Saturday, October 31, 2009

Tea Economics 101

This is a well written article from the Financial Times (15 Sept 2009) written by Tom Millar.  He explores the economics of tea and tries to explain the weak economics of Chinese Tea.  Here is the very interesting and thought provoking article entitled  "Why foreigners are beating China’s tea-makers on their home turf":

"China is rightly proud of being the home of tea, the world’s most popular drink. Celebratory cups of cha were sipped when China recently regained from India its historical position as the world’s pre-eminent tea producer and consumer after a 100-year hiatus.

But the country’s failure to produce a single internationally recognised tea brand is a source of frustration for cheerleaders of the native Camellia sinensis leaf.

Both at home and abroad, Chinese tea brands struggle to compete with foreign competitors. In China, Unilever’s Lipton brand has a market-leading share three times that of its closest local rival.

“Why is Lipton more powerful than 70,000 Chinese tea companies?” lamented a recent article in a Beijing newspaper.

The challenges facing China’s tea industry are the same as those facing a host of Chinese industries: product quality issues; excessive competition in the domestic market; low prices and meagre earnings abroad; and weak branding.

The root cause of these weaknesses is simple: extreme market fragmentation.

The problem begins on the tea plantations. Around 8m farmers work on plantations across the tea-growing areas of central, southern and western China, mostly tending tiny household plots. Consolidation of the land into larger plantations is constrained by China’s land laws, which prevent farmers from owning – and therefore selling – their land.

The result is that China’s tea industry is far less industrialised than in less economically developed countries such as Kenya or India. In Zhejiang, one of China’s largest tea-growing and richest provinces, there are over 1m smallholdings, each averaging less than 0.2 hectares.

Monitoring quality across millions of scattered tea gardens is an impossible task, and Chinese tea exporters have consistently had trouble meeting foreign safety standards. Chinese tea sells for an average of just US$2 per kg on international markets, compared with US$2.70 for Indian tea or US$3.40 for highly regarded Sri Lankan leaves.

Chinese exporters will not get consistently good prices for their tea in international markets until quality controls are improved across the board, which first requires far greater consolidation of plantations and tea processing factories.

At home, fierce competition among thousands of producers and brands translates into puny market shares and slim profits. Chinese teas are traditionally sold by type and place of origin, rather than by brand, and every region has its own local favourite.

Leading brands like Lipton, on the other hand, understand that creating mass value depends on nationwide marketing and an efficient, integrated distribution network. Lipton sources cheap tea from independent producers, packages it into teabags, and markets its distinctly average “Yellow Label” brew at an outrageous mark-up.

It’s not great tea, but it is great business.

In China’s highly fragmented retail market, no national brand has emerged to knock Lipton off its perch. Instead, premium players selling organic teas are attempting to carve out lucrative niches, both at home and abroad.

Take, for example, the tea grown by the Hunan Tea Company on White Cloud Mountain in the southern province of Hunan, where the warm, wet climate and the deep red-brown soil is perfect for cultivating quality tea leaves.

Behind a copse of dark green conifers, bees buzz lazily over neat rows of shiny tea bushes soaking up the summer sun. A list of rules pinned to a board instructs tea-pickers not to keep long fingernails or to powder their faces; smoking is banned. Instead of pesticides, bug-zappers protect the crop from leafhoppers and other tea-loving pests.

When these virgin leaves are picked next spring, one batch will be shipped to Japan and sold as high-grade organic tea under the exclusive Kaito Brothers label; another will be packaged for the domestic market under the award-winning Guanyuan brand, priced at a hefty US$100 for two small 10g boxes.

Wealthy Japanese and Chinese tea drinkers will happily spend hundreds of dollars on the best spring-picked leaves, much as Western oenophiles splash out on a good bottle of wine.

But speciality teas will not bring China the international brand recognition it craves. For that to happen, widespread industrial consolidation and far more sophisticated marketing are needed.

Despite having the oldest tea producer in the world, China has only begun to create a modern tea industry. It has a long way to go before local tea companies reach the economies of scale and branding expertise needed to capture the full value of their product.

In the meantime, the big revenues will be scooped up by strong foreign brands selling convenience and lifestyle. Anyone for a cup of Yellow Label?  "

My thoughts on this article are the government of China did not place tea export / production on top of their economic agenda in the past 40 years and correctly focussed its effort to transform China into a modern economic superpower.  I would like to point out that during the past 40 years , there was no major economic issues with chinese tea; in that there were no major excessive production of tea or drastic fluctuations in tea prices.  In fact, I felt that the demand for Chinese tea had risen through local and high foreign demand and prices are rising steadily.  Even Lipton is carrying a range of Chinese tea from pu erh , jasmine and Tie Guan Yin.  My solution -  The Chinese authorities can easily boost the Chinese tea market by acquiring these foreign tea brands.  This not only gives a greater market share of the tea market and it also allows easy immediate access to the tea drinker distribution network in Europe and Americas.  I believe that such a theoretical acquisition (makes a lot of economic sense actually) would work out well for the chinese tea market as the acquired tea farms, technology and research, and infrastructure (India, Sri Lanka and Africa), from this purchase, will solve most of the "chinese tea" problems listed by the author in the above article.  

Storm in a teacup? Tempest in a teapot?  Think about it when you sipped your chinese tea.

Saturday, October 24, 2009

2006 Mengku ripe mini cake

This is a Mengku Ripe mini cake (140gms).  Produced by Mengku Tea Co (very well known),  I personally rate this cake as one of my favorite 2006 ripe pu erh.  Newcomers to pu erh will enjoy the earthy toasty aroma and taste while the experienced ripe pu erh drinkers will find this tea extremely smooth with a distinctly pleasant aftertaste.  

This ripe cake is inexpensive costing me about US$6 (air freight inclusive).  I had already drunk through 2 cakes and have a couple more cakes left in my pu erh stash.  I tend to drink my ripe pu erh on the stronger side and I usually add more tea leaves when I brew a ripe tea.  Its something like 8/10 gms for a 180 ml pot.  Use boiling water every time for better results.  I could get about 10 drinkable brews after discarding the 1st two infusions (pour them over my teapot).  When I had my 1st taste of this tea,  it made me mumbled a "wow".  The taste was toasty and woody....very nice feel...... and before I knew it, I had drank the whole cup.  I also observed that there were also hardly any tea stems in the cake.....just small tea leaves (click 2nd/3rd pix).

This cake is value for money in terms of quality and price.  Its available for sale on the internet.  Yunnan Sourcing described  this tea as "This is a classic ripe mini cake from the Mengku Rongshi tea factory of Lin Cang.  These cakes are made from 2005 fermented Lincang large-leaf varietal tea.  The flavor smooth with a sweet after-taste."  Awazon gave this tea a 4.5 star rating (out of 5).   This tea was also an award winner in a tea contest.

Saturday, October 17, 2009

The Book of Tea

“The Book of Tea” printed by Flammarion is made up of 3 essays about tea; “Tea gardens” by Alain Stella, “Time for tea” by Gilles Brochard and “The taste of tea” by Catherine Donzal.

“Tea Garden” deals with the various tea plantations of the world, from India, China, Japan, Ceylon and other countries. He explains and compares the tea and tea harvest between the countries and the beautiful pictures (please click the pix to read the text) help the reader visualize the essay.

“Time for tea” examines how the various teas round the world are prepared and drunk.  The author asserts  “Each day, over one and a half billion cups of tea are consumed on the planet”.  The pictures accompanying these essays are poignant and breathtaking.

“The taste of tea” explores the charms of drinking tea.  An excerpt – “The tea leaf itself bears the traits of the soil in which it was grown.  Each harvest has its own special quality, whether cultivated on the plains, in the mountains, on Himalayan slopes in springtime or in Ceylon during a hot summer.  Each cup of tea represents an imaginary voyage.  The names of the various regions alone conjures up distant lands, and the names of the gardens are even more evocative.” 

The last section of the book lists all the famous tea rooms of the world; name of tearoom, address, tel, website and a tiny write-up on these rooms.

 I found the book to be an interesting read.  Good pictures did helped me visualized the authors’ thoughts.  An excellent read.

Saturday, October 10, 2009

A tea shop in Singapore

This is D'ART Station, a tea shop found in Singapore.  Aptly located in the heart of Chinatown, access to the tea shop now is made easier with a 5 minute walk from the subway station (we locals call it the MRT).  This shop is owned by a Mr Lee and run efficiently by his assistant Miss Chong.  Address - 63 Temple Street.  Mr Lee had also opened another outlet a few streets away at 65 Pagoda Street.

I enjoy visiting this tea shop as the atmosphere there is very friendly and the people there are willing to share their tea knowledge with me.  Miss Chong had made very good recommendations of some of their pu erh and I have not been disappointed with my tea purchases there.

As seen in the pictures (please click on the pix for enlarged views), this tea shop is very well stocked with everything tea.  The shop is now having a 50% sale on their teapots (not the expensive ones though).   I find that the range of tea on sale is impressive and the tea accessories varied enough to make a tea collector (myself included) spend considerable time and money at this shop.  Talking about money, the shop do not have any electronic payment facility and all sales are in cash.

The back of the shop is where you get to try a sample of a tea.  Regular tea customers normally gather around this table exchanging stories and showing off their recent tea / teapot purchase.  I was privileged that during my latest visit, an elderly gentleman came in and showed his latest purchase; a very old liu-ann tea....and its just the liu-ann tea stems.  A pot of this tea was made and I was offered a cup.  The taste was very rich with a  herbly fragrance and a very strong sweaty cha qi soon hit me.  I found the tea buzz too strong for me but apparently the rest of the tea drinkers there enjoyed this cha qi.  

The last pix is that of a raw pu erh.  This is the last production of the Menghai puerh in a CNNP wrapper.  I was given a small sample to take home.  The tea was really mellow, super tasty and smooth bringing a smile to my face when I sipped this tea.  Fairly pricey for this particular cake, I am thinking whether to buy this cake.....most probably.   

Sunday, October 4, 2009

2006 Haiwan raw remote mountain old tree pu erh

This is a 2006 Haiwan raw pu erh cake.  The label on the wrapper describes the tea leaves were harvested from old pu erh trees in the remote mountains of Yunnan.  This cake is quite popular as Haiwan has produced these cakes since 2005.  I have seen these cakes for sale in Hong Kong and are quite popular with the drinkers there.  The 2009 version of this cake is also now available when I checked on the internet.

I had purchased the 2006 version and I found the compression of the cake tight.  I had accidentally knocked the cake on its side which explains a small dent in the cake (1st/ 4th pix).  I had to pry the cake open with my swiss army knife. The scent from the cake is nice with a hint of lemon.

I had opened the cake up in late June 2009 and I have drank through 3/4 of this cake.  These are my findings:

I had broken up the cake and store the pu erh in a cylindrical cardboard tea box (those you find in commercial tea shops selling loose teas).  My first brews of this tea, especially in the starting infusions,make me felt that the tea was very smoky.  My daughter who walked past asked for a cup as the smoky scent reminded her of a bbq (campfire) in an open field.    I concurred with her on the scent and I tried to find out the origin of the smoky scent (where the tea leaves absorbed the smoke).  It is possible that burning wood was used for fueling the woks used to dry the tea leaves in an enclosed environment.   As a result, when batches of tea are being "fried dry", the tea leaves inadvertently  absorbed this  wood smoke during the drying process.  A reader suggested  "The smoky smell will stick to the surface because it probably comes from people smoking tobacco around the teas when they are in warehouses".  I have tea / smoking friends and they concluded that the smoke from this cake is not likely to be tobacco smoke.  WHEW!.....what a relief.  I believe that  smoking tobacco near the tea or tea production may impact the tea leaves with the tobacco smoke.......  likewise storing your tea in a smoke and odour free room will ensure your tea to be free from any unpleasant smells. 

The taste of the tea is very pleasant.  It is smooth and very drinkable. A brew will make more than 12 good drinkable infusions.  Tea leaves seem larger.  Slightly bitter with a sweet finish.  The tea has mild citrus flavor and leaves a slight tingly sensation to the tongue.  I felt a nice warm mild buzz after going through few infusions and it passes after a few minutes .  This is the cha qi of tea, something like the effect you get from the caffine from drinking coffee.  The cha qi from this tea is really pleasant.

This interesting fact from reviewing this tea is that the tea changes over 2 months as it is stored in the tea container.  The smokiness of the tea dissipates and the tea feels mellower and sweeter in the aftertaste.  I am lucky that I stay in a hot and humid climate in Singapore.  A tea shop owner  in Singapore told me that the tea "oxidize" when we open up a tea cake and store it for a couple of months.   My new tea friend (a tea master actually), Eric from Penang, Malaysia explains "airing your Pu for a month or two before you consume it is a very good practice. It allows your pu to absorb more moisture and  you will find that your tea broth is smoother and less abusive to your tongue".

Overall impressions of the tea is very good.  A value for money pu erh in terms of weight, quality and price.  I got mine for around $25 (inclusive of air freight). A "must buy again" tea.