When the time returned to the Year-end Show of Wu Xiaobo on December 30, 2021, we saw such a set of data: in 2021, coal rose by 97%, soda ash rose by 89%, tin rose by 65%, aluminum rose by 46%, crude oil rose by 45%, stainless steel rose by 44%, PVC rose by 39%, glass rose by 35%, nickel rose by 22%, and copper rose by 20%. Vegetables rose 30%, soy sauce rose 5%, salt rose 10%, vinegar rose 10%, MONOS increased by 20%, then color TVs 30%, refrigerators 15%, washing machines 12.5%, air conditioners 11%, sweeping robots 30%...
△ Image source: Wu Xiaobo channel
So, what about tea?
The beginning of March is the time when spring comes, and it is also the node for tea people to discuss whether the price of tea can rise or not.
At the end of each year, some brands will issue a notice of "some tea price increases", and some companies' product prices remain stable all year round, and "price reduction marketing" is not in the minority.
The average temperature in February this year is low, and after a heavy snowfall, the argument that "spring tea production will inevitably increase in price" will naturally float out.
In fact, there are many factors that affect the rise and fall of product prices, and they will not affect them in one dimension.
What factors are causing tea prices to rise? We disassemble them from different levels and try to understand the logic behind the price increase of tea.
Enterprise level: production costs and marketing strategies affect whether tea prices rise or not
1. Production costs are increasing year by year
The base price of the product is controlled by the production cost. Obviously, the production cost of tea is increasing year by year.
First of all, the cost of tea pickers is increasing year by year, and there is still a shortage of tea pickers in many tea areas: according to relevant media reports, the shortage of tea pickers in Yiwu Town, Mengla County, Xishuangbanna Dai Autonomous Prefecture and Xiangming Township in the spring tea season exceeds 10,000 people
Secondly, other labor costs and transportation costs are also increasing year by year, resulting in an increase in the ex-factory price of spring tea.
2. The company's marketing strategy determines whether to increase the price
Marketing strategies often use price tools. Enterprises will determine whether the price of tea will increase every year according to the market share of the brand and the positioning of the high-end, high-end and low-end products.
At present, many tea brands are high-end and low-end markets, and head brands have more right to increase prices than small brands.
Zhuyeqing is a high-end green tea head brand, the market share is high, its product line is divided into the tao, meditation and taste according to the level of the level, in the top user track, the price of the road remains unchanged; and on the relatively close to the people, the taste to take the price reduction to further expand the market share strategy.
△ Image source: Bamboo leaf Green Emei Alpine Green Tea
Industry level: The relationship between supply and demand and the official support of the production area affect the rise in tea prices
1. Supply and demand game
Supply and demand is one of the main factors that determine prices.
According to the "China Tea Consumption Market Report" released by the China Tea Circulation Association, in 2021, the total domestic sales of tea in the country will exceed 2.3 million tons, and the total domestic sales will jump to 300 billion yuan.
What are the factors affecting tea demand this year?
Big health trends promote tea consumption: In the post-epidemic era, people are paying more and more attention to their own health, and healthy consumption continues to heat up.
Ma Shengxue, a doctor of nutrition, wrote in his book "Imbalance": Tea is the healthiest natural beverage in the world, and there is no one.
With both taste experience and health value, tea is bound to be favored by more consumption this year.
The rise of new domestic products drives tea consumption: In recent years, the national tide has surged and new domestic products have ushered in a golden decade.
Tea has its own strong Chinese cultural genes, which is easy to cut into the national tide and attract young consumer groups.
Some categories can promote consumption because of long-term storage: long-term preservation means that the tea you buy will never be bad, and it may also appreciate. This property will promote purchase intent.
On January 30, 2022, the Wuyishan Municipal Market Supervision and Administration Bureau issued an interpretation of the shelf life of "Wuyi Rock Tea products": Rock tea can be stored for a long time. The "collectible" properties of white tea and Pu'er tea are one of the reasons why their prices continue to rise.
Combined with the above factors, overall, the consumption demand for tea this year will rise moderately.
What is the situation on the tea supply side?
On February 28, 2022, the National Bureau of Statistics released the Statistical Communiqué of the People's Republic of China on National Economic and Social Development in 2021 on its official website, showing that "tea production was 3.18 million tons, an increase of 8.3%." ”
Tea exports in 2021 totaled 369,400 tons, and after deducting this figure, we confirmed that Chinese tea is a stock market: oversupply, and the average price is difficult to rise.
However, some resource-scarce teas are limited in supply, reflecting the phenomenon of price increases year by year.
For example, the tea categories picked by the head spring head, white silver needles, golden junmei, top West Lake Longjing, etc., are sought-after goods when spring tea is listed every year.
△ Image source: Bama Tea Industry
Li Jiahe, director of the Member Service Department of the China Tea Circulation Association, once proposed that there is a traditional stubborn disease in the mainland tea industry where low-end oversupply and high-end supply are insufficient.
On the whole, the supply and demand factors of the tea industry in 2022 have a push and pull effect on prices. From the perspective of supply and demand, some categories and high-end positioning of tea have more room for price increases.
2. Support from local governments in production areas
With the landing of the rural revitalization strategy, more and more tea producing district governments actively support local tea enterprises, promote regional public brands, organize tea enterprises to go out in groups, and the mayor of the town has become a tea anchor, and a series of combined fists have a positive impact on the establishment of brands and the expansion of pricing space for local tea enterprises.
For example, in recent years, Shouning County attaches great importance to the development of the tea industry, and while paying close attention to the quality of tea, it has vigorously built a public brand of Shouning alpine tea, making the market price of Shouning tea rise all the way. In recent years, Songxi County has actively promoted the "Kowloon Great White Tea", and the Kowloon Great White Tea in the market has obvious price advantages in the same kind of white tea varieties.
Overall economic level: inflation, higher income of residents to promote tea prices
1. Inflation
Inflation is an economic phenomenon. Simply put, when inflation occurs, the money in our hands shrinks, often reflected in the rise in the price of the product.
For example, this year you have 100 yuan in your hand, you can buy a pound of tea, if the annual inflation rate is 5%, then the price of tea of the same value is 165 yuan after ten years, and your 100 yuan can only buy 6 teas.
We still face higher inflation uncertainty in 2022.
Since 2021, the United States has begun to print money like crazy in order to boost the economy that has been weakened by the epidemic, and the recent outbreak of the Russo-Ukrainian war has exacerbated the rise in commodity prices, especially oil prices, which eventually led to global inflation.
In this context, the overall price level will rise moderately, and the rise in tea prices is also a high probability event.
2. Consumption income increases
On March 5, Premier Li Keqiang mentioned in the government work report that the per capita disposable income of mainland residents will increase by 8.1% in real terms in 2021.
After offsetting the shrinkage caused by inflation, the people on the whole have more money in their hands, and the stronger consumption power forms a higher willingness to consume, thereby increasing the price of products.
This logic will not be directly reflected, it will play a certain positive force in the multidimensional factor.
Reflected in the tea industry, we believe that the increase in residents' income will be one of the factors that will increase the price of tea.
3. Steady growth to promote consumption
According to the Central Economic Work Conference in December 2021, promoting consumption will become one of the policy portfolios of stable growth strategies in 2022.
Under the stimulation of local consumption promotion measures, the residents' willingness to consume is positively improved, reflected in the tea industry, which is expected to increase the average price of products.
Finally, we share some unconventional thinking about tea prices: tea companies are located in traditional business models, and their price profits cannot escape the impact of enterprises, industries or the overall economic situation.
If tea companies can innovate business models or channels, they will have a new blue ocean. For example, from the perspective of the integration of "three teas", products are not limited to the tea category in the tea industry, but expand from the extension to tea culture, innovate and develop experiential products of tea culture, or explore tea technology in depth and develop innovative tea products, such innovative products have a strong price space, and the price increase is free or not.
Written / May
Edited by / Xu Qing
Editor-in-Charge / Tang Huiying
Duty Editorial Board Member / Tang Huiying