We are full into our buying season and the tea has been just excellent this year and, even better, the prices so far have matched the prices from last year. It says to me that the expected slow down in the Chinese economy is occurring. That is one thing about being a farmer or working in an agricultural based business, trends are easily felt there before it trickles up to the broader economy.

I wanted to say something about pesticides because they are once again in the news with Celestial Seasonings getting busted by the same group that busted Teavana last year. The Glaucas Research Group seems to be making money by exposing publicly traded companies and selling things short. It is true that they have a not so hidden agenda with exposing these companies, but without having the proof, they would not make much. If you read the reports you can see that the independent testing agency in Europe did a very thorough job, removing what ever doubt there might be about the motives of the Glaucas Research Group

It shouldn’t come as a surprise to anyone that there are pesticides used in commercial tea production, and that third world countries would be using some illegal ones, which are probably cheaper. The boney finger always gets pointed at China, the great polluter, with pollution in Beijing as bad as when I was a kid in L.A. They give us a good run for our money when it comes to putting carbon in the air, but let’s not forget that Africa and South America are where most exported tea is produced, not in India and China, where they predominately drink their own tea. It can all be explained in a couple of words: cheap, commodity, and quantity. For the most part, bugs come to in the summer. In the tropics however, bugs are omnipresent. It’s always summer. It provides for a long growing season and an abundant yield. I think that it is a broader truth that if you want cheap tea and cheap food, pesticides come along with the price.

How that relates to the way we buy tea, we have a few standards that get us started. We don’t buy summer tea. I know that is an obvious one. We buy tea that is grown at a high altitude, where there are not as many bugs, we don’t buy from commercial growers, and, with a few exceptions, they are certified organic. The truth is that the mountainous areas where we buy our tea doesn’t lend itself to commercial agriculture at all. Terroir is everything in tea as well as wine, and don’t let anyone tell you any different. The other magical thing about the tea plant in relation to terroir is that over time the plant itself develops defenses to predators as it becomes part of the local biodiversity. That is one of the functions of both caffeine and tea polyphenals.

I am going to London in June for a meeting of the Ethical Tea Partnership to discuss tea, pesticides, and the sustainable future. I have done some informal consulting with them about the Chinese tea industry. They have a program that teaches farm workers in China how to safely work with pesticides. I recognize the irony, but remember that the ETP is an NGO funded by the major tea producers. While I think it is a great thing that they are keeping farm workers from poisoning themselves, they have ignored the possibility of reaching sustainability without chemical pesticides, something China has had for 2000 years in tea through focusing on quality not quantity.

The Chinese have some shining examples of quality over quantity in recent history with their Anji Bai Cha. It is a major money making crop that only has a spring season and pesticides are banned in the use of its production in the whole county. Compare this to 1980 when there were only two Anji Bai Cha plants in existence. It is a good example of the dynamic nature of the Chinese tea industry. Another good example, maybe more familiar to Americans, is the case of white tea. There may not be the higher standards as in the Anji example, but it was a crop that barely existed twenty years ago and is now a very common tea. The crop was completely driven by the export market and has always fetched good prices.

Changing the agricultural model outside of China, and supporting a return to it inside of China seems like a logical and tested way to sustainability in the tea industry, as is true in food production as well. It doesn’t mean an end to the commodity model, but at least adjusting to a hybrid that considers incorporating the principles of the Ethical Tea Partnership seems like an other logical step. Of course prices will go up, but everybody, including the consumer benefits, if not financially than with better health and quality of life.

The first questions came when my close friend Wang Weizi gave me some green tea that his dad had sent him from China. Weizi was doing graduate work at the University of Arizona. He was from central Zhejiang Province and was a member of the first generation of students to go to college after Mao’s cultural revolution. When I drank Weizi’s tea, my first question was, ‘is this really tea?’, followed very quickly by ‘why have I never tasted this before?’

It was not because I had never traveled to Asia before, and it was not that I had never had green tea before, I had certainly gone to enough sushi restaurants to have consumed plenty of Japanese green tea, and I was a San Francisco transplant who had spent plenty of time in the best known China Town in the world, and before then I had even been to Hong Kong. But this Chinese green tea was so different and compelling that I was shocked that it had somehow managed to elude me.

Of course I wanted more, which very quickly lead me to an other shocking awareness, in the global market of the early 1990’s with China being open to the West for almost twelve years, I was still not able to get tea this good anywhere in the US. How was that possible? I wasn’t thinking about this anomaly from a business point of view, or even from an economics frame of reference, it was more of a cultural shock; I had thought in America, if you had the money, there was practically nothing you could not buy.

So I started learning a little Chinese and started traveling to China. In those days the bicycle was still dominating transportation, and the roads out to the countryside were rough, if they existed in a paved form at all. It took a long time to get out to the places where tea was produced, but I wanted to secure myself a stash of tea — without which, the quality of my life would seem greatly diminished. I had no interest in buying tea other than for my own selfish pleasure, and for what I could bring back to share with my friends and family. That gave me the advantage of naivety, because going out to meet the producers is not how business is done, not then or now.

I got to meet a lot of great producers, and because I was the only foreigner ever to make it out to the countryside, I got to meet a lot of other people besides, and always the local government officials, some that have become very power over the years. It is not possible to be really competent doing business in China without having strong government relationships (guanxi) on every level possible from the village to the national level.

Two questions that came up for me during this period was why were so many tea companies saying they were doing direct sourcing, and where ever I went, according to the locals who had no reason to lie, no foreigners had been around at all. What was I missing? The more surprising thing to me, was that tea producers everywhere, not just in China, were not revealed, but rather kept as a trade secret. I could not understand this at all, if it were fine wine, the producers would be marketed and would be famous and sought after.

I am pretty glad that I didn’t know what I was doing back then, or Seven Cups would not exist today. Even after China has been open for trade for 35 years and has become the 2nd largest global economy, if you want to get good Chinese tea in the US or Europe you still have to search out small companies like Seven Cups. Why should it be so hard to get good Chinese tea?

We are not talking about a lost painting by a dead painter, or some rare violin, we are talking about tea, and tea that could be purchased by people in China. Astounding still, even as tea sales in the US have been booming for the last ten years, and the US has become the biggest importer of tea of any country in the world, fine Chinese tea remains elusive for American consumers. Why is that? In fact, America has become obsessed with green tea for health reasons, and a lot of very bad green tea gets sold in America every year. So much so that most Americans see it as a medicine that has to be endured for better health, even though it is an awful experience for them. How crazy is that?

Here are some more questions that I find fascinating. If China is where tea originates from, and China has the most developed tea making techniques and the largest variety of teas, then why does China play such an insignificant role in the international market? Why doesn’t the international market adhere to Chinese standards for judging the quality of tea? Why is tea education outside of China so limited when there are many universities in China that offer advanced degrees in tea science and culture? Why do foreign companies still follow the sourcing practices that haven’t changed much since the Qing Dynasty even though China is the number two economy in the world?

Sure, I have my answers to these questions, and I’m sorry if you have read this for expecting me to offer up my conclusions, i’m not going to do that here, more to the point, there are still enough mysteries to keep my obsession alive. The questions, for me, are the important aspect of my obsession, and I have a lot more than these few that I have presented here. What I would like to suggest to you is that you look for questions, and start asking them, and if you are getting answers that you are not satisfied with you have the basis for a healthy obsession. The Chinese say that you can study tea all of you life and not discover all of the names for all of the teas. Here is one to start with, why are people in the US primarily buying blended and flavored commodity tea that represents such a tiny spectrum of experience possible with unflavored unblended Chinese tea? All of these are Chinese tea mysteries waiting to be solved.

Sweeping Lu Yu's Tomb

The news that Starbucks purchased Teavana for six hundred and twenty million dollars was stunning. The tea industry doesn’t seem to know what to make of it. There had been a very lively and interesting conversation on Linkedin about the possibilities of the shift to focusing on artisanal teas in India and Africa, and whether or not it could become a profitable venture having economic viability given the production variables there. When Dan Bolton announced that the Starbucks deal went down in the discussion comments, it came to a pretty abrupt end. It’s true that the discussion had been going on for a while and was due to fizzle out, but the news did not spark any new comments from the participants, as if the announcement had no impact on the discussion of the trend towards better quality tea. My feelings are that Starbucks buying Teavana will push the tea market to a tipping point causing a significant shift towards better quality tea in the market in general. I am not saying that they will have tea that is comparable to Seven Cups tea, but they will be offering better tea, at higher prices, that will shift the tea market in the same way that Starbucks shifted the coffee market.

It is interesting to speculate why Starbucks would make such a major financial commitment to tea, especially when they already had a very successful brand, Tazo. Why not just extend that brand? Starbucks certainly has no need for extra locations. Tazo opened a pilot tea shop in Seattle just last week that a lot of work went into. I doubt that buying Teavana was an impulse buy, they must have been thinking about it for a while, and they paid cash.

Let me just point out some things that can make the speculation more fun. Let’s talk about Charles Cain. He is the smartest corporate guy out there in my opinion and someone that I both respect and like, even though I am on the other side of the fence from him. We have debated about the market in private emails, and he has the best arguments for his side of anyone I know in the industry. I know that he has a very similar belief to mine that the future of the tea market will be defined by quality tea. Let me give some mare background. He started his career with TeaGschwendner where he worked for 5 years. They are the number one tea retailer in Europe but struck out in their expansion into the US market. I believe it was because they came with the promise of quality tea, and certainly Americans believed the quality of tea was better in Europe than here, (duh, not really), but they couldn’t deliver and they aren’t easy to Google. (I know, I just tried and it took me a few times for me to get close enough to the name for Google to figure out what I was asking). Mr. Cain then went to Adagio, where he was certainly the tail wagging the dog when it came to quality tea. He opened three store for Adagio in the Chicago area, but Adagio’s expansion into brick  and mortar retail has stalled out since he left the company early this year and went to work for Starbucks.

Charles is a good enough analyst to recognize the potential in the market Teavana was demonstrating and recognized also that they were very vulnerable to competition. Teavana has been very successful, but their customer retention is low; they use high pressure sales techniques in malls where there is a lot of foot traffic and piss a lot of people off, and they offer very little value for the prices they are charging, from their teas to their outrageously priced Chinese knock-off Japanese pots. It is a business model I have never seen as sustainable, and would never buy any of their stock or their tea.

There is no doubt that you can beat your competition by buying them out. I am sure Starbucks is  going to make it a point to bring the Starbucks business culture to Teavana, which means well trained staff and good customer service, making Teavana much harder to beat. The new Tazo store is geared towards trying to understand it’s customers.They even have a POS/video systems that tracks customers through the store, makes a note of where they focus, and what they buy. Gosh, it’s nice to have that kind of money. They are going to gather a lot of data on what customers want, and Charles is also someone that loves to crunch numbers. Making people happy rather that making them mad is surely a better idea.

Teavana has a decidedly Asian slant to it’s stores, which I think will stay. It doesn’t take a genius to figure out that as the demand for better quality tea of wider variety increases, the only place to turn is to China.  Both Starbucks and Teavana are very weak in their sourcing power in China, which is systematic of the industry. Starbucks is more likely to figure it out though, because they have a lot of experience working in China, and seem to be in a better position to raise the bar for sourcing since they have a much better understanding of Chinese business culture than Teavana. (Mr Cain’s boss worked there for years.) Rumor has it that Teavana lost a major supplier in Fujian because they tried to arrogantly act like Walmart and push the price down to the breaking point, and their suppliers just told them to take a walk. I doubt that Starbucks will make those kind of cultural mistakes.

You can say what you want about Starbucks, but they are very good at growing a market. They are lucky to have Charles Cain, because ultimately he believes in quality and sees fine tea as being analogous to fine wine. So where does that leave small quality oriented companies like Seven Cups? I think it leaves us in a great position. Having Teavana in Tucson has done nothing but help us, because they are growing the market, and they are never going to get to the level of quality tea that we have because they are too big and the teas we focus on are too limited in availability. Look at how Starbucks laid out the market so that private roasters could exist. It will allow other small tea businesses around the country to overcome the fear of charging the higher prices that come from better quality tea. Right now everyone is so scared, just like coffee shops were before Starbucks grew the market. They were tied tightly to the traditional cup of Joe, priced between 25 to 50 cents. Tea shops in order to survive are going to have to have better quality teas than whatever Starbucks/Teavana is offering. Customers will surely benefit, as will tea producers.. The small tea businesses that survive will benefit greatly from the expanded market.

Austin

Here is what Nigel Melican, one of the leading tea experts in the international tea industry, had to say on Linkedin in case you missed it.

“(i) Pesticides traces are universal in food – no tea in the world can have absolutely totally zero pesticides – nor can or does an organic apple or carrot. Consequently Maximum Residue Levels (MRLs) are set by importing countries. Presence of a chemical below the maximum safe level is accepted – but Greenpeace (through ignorance or ingenuousness) ignores this and rants against “drinking toxic pesticides in their tea” while naming and shaming some tea companies with well below MRL levels – no libel laws in China?
(ii) No reference is made in the lengthy Greenpeace China report to MRLs – particularly the EU MRLs which are internationally accepted. In fact, if you take the considerable trouble of comparing the Greenpeace data with EU pesticide limits for the 28 chemicals mentioned then 5 of the 18 teas accused actually fall below the MRL limits for all 28 and two more tea exceed by a trace level of 1 mg/kg on 2 chemicals. This leaves 11 teas non-compliant for one or more pesticides, were they to be sold in the EU.
(iii) These teas were purchased in the local Chinese market so Greenpeace China should have been comparing them with Chinese MRL legislation – they may very well be compliant with this (I do not have access to Chinese MRLs).
(iv) Nowhere in the report does Greenpeace China suggest that the non compliant teas are representative of China teas presented for Export – but commentators in the USA and UK have erroneously and immediately jumped to this conclusion.”

I would like to add that there are very strict penalties for trying to export contaminated Chinese teas, and as Nigel rightly points out, the MRLs are set by the importing country. China is very conscientious about inspecting tea for export, and does real testing. Testing for contaminates is relatively inexpensive. The Chinese government is very serious about not having another food contamination scandal, notice there hasn’t been one since 2008, when they beefed up their export laws. (Don’t forget that they shot the head of the Chinese FDA over contaminated drugs.)

It is also interesting that the two biggest culprits in the Greenpeace expose were not even Chinese companies, they included Lipton and Ten Fu/Ten Ren. Lipton is the leading brand in China, largely because there really aren’t any national Chinese brands, and Ten Fu which Americans know as Ten Ren is a Taiwanese company, and is probably the leading tea retailer in China. They are in almost every large super market that you go to.

I think what burns me most is that people jump to the conclusion that China is a monolithic country, and that a couple of tainted companies represent all of China, given that there are 70 to 100,000 producers in China. In 2009 China produced 22,000 tons of organic certified tea. That is a lot of tea.

Austin

I had come to Tucson from the VA/DC area where specialty shops abound, and the trendy menu of local small business is always expanding. I want to explain a reality that I am coming to terms with – that my experiences elsewhere in fair trade, in other countries and cultures, growing up with a Malaysian-Chinese mother, and my continued interests in all things Chinese have all led me here to Tucson where I am rediscovering all these parts of my identity again. You may be wondering what all of this has to do with tea. Whether you are new to Seven Cups, Chinese tea or are curious about small business and souring tea from outside the U.S., I invite you to take the time to reflect on what you have to offer and how a personal understanding of tea can expand your knowledge base of personal growth and of the world around you.

Like most people, I thought I knew all there was to know about tea or that the specialized knowledge was reserved for scholars and those who are on the ground involved in the production of tea. My husband is half-English so with the in-laws we drink Tetley’s with milk and sometimes sugar. My mother drinks green tea for purposes of weight control because I can attest it is certainly not for the taste. Living in Indonesia and Malaysia, I was introduced to large plantations with mass produced tea from companies such as Boh. On a visit to Sri Lanka, we discovered beautiful tea plantations and met the communities who live in this region southeast of Colombo. In my time studying abroad in China, I was given tea from my host mother to be shared with family in America. We visited countless tea houses in Beijing, Shanghai, and even Confucius’s hometown at the base of Tai Shan. I tutored two young boys whose father was a diplomat from the United Arab Emirates, and at their house I was always offered a comforting cup of tea with an afternoon snack or to accompany their lavish meals that very often they shared with me. And then there has been the weekly experience of walking past half a grocery aisle, shelves stocked with box after box of tea in bags often given comforting names (Sleepy time) and some more exotic (lemongrass and ginger). But with this exposure to tea, I still wondered where does it all really come from, and how does it get to my teapot and cup? Who are the people making decisions about what tea to source, the markets to promote to, and what motivates the average person to choose one tea over another?

With my experience in fair trade certification, I felt as though I got closer to answering these questions. Concerns are pointed to the process of production and to the stories of the growers. This is encouraging to the average educated consumer. I was impressed with the advocacy of fair trade groups and their marketing campaigns against big corporations. There were even educational tours offered to those interested in meeting growers and cooperatives and experiencing the process first hand. I felt that I had joined a club, that I had become more informed, but sadly there were others who were left out.

My hope is that I can share this experience of (re)discovery as I come to learn more about Chinese teas and the regions Seven Cups directly sources from. I can say a whole world of tea has opened up to me, and I no longer feel that it is world of knowledge that others like myself can’t discover for themselves.

Share your stories of learning about Seven Cups, and your personal relationship with tea- its value, taste, and culture.

Katharine

Klym.nature@gmail.com

In almost every aspect of our business and political culture, transparency is becoming a value identified as critical in reforming practices that have become toxic. Still, in the financial sector the lack of transparency is seen by many economists as being the biggest risk in causing another collapse of the economy. In 2012 the World Tea Expo (WTE) held a panel discussion on “Transparency in the Tea Industry” led by Dan Bolton, then the editor of the World Tea News and currently the editor of Tea, A Magazine. George Jage, the owner of the WTE, was the one responsible for putting it on the agenda. It was a risky thing to do since the idea of transparency in the tea industry is really a revolutionary concept.

Let me just start with a little bit of historic context. There has never been any transparency in the tea industry, at least in the West. Some tea makers were well known in ancient China, but now Chinese tea merchants realize their profit margins are directly dependent on a lack of transparency. Tea makers are rarely revealed. From the beginning of trading with the West, the Imperial Decrees of the Qing Dynasty sought to make tea trading as opaque as possible for the tea merchants of Europe, even to the point of making it illegal to learn Chinese and for the Chinese to learn foreign languages. When the British broke the Chinese monopoly in tea using their Imperial Navy, they also brought the plantation/corporate model to tea production in India, ironically supported by a form of slavery that had just been outlawed in England. Even today the wages and well being of tea workers is a major issue affecting commercial tea producers in all the areas where the British and other colonial powers set up their plantations, such as India, Sri Lanka, Africa and South America. They also extended the practice of deceptive marketing supported by a complete lack of transparency that survives today, inside and outside of China, and is actively and traditionally defended by the industry as trade secrets and essential to doing business. That’s why having a panel discussion at a major trade show was something to take notice of.

Three different groups — commercial tea producers, certifying agencies that monitor the treatment of workers and the environment, and some large tea companies — represented the panel at the World Tea Expo. Despite having very different frames of reference within the industry, there was one thing that everyone on the panel agreed upon: customers were very interested in transparency. Everyone on the panel, of course, agreed with customers that transparency is important. The question remains, then, why is transparency so scarce?

The tea producers clarified it from their point of view, at least when it comes to commercial tea. Although they all said they completely supported the idea of transparency, they suggested it was outside of their control. Once tea leaves their hands, except for the very few that buy from them directly, it is untraceable. That is because of the practice of blending. Tea companies buying the bulk of their tea are buying it to blend.

Blending is another invention of Europeans, although without question the Chinese have blended this year’s teas with last year’s teas, but that practice was never touted as ethical. Where as in the West, blending has been esteemed, done by ‘Master Blenders’, and they are truly masters. The object however is not better tea, but rather to have consistency year after year stemming from putting together good tea with bad to maximize yield. In no other industry is the chasm between quality to quality so vast. Since tea, just like wine, changes from year to year, maintaining consistency is not easy, and tea tasters and blenders are masters at navigating through the tiny nuances in character that is represented in commodity tea. Price should also be consistent year to year.  There is another requirement that is unique to commercial tea; it must marry up with milk and sugar, ‘stand up to it’ as the pros say. It needs to be brown with milk, and needs some sugar to balance the bitterness. For the Chinese, this is truly weird, and when Lipton produces its blend that is sold in China this local point of view is not a consideration, but when you consider the British need to find a place for an excess of both sugar and dairy, it was an elegant solution targeted for the workers in its factories. It provided cheap nutrition, with an energy boost, and caffeine, a neurotransmitter inhibitor that blocks the feelings of being tired. Beautiful. Of course, the blends are a secret. This secrecy and opaqueness pertains not only to the recipe, but also the object of the practice.

From the point of view of the certifying agencies on the panel, Fair Trade USA, The Rain Forrest Alliance, and the Ethical Tea Partnership, exist primarily because consumers have unanswered questions about how sourcing is conducted. There is doubt in consumers minds about whether or not tea companies can be trusted to provide safe, fair traded products that are produced in an environmentally sound and sustainable way. In the case of Fair Trade USA, it is an entity that is bringing in more money a year than a lot of the tea companies that are using its logo to market their teas. Consumers are beginning to understand that fair trade and organic certification is big business that may be more interested in their profits than in their founding principles. The proxy transparency being provided by certifying agencies is becoming suspect diminishing the marketing value of their logos.

Certainly the tea companies on the panel paid lip service to the principle of transparency, but I got no sense that they were willing to reveal enough details of their supply chains that the claims they were making could be independently verifiable. It is going to take that type of transparency to move those companies to a position of trust. One thing is certain, in an age where it is impossible to control information, a business that relies on secrecy to maintain an advantage in the market will certainly lose that advantage. Business, especially the tea business, just doesn’t seem to get that. It is true that this is a realization that is having a hard time gaining a foothold in general, but it is inevitable.

Transparency is an important goal for the tea industry to move towards. It provides for solutions to issues related to quality, safety, sustainability, and fair trade. Certifying agencies are limited in their abilities to provide real, verifiable assurances that a product is safe and produced by workers that are treated fairly, that the tea is authentic, and that the price represents the quality. Transparency provides for proof that goes way beyond logos. Of course companies have to work a lot harder to provide transparency, and we will become more vulnerable to our competitors by revealing our sources. However, it seems as if there is an even greater risk to a company for lack of transparency, as recently demonstrated by Teavana’s pesticide issues. The key element to building a brand is trust. It is hard to acquire and very easy to lose.

I think that initiating this conversation, even though now it may appear a very minor thing and a was poorly attended panel at the WTE, is a very big deal. I want to congratulate George and Kim Jage for having the courage to put transparency on the agenda. They are helping to provide for much needed leadership in the tea community, and I hope they will continue. Certainly they will listen to people in the tea community that support transparency. I also want to mention what a fine job Dan Bolton has done as well. The tea community needs more ethically oriented people like Dan. Finally, I want to say that there are a lot of tea business people that I talked to while I was there that are trying to figure out how to move in the direction of more openness. It is because of these people that I am confident that things will look very different ten years from now.

Austin

Revised Jan. 8 2012

If you are interested in tea from the Bu Lang check out our Bu Lang Wang Zi (Prince Tribute) Green Puer Cake