Frugality Policy Cuts Long Jing Prices by a Third

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Long Jing, the fabled “Dragon Well” green tea of China more than any exported variety reveals the nuances of trade year to year.

It is one of the most popular and price sensitive (read speculative) teas on the market. As the 2014 harvest is now arriving, tea retailers benefit from a close look at this year’s pricing which bodes well for importers.

Irrigation is not widespread in the tea lands of China and last summer when temperatures topped 108 degrees with little rain the heat-wave killed a significant number of bushes near Hangzhou in Zhejiang Province where the best Long Jing thrives. Tea bushes, often many decades old, have a reputation for weathering the toughest extremes. Those in Zhejiang ultimately produced a fine early spring harvest known as the first flush.

The hand-plucked leaves of this beautiful green tea are pressed flat during the pan-firing process. Long Jing is prized both for its flavor and the artisan’s skill in pressing and sliding the leaf by hand in an iron wok. This tea is the drunk by 370 million Chinese.

By 2005 some of these teas sold for RMB 60,000 ($9,172) per kilo. The price then rose 70 times to the point where three government officials in 2011 jointly spent RMB 180,000 ($28,580) for a half kilo sold at a charity auction. In 2012 prices for high quality Long Jing were $2,600 (RMB 16,000) per kilo or $1,180 a pound.

The China Times in Taiwan notes that this year “few customers are buying high-end tea, in sharp contrast to previous years, at Long Jing Village, a major production base for West Lake Long Jing tea.”

“Buyers are only offering us between $805 (RMB 5,000) and $900 (RMB 5,600) per kilo, a third lower compared with last year,” one farmer told reporters.

To rein in excess spending in December 2012 the Central Committee of the Communist Party of China (CPC) adopted an “eight point” austerity program requiring government officials to strictly practice “frugality and clean up undesirable work styles, including formalism and extravagance.”

In 2013 prices dropped by half. Fewer government officials now order tea and those who order tea are ordering less. Previously 20% of the tea was sold to government officials.

The Chinese are getting RMB 6,000 to 8,000 per kilo ($950 to $1,250) this Spring with most bringing around RMB 3,000 ($480) a kilo. This is the wholesale price at auction; retail prices are as much as five times higher, around $1 per gram.

Quantities are good and even the finest teas are readily available for export.

The China Times quoted Lu Jiangmei, chairwoman of Hangzhou Zhenghao Tea Leaf, one of the largest dealers of Long Jing tea, with 30,000 kilos of tea leaves sold last year. About one sixth of the volume was high-end tea, according to Lu.

“Unlike previous years, when “major clients” from across the country ordered 70% of their high-end teas, the company has decided to control purchases to prevent excessive inventory,” she said.  “If the tea is not sold this year, it will be worthless next year when new tea leaves are harvested,” she said.

To boost sales, she said the company is looking into online trade and selling at lower prices.

How favorable are the rates?

American wholesalers can purchase quality Long Jing at 2001 prices.

Mary Lou and Robert J. Heiss have been offering fine teas since 1974. They have visited China regularly for the past 14 years and generously share information via the Tea Trekker’s Blog. The blog is a source of reliable advice online and their handbooks are well-thumbed editions in my library.  Here is what they have to say about this year’s pre-Qing offerings:

“Our ShiFeng and Weng-jia Shan Long Jing shipments just arrived and are ready for drinking. These geographically-highly-controlled selections are made from pre-Qing Ming leaf (plucked prior to April 5, 2014) and represent some of the most elegant and sought-after teas of eastern China,” according to Tea Trekker.

Tea Trekker is priced its Meijiawu Village Long Jing (Grade AA) at $48 for 4 oz. or $192 a pound. The ShiFeng and the Weng-jai are both retailing for $168 a pound (1050 RMB Chinese Yuan).

In 2001 the average wholesale price of West Lake Long Jing from Hangzhou was around RMB 700 ($111) for a half kilo. Last year West Lake Long Jing was auctioned at between $970 (RMB 6,000) and $2,200 (RMB 14,000) per kilo, tea auction company manager Zhang Yufu, told China Times.

“It is likely to go down even further this year,” said Yufu.

Source: Want China Times, STiR Tea & Coffee International

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