Transparency in tea transactions

Post Reply
User avatar
Tillerman
Vendor
Posts: 446
Joined: Mon Dec 11, 2017 4:58 pm
Location: Napa, CA
Contact:

Wed Apr 04, 2018 12:49 pm

I am placing this commentary in the General Discussion area; it may belong elsewhere but I think it ought to be of concern to all tea drinkers.

We’ve all heard a lot about “direct-sourcing” and now, it seems, “everyone” is claiming it. The term has really been diluted to mean not much more than “purchased in the country of production.” This is not a very satisfactory situation: individuals claim it when they buy from a vendor based in China, Taiwan, Japan or India for example, and vendors when they similarly buy from wholesalers and large corporations based in the countries of production. Yet in neither case has the transaction involved the individuals or companies that actually made the tea.

Far more important, in my view, is “transparency.” Transparency means being open about the supply chain for your tea. Vendors who will provide you with all of the information they have on a given tea are being transparent: who grew and made it, when was it picked, etc. And buyers then can decide to try a given tea, or not, based on the information they have. A vendor who acknowledges that the buy from other middlemen also is being as transparent as they can be (although I’ve yet to encounter one who does this.)

Transparency also means being open about what value a vendor or other middleman adds to a given transaction that justifies the margin being asked. Sourcing is one such value added and education is another but, in any case, consumers should know why they are being asked to pay a mark-up and can base their buying decisions accordingly.

I've been thinking a lot about the prevalence of counterfeit tea and how transparent transactions could go a good way to avoiding being caught up in this. I am curious to know what the tea community thinks of this notion of “transparency” and whether represents a positive step in the tea business.
chofmann
Vendor
Posts: 195
Joined: Mon Dec 11, 2017 4:47 pm
Location: Rhode Island, USA
Contact:

Wed Apr 04, 2018 1:03 pm

Great post. Coincidentally I posted something very similar in the Miscellaneous section about Direct Sourcing.

You and I must be on the same wavelength!

In my opinion, ideally speaking, tea moves closer and closer toward the wine industry wherein the farms themselves become the brand, and the retailers are merely curators. But this would require a massive improvement in transparency. Hopefully we can get there sooner rather than later.

EDIT: I just realized I'm an idiot and I posted it in the Miscellaneous section of TEAWARE. Well that is obviously wrong... I'll delete it and repost it below.

----------------------------------------------------------------------------------------

Many vendors will advertise that they use “Direct Sourcing” or source “directly from farms”. But what does this really mean?

Generally speaking, this would suggest that they have actually visited the farm, spoken with the farmer, and are buying their teas directly from the farmer. This is important for several reasons:

1. It helps ensure high quality tea by allowing the vendor (buyer) to properly inspect the tea and understand what they are buying.

2. It reduces costs for the vendor and/or increases profits for the farmer because there isn’t any form of intermediary / middleman taking a cut first.

This sounds like a fantastic method of sourcing —> Better teas, lower costs, better for the farmer. Win-Win-Win all around, right?

Unfortunately, many vendors who use “Direct Sourcing” aren’t getting the full benefit. Many vendors use what I would describe as “Networkers”. These networkers help facilitate communication and make introductions between farmers and vendors, allowing the vendors to meet the farmers, speak with them, and source from them directly. Sounds like Direct Sourcing, right?

Not quite. These ‘Networkers’ will often keep 25%-40% of any transaction for themselves. That means that either the farmer is making less (booooo) or the expense gets passed onto the vendor and their costs increase by up to 67%, which means significantly higher prices for the consumer (double boooooo!).

So if you care about responsible sourcing, make sure your favorite retailers aren’t just sourcing directly from farms, but truly cutting out the middlemen to create a real, direct, relationship.

But how can you check if your favorite vendors are truly sourcing directly from the farmers?

Some vendors are honest about it, and will state that they use “sourcers”, “finders”, “networkers”, etc.

But most don’t. The great thing (sorta) about the tea industry is that is is highly fragmented, so most of the vendors are fairly small. This should make them more personable and willing to talk with potential customers.

Of course, they can always lie, but it doesn’t hurt to ask.

As transparency increases in the industry, it will make it easier to compare different vendors on a direct basis. For example, in the wine industry, wine stores don’t sell “Self-branded Chardonnay Grade 1”, they sell “Fog Head 2014” or “Daou 2012”. If you go to another store and see Daou 2012, you know it is the exact same wine.

Transparency is good for the consumer and the farmer, but typically bad for the retailer, because it removes the smoke and mirrors and shines a light on those who are not the best actors. This is something we are working on changing.
User avatar
Tillerman
Vendor
Posts: 446
Joined: Mon Dec 11, 2017 4:58 pm
Location: Napa, CA
Contact:

Wed Apr 04, 2018 2:45 pm

chofmann wrote:
Wed Apr 04, 2018 1:03 pm

As transparency increases in the industry, it will make it easier to compare different vendors on a direct basis. For example, in the wine industry, wine stores don’t sell “Self-branded Chardonnay Grade 1”, they sell “Fog Head 2014” or “Daou 2012”. If you go to another store and see Daou 2012, you know it is the exact same wine.
Well, as we seem to be in massive agreement here, I certainly hope we don't just end up speaking to our mutual choir on this subject but.....

I spent over thirty years in the wine business and when I began importing tea in 2007 I just assumed that that was the appropriate model for tea as well. It was perfectly natural to name origins and sources for the product. Perfectly natural for me but not exactly the standard in the industry as a whole. In fact, things were (and largely are) exactly the opposite: secrecy prevails and is even encouraged by many middlemen. And the consumers and the growers lose.

Now some stores do indeed sell "Own Brand Chardonnay Grade X" and "Own Brand Chardonnay Grade Y" but consumers know that, pleasant surprises aside, these generally aren't going to be as good as producer branded products. We're not there with tea yet and probably won't be for a long time, if at all. Part of this is due to the fact that tea is a "batch made" product. And getting access to the best batches is generally the result of years of building and maintaining relationships (guanxi, 關係.) In Asia these relationships are not like those in the West - they are deep, abiding and personal. And they take years to develop. As such, Daou 2012 at one retailer is not necessarily the same as Daou 2012 at another. This, actually, is another source of value added for a retailer who sources their own product. But yes, I certainly agree that it will make it easier to compare vendors on a more direct basis.

And you are "bang on" with respect to networking platforms.
User avatar
Bok
Vendor
Posts: 5782
Joined: Wed Oct 04, 2017 8:55 am
Location: Taiwan

Wed Apr 04, 2018 7:37 pm

In terms of guangxi, and having lived here for a while, I often wonder how all these new, often small outfits are supposed to get all their uniquely sourced teas from old men living on xyz mountain...

I just observe some hipsters coming for a trip and picking up whatever is available to them in the short time and limited language skills.

:)

Not talking generally, just a few things I have personally observed over the years, so take it with a grain of salt.
User avatar
OldWaysTea
Vendor
Posts: 81
Joined: Tue Dec 05, 2017 3:01 pm
Location: San Jose, California
Contact:

Thu Apr 05, 2018 10:57 am

Bok wrote:
Wed Apr 04, 2018 7:37 pm
In terms of guangxi, and having lived here for a while, I often wonder how all these new, often small outfits are supposed to get all their uniquely sourced teas from old men living on xyz mountain...
I've wondered the same thing. I know for a fact that if I went to Wuyishan by myself without any connections, I would not get the tea I have in my shop.

I would like to add more, but I'm out of time this morning.
User avatar
Tillerman
Vendor
Posts: 446
Joined: Mon Dec 11, 2017 4:58 pm
Location: Napa, CA
Contact:

Thu Apr 05, 2018 4:35 pm

Bok wrote:
Wed Apr 04, 2018 7:37 pm
In terms of guangxi, and having lived here for a while, I often wonder how all these new, often small outfits are supposed to get all their uniquely sourced teas from old men living on xyz mountain...
Oh they will get tea, no doubt. But what quality? They certainly won't get the best batches. That's another reason why the margins taken by most retailers are ridiculous; 80% margins for second rate tea. I've been visiting growers since 2002 and only in the past year or so am I sure that I have I had access to their best. And even then I know that, as a relative "newbie" at some places I pay a premium. One producer told me directly that "we save the best tea for the best friends." Happily I am in that category now.
Post Reply