Tuesday 19 Mar 2024
By
main news image

Tea has always been a highly sought-after commodity among the Asian community. But in recent times, teas such as pu-erh have attracted greater investor interest.

 

TEA is highly regarded for its medicinal qualities and health benefits. Green and black tea, for instance, have antioxidants that help to prevent some types of cancer and cardiovascular or degenerative diseases. Hence, many are willing to pay top dollar for the commodity. 

Market intelligence firm Euromonitor reports that tea has seen rising demand over the years. China, still one of the world's largest tea markets, saw export growth of 2.1% last year while major exporters Kenya and Sri Lanka recorded steady growth.

Chinese tea is also growing in popularity as an alternative investment. Jadryn Loo has been collecting and investing in tea for more than a decade. She keeps her collection both locally and in Singapore, as she regularly travels to the city state for work. 

A lawyer by profession, Loo travels the world looking for the best investment deals. She attributes the rising popularity of tea as an alternative investment to its status as a wealth symbol. 

“In ancient times, tea was a gift among royalty. Tea has always played a large role in society as a cultural and status symbol, and this is something the Chinese have revived in recent years,” she says. 

Chinese tea has seen strong demand from affluent investors, particularly for oolong and pu-erh. At the first rare tea auction held in Hong Kong in November 2013, a 20kg box of narcissus oolong tea was valued at almost HK$1 million (RM483,109). And at the rare tea auction last year, one cake of Qianlizhen Songpinhao pu-erh — one of the rarest teas around — was valued at HK$2 million.

The appeal of pu-erh 

While there are seven categories of tea and more than 20,000 species, pu-erh attracts only serious investors. Other teas are not as desired as they are largely mass-produced and offer fewer health benefits. 

Pu-erh’s popularity saw a revival in the early 2000s, when collectors began speculating and prices skyrocketed. Values have fallen and stabilised since 2010, but the tea remains a popular investment. 

According to local tea experts, investors in rare and antique pu-erh teas can see up to a tenfold return on investment. Normally, the value of their investments is realised through tea sellers or auction houses in China and Hong Kong, and is highly dependent on “willing seller, willing buyer” transactions.  Now that auctions are held in places like Hong Kong and China, there are more opportunities to sell speciality teas.

Pu-erh’s potential as an alternative investment was barely recognised in Malaysia before 2004. Its market share was only 30%, compared with the more popular oolong tea which had a market share of about 70%, according to Loo, who has been following the market for more than a decade now. 

New teas would cost about RM15 per piece (357g) while aged teas (more than 30 years), antique teas (more than 100 years) and rare teas could cost anywhere from RM2,000 to RM20,000 per piece. People often bought them in pieces. Loose tea leaves that are of a lower grade were usually sold to coffee shops and restaurants. 

In 2006, pu-erh gained covetous status and prices began to shoot up. Speculators in China were buying loads of the tea to drive up prices. At their peak, pu-erh cost about US$150 per pound. 

Pu-erh’s market share in Malaysia reached a peak of 80% in 2008, Loo recalls. New teas were sold from RM30 per piece, but buying patterns changed and investors started purchasing by the basket (seven pieces) or by the container (hundreds or thousands of pieces). 

The market softened in 2010 — a 20% to 30% correction — says Loo, and has remained in that price range since. This is only for the general pu-erh market and not the aged, antique or rare teas, she points out. 

Antique and rare teas, which cost anywhere from RM2,000 to RM20,000 in 2004, have seen more than a tenfold investment gain over the past decade. Loo herself bought a piece at the very early stage of the pu-erh wave in 2004 for RM2,000. That piece is now worth more than RM200,000, according to her tea supplier. 

While Loo does not disclose the brand, she says the tea with the red and yellow label turned out to be one of her best investments. Nevertheless, she is still unwilling to sell the tea.

When it comes to the price appreciation of tea, there are three things to consider — the age of the tea, its brand and its quality — says Loo. Antique teas are usually wrapped in paper that carries a unique stamp. By looking at the stamp, collectors know which factory produced the tea and when, according to C F Wong, owner of Cha-No-Yu tea shop. The three most famous factories in China’s Yunnan province are Meng Hai, Xia Guan and Kun Ming. 

Collectors and investors dabble in other teas as well, but pu-erh is the most popular. The tea is mostly sold at auctions or tea houses. 

Lim Hock Lam, the founder of Purple Cane Tea House, one of the first tea houses in Malaysia, recommends the 15‘Yi Wei Man Yun Qing Bing label to those who are new to investing in pu-erh. The company promises investors a steady return of 7% a year and a guaranteed buy-back of the tea. This deal is exclusively available at Purple Cane. 

The 15‘Yi Wei Man Yun Qing Bing tea comes in a compact purple box. Containing five pieces of tea, the box is priced from RM3,000 for pre-orders (the retail price is RM4,425). 

Historically, the pu-erh that has commanded one of the highest selling prices at auction is the Song Pin Hao (produced in 1920). Three hundred grams of the tea was sold for more than RMB1 million (RM606,272) in China. 

Antique teas are those that are almost 100 years old or older, and they tend to command higher prices. Antique teas are packed in bamboo, while those produced after World War II are packed in paper. 
The export of pu-erh began in the 1970s. Interestingly, the tea also carried English names. This was the start of its global popularity, says Wong, who started his business in 1998. 

He adds that he could sell a few bricks of tea at RM2,200 per piece in 1999. But today, they are worth more than RM250,000. However, the tea is only worth that much if it has been kept properly. 

Chan Kam Pong, owner of Cloud’s tea house in Hong Kong, concurs. He says the tea’s current availability, popularity, ageing ability and storage condition also matter. Like wine, tea that comes from reputable plantations or factories tends to command higher prices, he adds. 

Malaysia is said to be one of the best places in the world to store tea because of its high humidity and temperature. The country offers the perfect environment for fungus to thrive, says Chan. 

Fungus is an integral part of the fermentation process. As long as it is stored away from direct sunlight, it should ferment quite nicely, says Loo.

hocklam_pw_theedgemarkets

This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on June 15 - 21, 2015.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.

      Print
      Text Size
      Share