Pu'er is a popular gift.

The tea that is closely associated with Yunnan Province, Pu'er, is widely popular not only because of its history, flavour, culture and health benefits, but also because its quality improves with time and environment. It becomes more mellow and aromatic the older it gets.

Pu'er prices have been steadily on the rise, but have now suddenly accelerated to an annual rate of 20%. The ever-present drink is now pushing demand to greater heights: Yunnan people offer Pu'er tea to their guests and present Pu'er tea to people as gift. Visitors to Yunnan also buy Pu'er for their own use or as gifts for relatives and friends. Furthermore, Pu'er has no best-before dates and is said to be one of the best health drinks on the market.

In order to regulate the Pu'er tea market and give people a better understanding of the tea, the provincial bureau of standards and metrology announced the definition of Pu'er tea in March 2003 as "loose tea or compressed tea fermented and processed from the Yunnan big leaf species grown in certain parts of the province".

Good Pu'er tea is priced according to its quality and age, while "mature" Pu'er is kept in storage for six to seven years and "raw" Pu'er is stored for about 10 years. Pu'er (both raw and mature) and from three to five years old is priced at between Rmb200 and Rmb600 (HK$192 and HK$576) per catty. By contrast, prices of "old Pu'er" between five and 10 years old ranges from a few thousand yuan to over 10,000 yuan (HK$9,615) per catty.

When you get to the "very old" variety of Pu'er offerings of over 10 years old, then this moves into the collector's realm for a tea that is rare and valuable. Such teas are hard to come by and are mostly held in private collections or stored by teashops as heirlooms.

Some high-end tea clubs charge several hundred yuan or even over Rmb1,000 (HK$961) for just one serving (of between 5 and 7 grammes) of 5-to-10 year old Pu'er. As can be expected on this basis, the price is phenomenal for one serving of 10-year-old-plus Pu'er tea.

In an auction at the 2005 Guangzhou (International) Tea Expo, 250 grammes of old Pu'er were sold for Rmb180,000 (HK$173,000).

Packaging to enhance value?

The demand for Pu'er tea and the high profit margin of this business have generated good opportunities for investors, helping to revive the prosperity of the Yunnan tea industry, one of the Province's dominant industries.

According to Kunming Customs, Yunnan exported 3,400 tonnes of tea in the first half of 2005, up 28.7% year-on-year. Hong Kong, Macau, Japan, Germany and the Netherlands are the main destinations.

There are three large tea marts in Yunnan. These are the Yunnan Tea Wholesale Mart, Yunnan Yuncha Tea Leaves Trading Mart and the Xiongda Tea City.

Yunnan boasts more than 20 hectares of tea plantations, with total output amounting to over 90,000 tonnes, ranking top in the country in terms of planted area and third in terms of output.

Due to low productivity, a backward means of production, low processing level and primitive processing equipment, it is little short of miraculous that the tea stands out.

Hitherto, there has also been little conceptual work on packaging and design, while a weak business concept and lack of experience in tea marketing have not helped.

Yunnan tea is a primary product of which only about 3% has gone through a form of fine processing. So Yunnan tea trails behind more celebrated types produced in other provinces both in terms of price and export volume, while ranking beyond 10th in output value.

The tea industry in Yunnan is trying hard to invert the conception of Pu'er as being "a first-rate tea with second-rate packaging, a third-rate price and fourth-rate marketing". As Hong Kong companies have a leading edge in finance, design, packaging, planning, management consultancy and market promotions, support in these areas would undoubtedly help Yunnan's tea enterprises to market tea internationally.

from Helena Peng, Kunming Office