( white tea requires the least processing ).  Since it has a tag “Gushu” , marketing-wise it has an additional price tag, therefore bigger margin / profit.

Old White Tea Leafs
Old tea leafs processed as white tea and pressed into the 357g cake

The tea from those leafs is actually very nice, sweet , fruity , but most of the time it is not as rich as the one from white tea varietal growing in Jinggu , which ( at least from our perspective )  has much higher value in terms of tea leaf quality / enjoyment from tea session.

More White Tea

Due to the high prices of puerh, or just because we are all “over-puerhed ” here , maybe because easy money ( since white tea is relatively easy to make ) ? I don’t know, but have a feeling that each year more and more the white tea shows up on tea markets and getting slowly the hype and marketing tags as puerh.

Trying white tea from Laobanzhang village. I can not confirm that was the real LBZ tea neither can’t say I would experienced some special taste or body effect , yet the price tag was with another “0” compare to regular white teas ( means from not famous places ) .

Gao Gen Shu  – Tall (trunk) tea trees concept

This has been practiced by tea farmers many years, yet this concept of marketing slowly starting to come out from some tea vendors recently. Tea farmers cut side branches of tea tree and force it this way to grow up rather than spread around ( also surrounding tall trees in forest helping to promote that as well ) .

More details in Tea Marketing

Wholesalers turn to retailers

As the header suggesting , the new trend in local tea markets is that tea bosses who many years were only wholesalers focusing on support other tea businesses / tea shops , now struggling with paying the rent and have to start also the retail. There are many reasons behind the wholesale business difficulties , but in general it is the slowing economy ( with Covid 19 even slower ) , more competitors , more people choose directly source from tea farms despite not getting any price advantage ( as they mostly not aware of it ) . Increased prices for tea in farms, yet economy is not increasing at all ( at least not in pockets of general folks ) .

Near future?

Well, I don’t have a crystal ball but I believe that next years are going to play in favor of customers ( tea drinkers ) finally. The prices from the tea farmers will have to drop down eventually ( at least those not very famous ones like LBZ or Bing Dao ) , unless the climate change will play significant role in harvest issues . Sourcing from middleman as wholesale buyer might get even more interesting. We already offer new concepts of cooperation , prices and many local suppliers also haven’t done usual price increase of puerh ( except big factories who have to ..as we mention in other article with puerh as investment ….Factory Teas ) .

Great opportunity for overseas tea businesses to thrive as big shipping delays will put off many people from purchasing directly from China. So , at least we believe , smart tea vendor will stock up before winter when 2nd wave is expected.

The tea is often associated with medicine and some vendors already try to promote tea or puerh tea as an efficient prevention from Covid . Although this is not the ethical marketing strategy from our point of view, ( we stay away from any health claims ) yet we believe , it does play on buying psychology and general tea sales might have increase in future.

More random Chinese people ( not only tea vendors ) are trying to venture foreign market via available social networks or selling platforms , which creates more competitive environment and lower prices of course. Unfortunately not increasing the quality ( as most of those people follow traditional concept ” cheaper is better ”  ) , so hard to judge how much this factor is beneficial for the final customer / tea buyer. In our opinion , so far it is just creating the overseas tea market more messy as all those marketing tools / claims being passed over without any ” ethical ” filter.

This crates the same problem, which we have here in China for last few years , and it’s getting worse each year. The honest vendors sourcing good tea can not offer competitive prices because they are facing to vendors who claim to sell same authentic stuff but for less than half price , so they have to rely only on old customers or people who truly understand the tea quality.  Many beginning tea drinkers start with cheap ( psychologically the safe investment ) tea and many of them finish their journey right there with understanding ” the puerh tea is not for me “.

Hope

We hope that pandemic will end soon and we all learn something from it. We hope that not only our customers will have understanding for delivery delays , as the shipping is not in vendor’s hands and many of them can not afford to “eat the bullet” by refunding X parcels at one time because they have been sitting in container somewhere in Shanghai port for few months.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s