2007 was a turbulent year for those involved in puerh tea, especially tea businesses that were heavily invested. After a decade of escalating prices the momentum driving the value of puerh tea would peak during the spring of 2007. However the high prices could not hold and as the price for puerh tea tumbled, the first crash of the modern day puerh market was at hand. Fueled by heavy speculation and in part the wave of euphoria generated by the Chinese national media the price of puerh tea was at an all time high and was no longer sustainable without a significant correction. Furthermore the realization that the quality of puerh tea was increasingly being compromised for bigger profits by producers had begun to greatly dampen the euphoria of puerh tea leading up to 2007. A lack of confidence in new products whereby quality was sacrificed for quantity increasingly deterred buyers and investments. By mid-2007 the puerh tea market had crashed. As prices plunged to deeper depths for the reminder of the year many tea businesses that had gambled on escalating prices would be forced to close their doors.
“In a nutshell, the Yunnan Puerh tea crash of 2007 was absolutely caused by human factors. First, there were the well-known processing plants, taking profit from the market as their own. Second, a certain company rented out its name but didn’t ensure product quality, thereby losing the confidence of the customers. Third, Yunnan anxious for ever greater results, falsely reported production, increasing production every year and flooding the market. Fourth, tea sellers went to great lengths to fool consumers, causing Puerh consumers to back off.”, excerpt from the article Thoughts on the Business of Puerh by He Jing Cheng fromThe Art of Tea No.8
Revisiting the crash of 2007, a significant correction was made and a painful lesson was handed out. In the aftermath the Chinese authorities attempted to restore confidence in the puerh market by issuing tighter regulation and conditions that would stipulate what teas could be called - Puerh Tea. At the heart of the new ruling the use and production of raw materials and puerh tea respectively must be exclusive to the geographical location of Yunnan Province. Meanwhile the tea market would seek to re-establish quality by increasingly shining the spotlight on gushu raw materials (tea leaves that are harvested from big trees that can be centuries old) and further emphasizing the names of famous tea growing regions. The post-2007 crash would also see big tea factories like Menghai Tea Factory taking up the trend by redirecting their significant resources towards heavily marketing and promoting countless limited and special editions that would consist of big tree materials in association with the famous regions of Yunnan.
From my own experiences I remain grateful that my instincts kept me away from the calamity that was the 2007 Puerh Market Crash. Thinking back to the years 2006-2007, the most recurring memory I have is my many encounters with newly produced raw puerh tea that had an uncanny similarity to Chinese green tea. I also recalled many of the famous regional teas I encountered (ex. Yiwu, Banzhang, Jingmai, Nannuo, etc) all having a very generic character and clearly missing their own definitive characteristics that would be the hallmark of each famous region. I had long suspected that overharvesting and deceptive blending of raw materials was rampant. It is from these negative memories and circumstances at the time that I find puerh tea produced in 2006 and 2007 to be a risky proposition compared to other years that are less driven by market speculation and bad practice.
I have mentioned this already in my Tea Market Series but it is important to reiterate it here - I believe that the first and most important step to ensure consumer protection is by ensuring that we have educated consumers. This is because the best person to consistently look out for your best interest is YOU. It is worth remembering.
