Quality Puer tea is worth its weight in gold, with appreciation in value generating annual returns on investment of up to 15%. And with initial capital outlay for the trade being relatively low, young people are getting into the business, writes DAVID TAN.
OVER the last five years, the raw Puer tea trade has attracted a lot of young entrepreneurs below the age of 40 into the business, what with the steady appreciation in the value of the fermented and aged dark tea generating 10% to 15% return on investment yearly.
The price of a high-grade 357g Puer tea cake from famed regions like Lao Ban Zhang and Yi Wu in Xi Shuanbanna, Yunnan, is now over RM2,000, compared to just RM200 to RM300 when prices were at their lowest.
The price of Puer tea from the other established Puer tea areas like Nan Nuo, Jing Mai, Lao Man Er, and Meng Song in Xi Shuanbanna, is currently at RM350 to RM700 per 357g cake, compared to about RM80 in 2007.
It also helps, says Tea Home co-founder Lee Yaw Choong, 32, that the capital barrier entry to the business is also not very steep.
The initial capital outlay required is about RM300,000, with RM200,000 going towards the stocking up of a mixture of medium and high-range Puer tea. Ten years ago, the outlay was about RM180,000.
“This makes it possible for young entrepreneurs to get a couple of partners together to start the business,” he says.
Young entrepreneurs are also attracted to the trade because it can be conducted easily via the Internet.
“For example, one can easily source quality Puer tea leaves via the Internet at very attractive prices,” Lee says.
However, the sourcing of Puer tea leaves, whether through the Internet or directly from wholesalers and collectors, is never a simple process.
“Puer tea cakes that are processed according to the recipes of well-known factories such as Da Yi, Xia Guan and Jung Cha have a complex full-body taste, as they are made from Puer tea leaves of different trees, mountains and seasons.
“On the other hand, Puer tea cakes made from tea leaves belonging to Puer trees of a single mountain leave a fresh bitterness at the tip of the tongue. This type of Puer tea cake are processed without a specific recipe, relying more on the natural taste of the tea leaves,” he says. According to Lee, the trend currently is to speculate on Puer tea leaves harvested from a single mountain, which has increased the value of such tea.
“This has led to a correction in the prices of Puer tea cake produced from Da Yi, Xia Guan, and Jung Cha, the famous Puer tea factories based in Yunnan,” he says.
In 2012, the price of Puer tea cake from Da Yi factory rose to RM1,800 for a 357g tea cake from about RM95 in 2006.
“Since then the price has declined. It is now priced at over RM600 per 357g cake,” Lee says.
However, there are also special editions of Puer tea processed in 1989 by Da Yi factory which are now priced at about RM6,000 per 357g cake, stresses Lee.
“We sold 14 units of such Puer tea cakes from 1989 to a Hong Kong investor in 2015,” he says.
From 2006 to 2008, when Puer tea prices were at the lowest, Puer tea collectors invested in a lot of Puer tea, adds Lee.
“Now that the prices of Puer tea have climbed back, many of them have opened up tea shops. This is the reason why so many tea houses have mushroomed in the northern region of Malaysia in the past few years.
“To compete in the market, they sell their collection of Puer tea leaves at very attractive prices, bringing down the prices of certain range of Puer tea leaves,” Lee adds.
According to Lee, there are about 100 small and medium-sized tea houses in the northern region.
“The market size of the Chinese tea market in the northern region is about RM10mil, of which about 60% to 70% is dominated by Puer tea,” he says.
Ng Mei Ling, 25, the director of Golding Tea, says her company only sourced Puer tea leaves from old trees aged about 100 years from well-known Puer tea mountains.
“This is because old Puer trees are able to extend their roots deep into the ground to absorb nutrients to stored in the leaves.
“Puer trees that are farmed do not grow very tall and therefore do not have roots deep into the ground to extract the nutrients,” she points out.
“I personally visit the mountains during spring and autumn, and stay there for weeks to make sure that we collect only the tea leaves from old trees.
“We never source our Puer tea leaves from middlemen or wholesalers, as we want to ensure that the best Puer tea leaves are sold to our customers,” she says.
Golding Tea also sells its teas to the corporate sector.
Ng says the company packages Puer tea and tea accessories in attractive hampers meant as souvenirs for the corporate sector.
“It is very fashionable for big companies to give out Puer tea as souvenirs nowadays. We can also print out the name of the companies and their logos on the packaging,” she says.
In 2015, the most expensive Puer tea cake (357g) sold by the company was from the Lao Ban Zhang region. It fetched RM15,000, according to Ng, whose company operates in Kuala Lumpur and Penang.
The consumption of Chinese tea in the northern region has declined over the past three years by about 30%, according to Yeap Kim Cheok, 58, managing director of Ten Yee Tea Trading.
“The size of the Chinese tea market has dropped as tea lovers have slowed their spending on tea from the market. This has to do with the rising stock of tea kept at home by tea lovers and connoisseurs.
“When they go out to tea shops, they would bring their tea along, which cuts down their expenditure on tea. The stock that is kept at home could last three to five years,” she says.
Lately, the weakened ringgit has also impacted the consumption of quality tea.
“The price of quality Chinese tea, especially Puer, has increased by about 30%, due to the weakened ringgit,” she says.
However, there is an increase in the number of young people, aged between 25 years and 35 years, drinking tea nowadays, but their spending power is limited, according to Yeap. She says another reason is because Malaysia is still a good destination for aging Puer tea due to its humid weather and the low rentals of storage space.
“This is why Malaysia is known as one of the key centres in Asia for purchasing quality Puer tea,” she says.