After a long hiatus from documenting my observations—primarily focused on the local Kunming tea markets—I’ve decided to share my thoughts again. I must emphasize that these are my personal and highly subjective observations, though they are also informed by conversations with other vendors in the area. Now, five years later, I can say with confidence that several of my earlier predictions are unfolding, with more likely to come in the near future.

The rise and fall of Puerh tea business.
In 2017, we began producing our own puerh tea cakes, having previously only resold other brands. That year marked the peak of the market, with prices at their highest and demand booming. It was a challenging time to start, and our first cake came from one of those “no name” villages along the Myanmar border—places untouched by tourists or major tea dealers.
The situation did not improve in 2018, as purchasing good mao cha remained difficult and costly. This led me to question how long such trends could continue. In 2019, I published Tea Market News 2019, based on my observations, followed by a piece on Pu-erh Tea Business, where I highlighted some of the more absurd aspects of the industry and argued that the business model was unsustainable. Admittedly, I made one major misjudgment: I expected that the prices of renowned villages like Bing Dao or Lao Ban Zhang would never fall. Yet, this year, the price of Lao Ban Zhang and Bulang Shan teas has dropped by 50%.

So where did things start to go wrong? It probably began with the retail concept itself. Opening a shop and hiring staff requires confidence that your products will generate sufficient profit through average sales. Looking back, it seems there was little calculation or planning involved when new shops began to spring up everywhere. The prevailing attitude seemed to be, “Let’s try it because it worked for others.” Most of these new shops offered only new, young sheng puerh—which appeals to a very narrow audience—sometimes even sourcing from just one place or village, limiting their market even further.

Over time, some shops broadened their range; a store once called “Bing Dao” later rebranded as “Lincang,” likely because they could no longer afford genuine Bing Dao and had to diversify with teas from neighboring villages. Wholesale suppliers have transitioned into retail shops because they could no longer sustain low wholesale margins due to declining annual sales volumes. This caused a spiral effect, as they were losing long-term wholesale clients like us and had not yet built up any retail clientele.
Shops specializing in expensive teas often relied on tourists and customers from China’s first-tier cities. However, as source prices rose, these businesses shifted from merely unappealing to downright unfeasible.
Deep-pocketed investors set up networks of shops, processing factories, and stores in famous villages, even purchasing SUVs emblazoned with their logos to project an image of success. They attempted to create franchise concepts and large-scale wholesale supply chains, in imitation of established big producers who had built their scale and reputation over many years—with little competition and government support in their early days.

I visited one such “full OEM” business, where you simply hand over your money, and they manage the rest: tea products, design, branding, advertising, and even identifying shop locations. You give the money, and we’ll give you the keys. Basically the concept of large factories which have their own distributors, but you will have your personal brand, therefore more control of the selling price. Most of these investors had little or no real tea business experience, yet they ended up owning large stocks of tea and no established clientele. They hadn’t put in the groundwork necessary for sustainable yearly sales or for covering expenses such as rent or future harvest investments. It was like jumping into the middle of a football game without training—knowing only which goal to aim for. While some say the best way to learn is to dive right in, this business “water” runs much deeper than it appears.

The promise of the bright future.
The investment appeal was clear: aged puerh tea almost always rises in price—though not always in value, as I elaborate in my Choosing Tea article. The main allure for tea vendors was the prospect of selling “tomorrow at a higher price if the tea didn’t move today “— unlike green or red tea, which must be sold relatively quickly. So there was no time pressure, which drove up demand for sourcing ( and so the prices at the source ) . Example : with green tea, if you sold 100kg this year, you’d buy a similar amount next year based on demand. Puerh is different; you might buy a ton, sell only 100kg, yet buy another ton the next year for aging and storage. In the meantime, vendors need to sell other teas just to cover their living costs and shop rent.
High competition and the relatively low purchasing power of Kunming’s local economy made it increasingly difficult to keep prices affordable. Rents remained the same—or increased—while sales declined.

This caused the quality-to-price ratio to deteriorate each year. More about in Quality of Tea article. With rising demand for first-harvest (“tou chun”) and “gu shu” (old tree) materials, farmer prices soared. Unsurprisingly, it became common (and I’ve noted this in many articles) to see bush tea (“tai di cha”) passed off as “gu shu” and other questionable practices, which I discuss in my article on Tea Marketing. With vendors scrambling each spring to secure the best “tou chun” and “gu shu” before others, large-scale tea growing was spurred—a development whose long-term sustainability I’ve always doubted, as detailed in The Misconception of Puer Business. Some may argue that improved harvesting and processing are positive developments, and I agree to an extent, but the economic model has proven unfeasible in the long run. Some farmers simply calculate their needed annual income and set tea prices accordingly—working intensively for a few months during the spring and autumn harvests, and then earning enough not just to live, but to build homes, buy cars, or send children to study in major cities—or even overseas.

The Downfall of the Vendor / Middleman
With the rise of affordable smartphones and social media, every tea farmer in China can now access the broader Chinese market, and sometimes even the global market. While this seems like a positive development, it hasn’t worked for everyone. Many vendors lost interest in working with farmers who transformed themselves from mere producers into retailers, selling directly on social media at what they believe are market prices, without accounting for all the additional factors that justify retail pricing. Some succeeded; others did not. Building a large enough customer base to support an entire year on a highly specialized product—such as a single-village tea—is difficult, especially if one’s total production is just a few kilos. During a trip to Menghai (detailed in Bitter Tea Journey ), I encountered farmers in Hua Zhu Liangzi live-streaming “Buy one, get one free” deals, with Yiwu tea as the free gift—a clear promotional tactic.

From the source
The smarter farmers began sourcing mao cha from other areas, effectively becoming middlemen themselves, and set up shops in cities like Jinghong, Pu’er, or Kunming. Their “Tea Farmer” status gave them a marketing edge over traditional vendors, as consumers believed they were getting a better product at a better price. However, these farmer-vendors usually do not stock as much tea as established market vendors or wholesalers do.
This is where things stand today. Many vendors are stuck with tons of tea—mainly of medium to poor quality—believing it was, or still is, a good investment. But as a friend put it: “Until you sell it, it’s just a leaf, not an investment.”
Although mao cha prices have dropped significantly in many places, most vendors are not planning to buy more tea for few years to come, hoping instead to survive on existing stock till economy gets better. The challenge now is justifying the inflated prices of tea aged for only a few years. In some cases, it’s hard to sell even at cost. Many vendors are just sitting on stock, hoping the situation will improve, without recognizing—or choosing to ignore—the underlying issues behind the collapse of the puerh tea market. Some have begun a “soft transition,” moving their shops or tea rooms into larger apartments with cheaper rents. Others have left the tea business altogether; I know a man who, in 2007, moved several tons of puerh into a friend’s storage space outside Kunming and switched to real estate development.
Many tea farmers—including friends of mine—have taken up day jobs. For some, this transition is especially difficult, as their villages are hours away from the nearest town, where job opportunities and wages are also limited. Ambitious farmers who took out loans to fund homes, production facilities, vehicles, or even luxury items are now facing real financial hardship. Recently, one such farmer offered me tea at or below cost. I declined, as I was uninterested in the tea and the offered stock was too large. I expect to see more such offers in the coming years.

Stuck in Limbo
The tea market has been remarkably quiet for the past year or so. Vendors sit quietly in their dimly lit shops, turning on the lights only when a customer walks in. On social media, I’ve seen videos of some vendors lamenting how the puerh business is sinking into a deep slump. Others having a laugh, making humorous videos in their shops to highlight the challenges of this business. Meanwhile, some sellers pass the time playing cards together, pretending that everything is fine—just another slow season like any other.
There’s an ongoing, unspoken struggle about who will stay and who will leave the market. It’s widely believed, based on logical observation, that fewer shops increase the chances for those remaining to survive. No one seems eager to offer discounts these days, and there are several reasons for this restraint.
First, sellers don’t want to upset or lose the trust of customers who bought their pu-erh tea at higher prices in the past. This is especially true for the big producers, who risk loosing investors if prices drop too quickly. Second, they want to avoid triggering a downward spiral where one person’s price cut leads everyone else to follow suit, crashing the market further. Lastly, deep discounts don’t guarantee high sales volume or enough profit to cover the costs of running a business and living.
One funny example comes from a social media video where a vendor highlights this dilemma perfectly: a customer is offered a pu-erh cake at full price. When he shows no interest and is about to leave, the vendor offers a 90% discount—and the customer still declines.

The Future of the Pu-erh Tea Business
As usual, I can only speculate, but it will be interesting to see how close my predictions come to reality in the next few years. I want to emphasize that my observations apply primarily to the Kunming tea market and, more generally, to Kunming-stored pu-erh. I don’t have enough experience with the Guangzhou tea market or other regions to make any informed judgments there.
Pu-erh made from quality arbor tea tree material—not the mass-produced bush tea called “tai di cha”—harvested before 2022/23, is unlikely to see a price drop, but prices probably won’t increase significantly over the next few years. Of course, price fluctuations will depend on many factors including the quality of the tea, the reputation of the seller, the fame of the growing location, stock availability, demand, and the vendor’s financial situation, among others. So, this is my personal expectation.
Aged Sheng pu-erh over 10 years old will likely continue to increase in price, but at a much slower pace than before. Prices for teas dated before 2007 remain variable as usual. New teas and mao cha from farmers are already seeing price declines in many areas, although some vendors still cling to last year’s prices. For example, in Yiwu, I was told this spring that they want to maintain business stability and keep investors’ trust, but I believe price adjustments there may be inevitable in the near future.
Smaller producers with limited output will probably keep their prices stable longer but will look for alternative ways to earn income—perhaps by producing tea strictly at current price levels or deciding not to produce at all. In fact, many producers and tea farmers didn’t produce tea this year due to a lack of pre-orders.
One factor that could balance or slow price declines is climate change, which is impacting yields. Some years are extremely dry, others extremely wet, and neither condition is ideal for producing high-quality tea. A general decline in the stock of good pu-erh tea on the market combined with an improving economy could drive prices up again.

At the moment, the situation in our Kunming tea markets is quite like this. Several shops have already closed, while some are barely holding on until the end of their annual lease and will likely close afterward. From friends in Guangzhou, we’ve heard even more concerning news. The Guangzhou Fangcun tea market is on the brink of collapse.
We visited there last December and can confirm the atmosphere was very bleak. Many shops were empty with few or no customers, and several had already shut down. Vendors are resorting to social media platforms to sell their Pu-erh tea cakes at alarmingly low prices. There are also rumors circulating about some Pu-erh tea businessmen going bankrupt, but since we have no concrete evidence to verify these claims, we prefer not to spread unconfirmed stories.

The story I can confirm from personal observation is that more and more Chinese tea vendors are attempting to sell abroad, under the impression that greater profits can be made overseas. I believe this trend will continue, as the domestic market is collapsing. However, this is likely to result in foreign markets being flooded with cheap, low-quality tea. This stems from the different ways in which good tea is valued in China compared to other countries, compounded by the high costs of shipping and import taxes. Ultimately, the outcome may be that no one in the chain earns enough to survive.