What Determines the Price of Your Cup of Tea?

21.jpgWhy is it that we will spend a lot of money on one thing but grouse about the cost of another?

Why might a $12 cocktail be okay but a $4 cup of high-quality tea, not so much? (To clarify, I am referring here to truly high-quality loose leaf tea, brewed correctly!)

You might argue that you are paying for the expertise of the bartender because, well, for most of us, we are paying for the expertise of that bartender.

However, the knowledge required to produce an exquisite tea has been honed by centuries of tea masters! And this knowledge covers both the cultivation of the plant and the processing of its plucked leaves.

Consider a pearl oolong, for example. That rolled tea leaf was first hand plucked—after the tea plant had been planted, pruned, carefully tended, oftentimes for decades and decades. Like wine, many, many factors impact the quality and flavor of the tea! (Think soil, elevation, rainfall, general climate, species and age of plant.) Further, conditions in one year will affect the tea in following years.

tea leaves growingAnd, again like wine, there’s the processing to make the finished product. For tea, there is pretty much no end to how this might be done!

For oolongs and many rolled teas, for instance, the procedure is lengthy and is both an art and a science. And sometimes a closely held secret, as with yellow tea.

The unique smoky flavor of a genuine lapsang souchong depends on the specific variety and environment of the tea plant and on the specific species of the pine whose wood is used to dry the tea leaves.

As with any crop, all these myriad elements factor into the price you end up paying for a cup of tea. Obviously the more labor-intensive or rare the tea, the higher the price.

Further, like all agricultural products, tea yields are dependent on a zillion things, such as how many pests the growers have to contend with or weather conditions. For example, the lack of rain in Assam and West Bengal during this past May meant estimates of 20–30% less tea than what May 2017 had yielded. Things didn’t improve as the season went on. On July 6, due to the lower yield, tea prices went up over 6% from a year ago.

Among the many costs of any type of farming are wages paid to employees.

Assam Tonganagaon

In Assam, wages went up 45¢/day, which sounds like absolutely nothing unless you know that the average wage in India is around $2/day, making the increase not insignificant.

Strikes, such as happened in Darjeeling last year, affect not only how much or how little tea is harvested, but the state of the tea gardens (which impacts succeeding years).

Then there’s the whole global economy and interactions realm. For just a peek into how complex this can be, consider this:

Kaushik Das, vice-president and sector head, corporate sector ratings, [financial services firm] ICRA said, “The recent trade sanctions imposed on Iran by the US, which affect US dollar trade, are likely to provide opportunities for higher exports of orthodox teas from India, given the payment mechanism between India and Iran, which puts it at an advantage relative to Sri Lanka, the largest exporter of orthodox teas to Iran.” The rise in export volumes from Kenya may place some pressure on Indian CTC tea export volumes. (Ghosal July 2018)

Then of course there are the costs of your supplier, whether it be grocery store or tea shop. And then if someone expertly brews your cup, that service comes with a price.

So perhaps we should be surprised we aren’t paying cocktail prices for our cup of tea!

Assam Tonganagaon

(Plus, once we share a pot of tea with a friend, isn’t the tea then priceless?)

–Bolton, D. “Interim wage hike quiets Assam but Darjeeling remains unsettled,” World Tea News, July 9, 2018.
–Ghosal, S. “June tea prices up as production fall,” The Economic Times, July 6, 2018.
–Ghosal, S. “Tea output may fall 25% due to dry spell,” The Economic Times, May 30, 2018.

One thought on “What Determines the Price of Your Cup of Tea?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s