Valuation for Puer

I have not seen Harry for over three years now, so it is okay to read my notes on the iPad waiting for him in the uncomfortable chair of this pricy little cafe over the basement entrance to the theatre underneath this giant skyscraper that is one of the world's most expensive property — the International Finance Centre, Central, Hong Kong. The coffee is mediocre and the space is crammed. It is understandable; they must have a big rent to pay.

Puer Discus: Investment or Just a Toy?

Harry is the head of an investment advisory of an international financial company. His office is high, high above this cafe. It was a delight to catch up with him; those I maintain friendship with are all nice guys after all.

He asked me quite a bit about collecting puer discuses (puerh cakes, so to speak). Like a lot other high income middle class males in Hong Kong, Harry aspires to collecting red wine and those compressed tea objects, thinking that they will appreciate in time and are good gastronomic products. Harry was certainly not the first friend to ask about such subject, and I believe a lot have been persuaded by the many seemingly harmless neighbourhood teashops into stocking up at least a few.

Confronting the Facts

Pu'er Special Feature 1&2

Pu'er, Pu-erh, or Bolay?

Pu'er: Cooked or Raw?

Myths of Origin and the Reality of Blending

Valuation for Pu'er

Maturing Pu'er

Tea Health: The Difference between Shengcha Pu'er and Pu'er

Related stories:

Modified Teas: What are compressed teas?

Dark tea: From crude tea to treasure — a demystification

Post-fermented teas (aka dark teas)

The bigger reason that we have developed two whole special features to write about puer is way beyond if someone has been hoaxed for a few thousand dollars — or a few hundred thousands — or some teashop friends have been trapped with a few millions of tea "cake" stocks. We feel obliged to state facts and reality of a tea subcategory because we think that the trade needs to correct itself from harming its own long term development, and from discouraging the popularization of real tea. It is only through empowering the mass with knowledge that they can make intelligent decisions for themselves; that any culture, be it tea or any other culinary category, or any other human activities, arts, technologies, etc for that matter, can prosper. At the moment, there simply is too much myth around puer for it to be purely just a tea.

If you have read my other writings about compressed puer products, you may remember that I do not have high regards of them in gastronomic values. What about investment value? Aren't they appreciating in time, if we discount those inflated price during the height of the puer price bubble?

Don't all puer appreciate anyway?

They really do, overall speaking, but there are big details (not even expressed in small prints) that you should know, if by any chance you are interested in buying some for your "investment".

Before we go into these "fine prints", let's revisit two major conditions:

1. There are two distinct sub-categories of compressed puers: shengcha and shu cha. Shengcha is said to continue to improve in taste value, while some believe shu cha reaches peak in less than 10 years. Because of that myth, shengcha is always fetching a higher price than shu cha even at the same chronological age. Shengcha is the type that takes up the majority of speculative trading even to this day.
2. Most transactions for puer speculative trading has been business to business, i.e. between factories to wholesalers, wholesalers to shops, and between shops. Many, many shops are holding on stocks that are not going at the moment of this writing. There is no figures, but everyone in the trade know, and reluctant to talk.

If you do not mind overpaying a few cups of tea, it is okay you buy following your impulse. If you want real value for your money or look at it as investment, you have to know in the very beginning that whether you are already over paying for a decorative disc made of tea. That brings us to point number 1:

No valuation standard in compressed puer

You may have seen a few pamphlets or magazines printed in simplified Chinese giving figures of so and so grade of so and so year is worth this and that dollar (or Chinese yuan, so to speak). The fact is, within Mainland China, there is no freedom of press and no freedom of association, do you think there is any independent price report? What do you think fueled the price bubble in the beginning anyway. Unlike wine, there is no independent critic and no valuation system for the commodity at all. As far as I know, there is not even a task force set out to do that or any institution intended for such development. It is a price tag open for interpretation.

The few record setting prices in auction reports that perpetuate the internet were rare arrangements rather than recurring functions of a normal commodity market. As in selling of art pieces, antiques, or newly constructed apartments in China, eyebrow raising prices are arranged performances intended to set the momentum for price surges to the benefits of the commodity producers and wholesalers. Puer discus is no exception. For a market whose access to information is restricted and alternative voices punished severely, manipulation of anything is relatively much easier than in the West. This leads us right into the next issue: » continue on next page »

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