Supply and demand of Pu. Is it enough?

[auhckw]

Was talking about supply and demand of Pu in a teashop and here are some thoughts (don't take it as facts).

On 5th July 2011, there are about 1,670 Dayi retailers
http://www.taetea.com.cn/dayi/more.html
http://vip.taetea.com.cn/storefront/?ne ... ewAreaID=2

Do you think Dayi is able to generate enough supply for every retailers? We speculate, if just 2 cartons of a new product were to be distributed per retailer... it may not be enough to supply to all of them. So there may be some retailers that don't get it cause some will take much more stocks. Which is why these days Cartons sizes are reduced. Less toongs in them.

Besides the retailers in China, How many are being exported out of China to Malaysia, Hong Kong, Taiwan and Western?

How many population are there in China? 1.3 Billion (2009). Not all are tea drinkers and not all drinks Pu but the percentage of Pu drinkers are increasing year by year, otherwise why would Dayi open so many retailers? Why would GuangZhou have 2000+ teashops in one area (so i read). What about the drinkers abroad? How many drinks Pu?

In China/Taiwan/HK, there is a 'gifting' culture. Tea is one of the items that is being gifted. It is also a common culture to drink tea often (at home, restaurants, gathering, etc). So a lot of consumptions than keeping. More people are buying to drink than those that are keeping. Buying power in China is also increasing, people are more capable of spending their money.

There are a lot of Pu being generated by Dayi (and other brands) but it is being consumed day by day. If more and more people in China starts to drink Pu, we may not be able to see Pu out of the country. What will happen in the years to come? Price goes up when the demands gets more and not enough supply?

Share your thoughts...

[betta]

There is a significant increase of puerh tea drinker amount nowadays. However we should take into account also that the current consumption is quite high partly because of economic boom in china.

These new speculants/drinkers buy a lot for the first time and causes price increase sometimes beyond reasonable range.
New young puerh teas as well as some proven recipes like those of dayi's would be the first target as they're the most affordable ones for long term storage.
Meanwhile dayi or any other puerh factories will buy whatever they can find in the market... So I don't expect that the quality will be the same.

As this tide goes by, I think the puerh market will be more stable and find its stable position.

Now it will mean also in the incoming 10-15 years, there will be large amount of "aged" puerh appear in the market. As the supply demand ratio could be higher by that time... the margin (%) we expect should be different from today's aged puerh.
The price varies depends mainly on the taste which governs the supply-demand, etc...
At the end, reading your post regarding the price increase in Malaysia, I personally, as a nobody in terms of economy, consider puerh as a short term investment providing its liquidity is not a problem, the tea doesn't get spoiled during the storage and there's spare cash I don't mind to sit around.
The global economic crisis will affect and then define the payable of mainland people as well as puerh price.

[gingkoseto]

Auhcwk, this kind of questions, came up to you themselves, or through other people? I just thought local tea sellers would be so happy if people worry about this kind of things

I think there is more than enough pu, not all kinds, but enough over all. Currently Dayi is already making all kinds of non-routine products. Other big factories are envious and try to copy Dayi's market success. If the market size keep increasing, those factories will be happy to get more share.

[MarshalN]

I'm going to guess about 90% of Dayi's current year production go into storage -- how many people do you know who love to drink 2011 Dayi as their daily tea of choice?

So.... to satisfy the speculator/collector market, no, perhaps not enough (and why should they fill that demand?). For the drinker market? Plenty.

[shah82]

Just think of all that tea as a means of insurance.

There will be fires, plumbing accidents, bribes.

There will be changes in tastes and cuts in storage expenses.

There will be wars, and odd fads.

That Hong Yin has seen unimaginable change in the 60 years it's been around. Even with all the tea we see now, how many will be delicious, 60 years from now?

?:~)

How lucky do you feel, baby?

[auhckw]

Tea shop owner was telling (from his opinion) why 2007 Pu bubble burst in Malaysia.

1) Zhong Cha starts printing Pu cover and duplicate recipe with different tea.

2) Xia Guan increased the price too much.

3) Dayi opens up too many branches.

I wanted to asked further, but he left to do something.

[gingkoseto]

Tea shop owner was telling (from his opinion) why 2007 Pu bubble burst in Malaysia.

1) Zhong Cha starts printing Pu cover and duplicate recipe with different tea.

2) Xia Guan increased the price too much.

3) Dayi opens up too many branches.

I wanted to asked further, but he left to do something.

I'm not sure of the impact of 2 & 3. But I think 1 is quite a big impact and to some degree ruined zhong cha.

But... in my observation, zhong sha shares a lot of blame, but not most blame... Most blame went to some people (big stake holders in different aspects) who stirred up the market and mesmerized the general public into crazy buying. Market crash rooted from crazy growth.

[auhckw]

When there is big demands and ppl hungry for quick profit, bad events happened. 2 cases I heard during 2006/2007

1) One tea shop has 1 container of Pu. He started selling the same container to many people including relatives. Eventually he ran away (missing till today) cause he has 1 container but many ppl bought the same container.

2) One tea shop said he will buy back his Pu at 20% guaranteed profit per year. When bubble crashed. Ppl went back to him and sell. He went into hiding.

How true are the 2 stories... I don't know. These are some gossip ppl share over cup of tea. But I heard it couple of times from diff ppl

[Chip]

2) One tea shop said he will buy back his Pu at 20% guaranteed profit per year. When bubble crashed. Ppl went back to him and sell. He went into hiding.

How true are the 2 stories... I don't know. These are some gossip ppl share over cup of tea. But I heard it couple of times from diff ppl

A fool and his money are soon parted ... anyone who would buy into this is plain stupid ... imho.

[beecrofter]

There will always be an oversupply of mediocre and just horrid puerh.

There will always be a shortage of exceptional puerh.

[auhckw]

This happened today.

A guy walked into the tea shop holding 2 bags. Went to the owner and said he has old tea to sell. He is there representing someone.

He took out a few diff pieces which he said there are more where it comes from.

Owner rejects some of it at a glance, but stopped at 1 Pu which the guy has 3 pieces only. Owner opened up to inspect saying there are some of the side which is 'lost'. He gathers some of the loose and brew it.


First brew has some warehouse taste. He then soaked for the 2nd and 3rd brew. It is nice to drink and mellow but I couldn't find anything interesting out of it. Not old. Not woody. Not sweet. Not special. Not camphor. Pic: 4th brew. I didn't get the chance to take the front cover.

Owner asked for the price... and after a quick nego, Owner bought the 3 pieces for MYR 9,000 (USD 3,000). He asked his staff to prepare the cheque instantly and I nearly fall off my chair!

I asked the owner what is it. He said this kind of Pu, he can easily sell by naming it anything he wants in China.

The whole transaction from the guy coming in and getting his sale is only about 20 minutes. I speculate the owner knows what it is but not telling me cause the guy is there. Possible is some famous Pu that the guy didn't know and under sell... any how, I cannot brain the taste with that price >.<"

[gingkoseto]

This happened today.

I would be quite shocked too. Supposedly a shop owner is not impulsive or stupid, my guess is, the shop owner knows the sales representative (and the seller behind him) extremely well and did a lot of business with them before, and the shop owners knows a bunch of impulsive rich people who would potentially buy the puerh instantly without the owner having to hold it in his own warehouse (well he pretty much said so).

Usually even in high quality market, a puerh has got to have very clear wrapper and clear historical record (who owned it from x year to y year at z location) to be fully valued in the market, and preferably in whole boxes (jian) or at least whole tongs.

I would be extremely shocked if this kind of thing happens every year in future 3 years

[auhckw]

From what I observed, I think the sales guy was there for the first time. The owner was asking him questions which sounded like he never know him before.

There is another thing I noticed which the owner did say. The 3 Pu has a sticker on the back which states which shop used to sell it. According to him, the shop has been closed for quite some time.

I think the owner knows what Pu it is but not telling, and he probaly have sold it before.

I was looking at him going through the cover and tea leaves very briefly. Then brew the tea, 3 brews (soak 1min, 1min, 2min) and conclude the sale.

If the amount is small I would have understand, but the amount is quite big to make such a fast deal. Maybe he is expert. Maybe he knows someone who wants it already... but one thing for sure, he is the big bro here in TeaBiz. He has the buying power.

[Milhouse]

Sounds like a scam. Owner knows the guy selling cake and has set up sale to get people in his shop spreading rumors about how easy it is to sell tea back to the shop so people will keep buying tea in hopes of selling it back one day. I could be wrong but thats the first thing i thought of, maybe because similar things are played out it con artist movies all the time.

[shah82]

Real world doesn't work out like the movies. Reality is just as mindbending as any scam--the chief danger is fooling yourself. Anyways, a scam like that would be tongs and jians of 2005+ sheng bought back, not individual cakes that have to be assessed.