Tuesday, 1 May 2012

Why does tea cost so much?

grouchy as I want to be
It all started with this innocuous query on twitter:
Sounds like a simple enough request, right? 'Why does tea cost so much?' Why, indeed. 'What're acceptable prices?'

I'm afraid I can only give a small sliver of the answer. My knowledge of the tea industry is only from the perspective of the end user. The customer.

someone better qualified

When I have questions like this, I often turn to Xavier (@teaconomics). He studied economics, and has a mind for such things. When he and I visited tea shops in Nice earlier this year, he had a very logical and well thought out response to 'Why does tea cost so much?'

If you don't know his blog, you really should take a gander here: Teaconomics.

He writes about where tea and economics meet (hence the blog's inventive name). Although I couldn't begin to create the in depth analysis he does, I find his writing compelling and tend to celebrate whenever I see a new blogpost over there.

Having dealt with the reality that there are economic factors that make tea expensive, now I can get on to my more emotional response. And the way I'll begin my answer to whatever financial rationalisation you throw my way is with one simple declarative word: Bollocks!

Yes, it's a commodity. I understand that this is a product that comes from a plant, and that growing conditions can make for a myriad of hassles and unforeseen circumstances. There are tea auctions and logistics to bring the sacks of tea to your country. If you've got a stand alone shop, there's rent and overhead and I could go on and on about that part of the argument.

but wait just a minute

However, I continue to disagree. I believe tea doesn't have to be so dear. It really doesn't.

The impression I get is that tea is marketed and sold as a luxury item. That means it's purposely priced highly and intended to be viewed as something to be valued. I understand that and if I thought it was the actual tea growers who were getting the inflated profits, I might be more sympathetic.

From what I've heard and read, that's rarely the case. The sometimes obscene prices go primarily to those who have marketed it. I'm not against marketing at all.

I'll be in the United States again later this May, and I danced around this topic when I was there last year. It's something I'm sure I'll write about more extensively. The good news for Brian and others tea newcomers is that many of us are constantly on the lookout for reasonably-priced tea.

Is that really too much to ask?

(photo source: Source of Inspiration)


  1. This is also one of the reasons why it will cost even more in the future: http://www.economist.com/node/21549956

    1. Thanks for that Miha. I've skimmed the article you linked to and will read it more carefully. Very interesting topic.

  2. I like this old man photo :-)

    I guess it really depends on what's too much. Sometimes the definition may not be straight forward. For example, I always find the low quality supermarket teabags are really expensive. You may spend just $2 on one box, but that's only 10 bags added up to 20g, and it's equivalent to $100 per kg, which is outrageous for its quality. In this case, the answer "why it costs to much" would be "bagging materials, packaging and marketing costs".

    Also I guess the market size matters. I think in the future, the production costs of tea will keep increasing, as labor costs in tea producing countries such as China and India is increasing rapidly. But with larger market size and stronger competition, hopefully the "waste" in the middle of the trade chain is less, and the trade chain will be probably cut short with direct trade. So eventually, I hope tea price will not increase, and there may be even more options of better tea at lower prices.

    1. Quite a good couple of points Gingko.

      The relatively high price of brand name tea blends sold in supermarkets is quite astounding. And if I was arguing the other side of this, I'd point out how many infusions of a high quality Oolong or green tea you can get. That's certainly a good deal.

      Did you look at the site that Miha included above? It goes along with exactly what you're talking about. The quality of life/cost of living in tea-producing regions will most certainly make tea even more dear.