More on Da Hong Pao

Check out this recent Wall Street Journal article regarding the famous Wuyi Yan Cha Da Hong Pao. The gist is that Da Hong Pao prices have recently skyrocketed in China because shops and individual people have been speculating with the tea--purchasing it for the purposes of investment. This article is illuminating for a number of reasons; some are obvious and some are not so obvious.


For starters, it reminds us Western tea fans that tea really isn't "our" beverage--when it comes to Chinese tea, domestic demand almost always trumps exportability. In this case, the market has (rather unrealistically) decided that there's enough demand for Da Hong Pao that 1000% price increases accurately value the tea. As the article makes clear, though, this price is unsustainable and vendors aren't able to sell much of the oolong at current inflated prices. Moreover, it's pretty interesting to see how integral tea is to Chinese culture. What do you invest in when real estate and stocks are unstable and high-risk? How about a rare tea? It's funny to think about as an American, but this sort of thing (including the 2007 pu-erh market bubble) indicates that some Chinese view tea as a viable form of investment--however, the pacing of this surge also seems to suggest that any potential profit has already been made and that the late-comers are stuck with some (hopefully delicious) unsellably expensive tea.

From another angle, this article is a good reminder that no matter how fun a hobby tea can be, it's still ultimately a commodity and is subject to even the most basic economic principles of supply and demand. For those of us who don't reside in China, it's easy to feel toyed-with when the price increases are piled onto our already marked-up tea prices. Additionally, when a tea's value achieves such a status, on come the fakes--you can bet there are hundreds of kilos of cheap Shui Xian being sold as "real" Da Hong Pao. Another bad sign for us consumers. What to do? It's still the best policy to buy from vendors you trust who have as long a history as possible and a close relationship with their tea producers--one of the reasons we count ourselves lucky to partner with Seven Cups, who I've just now seen has its own article on the same subject!

Finally, this article provides yet more evidence that there's a lot more going into your tea cup than just a few leaves from a bush somewhere in the far East. It can be pretty interesting and bewildering to dive down the rabbit hole and find out just how much is going on before the hot water hits the leaves in front of you.

Elliot