> As I'm sure you know, Lew, any pu'er tea may or may not improve over
> time, storage being only one of the determining factors.
> Nevertheless, regardless of a tea's future quality, its future _value_
> (like that of any commodity) very possibly may have plummeted, as the
> article well describes. *Hence the "showman's smile" that accompanied
> his claim, I assume....

Yes, Pu-erh as an investment has plummeted in value just like my 401k
plan is currently doing. What I do believe is happening in the puerh
market right now is what I would call "right sizing" within the tea
industry. Aged puerh and speculation aside, when looked at it from a
cost of production point of view, puerh was long undervalued in terms
of its production costs when compared to the cost to produce other
teas which sold for much higher prices. I think industrial economics
will stabilize the market at a level more in line with traditional
teas. In other words it will be a factor of raw material cost, labor
cost, transportation cost etc. I believe this "true market value" will
stabilize at a level much lower than "bubble" pricing yet higher than
pre - bubble prices.

Puerh is an agricultural product, and as such it is a commodity.
Quality will always bring higher prices but lets face it, how many
agricultural products sustain unrealistically high prices in relation
to the cost of producing them? Sure there are bubbles, bad years,
drought, disease, etc that will spike the supply and demand equation,
but in the long run it is still an agricultural product whose primary
cost is the land and the labor to bring it to market.

Aged puerh is a different animal and will ALWAYS be subject to the
laws of speculation, supply and demand, hype, maocha quality, storage
conditions, etc. Aged puerh will always be priced at a level equal to
what the market will bear. The connoisseurs of the world will continue
to create a demand for the truly good stuff, the speculators will
capitalize on that, and the con-artists will continue to try to cheat
the uninformed. However, I doubt you will see the value of a 1950s Red
Label drop, the demand for these scarce quality vintages is still very
high. In 20 or 30 years from now the value of the current early 2000s
cakes will ultimately be determined by its quality, especially since
many inferior cakes were produced and the market will be glutted by
these vintages. The demand for truly superior aged puerh will always
exist amongst the connoisseurs and the elite so the good stuff WILL
continue to increase in value even if you paid $100 a cake for current
year production, but the value will be determined by quality rather
than mere speculation.

What we just saw these last few years was a bubble created by a sudden
increase of demand from an ever increasing, newly created, middle
class Chinese market. It was a fad and symbol of new found wealth. As
production increased to meet the demand, the value, and the quality,
of current production plummeted. Many inexperienced people got into
the market at all levels, many producers put virtually anything into a
cake and called it puerh, many inferior teas were brought onto the
market, and many speculators and consumers made poor buying decisions.
It will probably take another year or two before the market fully
stabilizes, the focus will return to quality and the inferior
producers will be eliminated.

That my two leaves worth, brew it or leave it.....

Mike Petro

www.pu-erh.net