It’s been a while since I last posted, but I’ve known what I was going to post for weeks. (I’ve been getting ready for the experimental Online Tea Tasting–if it works out well, keep an eye on the “Tea Geek Events” section at https://teageek.net/store/ ).
With the economy seeming to get worse every week, most people are looking for ways to economize. But with tea there’s a “secret” I’ve learned during my years in the tea business that will no doubt seem very counter-intuitive. However, I want to share it with you so that you can make better choices when buying tea.
You’re usually better off buying more expensive tea.
Here’s why: Every tea business I’ve been involved with (including a wholesaler and two retailers, plus Tea Geek) does the same thing when it comes to marking up tea. They have a selection of teas that are affordable and make up a healthy percentage of what people buy; they also have a selection of higher-end teas that meet with a good deal of resistance on the part of customers. (Customers like inexpensive tea.)
However, generally speaking, it’s the higher-end teas that have the lowest markup. That means that a higher percentage of your spending goes to good tea and not to the decor of the shop or the landlord or into the pockets of the owners. (Not that you shouldn’t support tea shop owners–you should. They still make money even on the expensive ones; if they don’t, they’re not very good at running a business.)
Here’s an example: Say you’re interested in two teas.  The first tea costs $2.50 per ounce, while the second tea costs $5.00 per ounce.  You might naturally think that the $2.50 is a better deal–and it is, if you don’t consider what you actually get for that money.
Based on what I’ve seen in the industry, I might guess that the ounce of $2.50 tea cost the shop $0.50 or $0.75. Some teas are even marked up 700-800%…meaning your ounce of tea might really be only $0.30 worth of tea to the wholesaler the shop bought it from.
On the other hand, the $5.00 ounce of tea may be marked up less than 100%. You might get it for only an 80% markup. This ounce of tea might be worth $2.75 to the wholesaler.
Now compare those. By paying twice as much for an ounce of tea ($5.00 compared to $2.50), you’re really getting nine times the tea–not in weight, but in value ($2.75 vs. $0.30).
Granted, this is a hypothetical example and any specific situation is certain to be different in some aspect. But the general rule seems to apply–more expensive teas have lower markup, and thus are a better buy when you consider what you get for your money.
(I should also note that I’m assuming you’re getting bulk loose tea. Fancy packaging usually costs more than the tea it’s in, so assume an even higher markup if the tea is in some kind of exotic-looking box with high production values, or is in tea bags, etc. It’s all stuff that encourages people to buy, but you don’t end up drinking the box–you drink the tea.)
Tea is an affordable luxury, and buying bulk loose high-end tea is usually a better proposition than cheaper tea, or expensive tea that’s been packaged.
I don’t really see opting for the more expensive tea as a method by which to economize though. Sure you’re paying less on margin, but in your example you’re paying almost the same amount to the vendor regardless of what you are buying. Cheap or expensive turns out to be about 2 dollars and change to the vendor. The difference is yes you are getting higher quality tea, but you’re also spending twice as much. If you’re really looking to economize it would be better to spend the 2.50 on the ounce, save yourself the other 2.50 for the next time you need tea. Even if the 5.00 is a better deal you’re still paying out more. Economizing is more about saving than getting a better value. It would be like saying if you’re looking for a new car you could pay 500 above list on a honda civic or get a Lamborghini at cost. Even though the Lambo would be a great deal it’s about spending that kind of money, not the value.
Hi Tea Geek! I completely agree == Buy good tea and skip the fancy packaging! ==
That is really great advice for everybody. Thanks for posting!
How very true 🙂 Not to mention that more expensive teas are usually more exciting as far as flavor. Another important benefit to buying higher-end teas is supporting the production of those teas, which are the first to be hit hard in times of economic downturn. When you buy higher-end tea, you are supporting the culture from which the tea comes and the livelihood of the growers and workers.
Thanks for the great post! A wonderful reminder that cost is not the same as value.
Yes, I agree. I prefer to buy a small quantity of a high quality tea than a larger quantity of a lesser grade tea. I think you are talking about value here – I’ll slowly drink the higher quality tea and really enjoy it. Obviously which teas each of us like is an individual preference, so I’ve also managed to find a few teas that are really wonderful, but not too expensive. For example, Huang Shan Mao Feng is a very fair priced tea, but very enjoyable to drink. I can buy the highest grade Mao Feng and still not break the bank.