Tuesday, August 9, 2011

Factors Influencing the Price Increase of Korean Tea

The shelf prices of Hwagae Valley Korean tea have increased tremendously from 2009 to 2011. Prices of the old famous producers such as Jukro (Jookro) and Ssangkae are pretty much fixed across Korea (as noted on their web pages), a study on the shelf price of these teas gives us a pretty good idea of what is happening to prices of Korean tea. Note a personal example of how the standard shelf price has changed:


Jukro Saejak 30 000 South Korean Won
Ssangkae Saejak 30 000 South Korean Won
Jukro Yellow Tea 30 000 South Korean Won


Jukro Saejak 45 000 South Korean Won
Ssangkae Saejak 45 000 South Korean Won
Jukro Yellow Tea 50 000 South Korean Won

Why did the price increase so much? The reason is much more complicated than just the colder than average Winter and Springs and low yields that you have been hearing about...

First off, the actual quality of the tea is not a factor in the year-to-year increase in price. Some years, Jukro Ujeon is thought to be of arguably better quality than other years but the price doesn't seem to reflect the quality. It is important to note that these famous Ssangye area tea producers are very good at producing a fairly consistent, high quality tea from year to year, so the difference in quality is very minimal. However, smaller relatively unknown producers from the same region ARE impacted by the quality of their tea from year to year. Price differences can reflect this but the below factors have influenced the price much more than quality over the last three years.

Increased demand both nationally and internationally, increase in the cost of production, and decrease in yield all seem to be having a synergistic effect on the increasing price of Hwagae tea.

Increase in wealth and stability in the Korean economy has lead to an increase in the purchase of luxury goods (tea at this price is a luxury). Also there has been a recent interest in all things "traditional" in nature of which Korean tea, pottery, and tea ceremony fall into. This interest in the traditional arts of Korea is both a reaction to a globalized world, a result of an increase of wealth, but more importantly, a movement where a sometimes historically repressed Korea is reclaiming its culture. All of these factors have increased demand for tea grown in the most traditional of green tea growing areas, Hwagae Valley.

International demand and interest in Korean teas have increased tremendously over the last few years. Outside of Korea people are becoming more educated about Korean tea. Before 2007 there was only Brother Anthony's webpage that offered information on Korean tea- nothing else on the net or in print was available in English. Now you can find lots of good information on the web and even a few books the focus on Korean tea. Before 2007 Jokro, Ssangkye, and Joytea didn't even market their tea outside of Korea, now these big Hwagae Producers are often in attendance at all the big international tea festivals. On top of this publicity and public awareness about the Korean brand Korean teas have racked up its fair share of international awards particularly in Japan. All of these have added up to an increase in demand in tea drinking countries around the world.

An increase in production costs is another factor that is likely leading to the increase in prices. The traditional movement has even spurred those who once worked as business executives in Seoul to renounce the modern Korean and trade their suits for hanbok (traditional Korean clothes) to live the traditional rural life emulating the monks and aesthetics of long ago. More and more old farmers are being replaced by businessmen driving late model cars (Hogo you can attest to this). The old ladies that would work the fields picking the tea for almost free are dying off with no cheap labourers replacing them- a story seen in every aspect of agriculture in Korea. As Korea becomes more wealthy the cost of the very labour intensive production of traditional Korean tea will continue to keep prices high.

Most people, especially here in the West, are pegging the yearly increase in price solely on low yields caused by the colder than normal Winter and Spring. Although this may be the enough reason to increase the price, will yields back to the pre-2010 levels in the near future deliver prices of 30 000W ever again?- probably not. Prices we see today are likely to be the norm. The days of 25$-a-box all hand produced semi-wild hwagae saejak grade green tea have come and gone.



Ho Go said...

All true. But one factor you didn't mention was the control that seems to be in the hands of the Hadong Tea Association (not sure of the name) who insist that the growers package their teas in the most expensive boxes (lovely to look at) which adds about 10% to the cost and maintain this high end branding targeting the affluent. The cost of living in Korea is already quite high so this image of tea fits right in to the marketing dreams of the tea business.

I just bought good sejak from Boseong for $10/40g. Okay, it wasn't great but I did enjoy it.

Matt said...


The Hadong Tea Institute has been a driving force in the recent popularity of the Hadong tea brand. They seem to be a welcome entity in Hadong- ensuring that there are no producers releasing sub standard products or making clams that simply aren't true.

Thanks for mentioning them.