What Price Good Tea?

There’s bad tea – it’s always cheap.

Although if you buy it in certain circumstances – such as in a bus-shaped tin with “Souvenir of London” in it, then it’s not.

OK,  so bad tea isn’t always cheap.

There’s good tea. That’s expensive. Right?

Well, no. Mostly wrong.

If you have a cup of Cola, a cappuccino, a glass of milk, a glass of beer, a nice cup of good tea  and a glass of wine, then the tea is probably the cheapest.

So tea is good or bad, cheap or not cheap, or possibly just cheaper than you think.

Or even very good or very bad, very cheap or very much not cheap, or – let’s face it, there’s no right answer to how cheap tea is.

So let’s start with how good it is.

Let’s pick a tea: I’m going to select one of my favourites: Sikkim Temi.

Now whilst there are various grades available, there is one stock standard grade that is put out by the truckload, and it’s pretty good.

So, how much is it?

Depends upon how you buy it!

We buy it in kilos direct from India. That is “very cheap” compared to buying it from Sydney. And it’s even more expensive if we buy it at the tea seller at the Adelaide Central Market.

But if one buys it in a local market, it’s in one’s hand. Buy it from the big smoke, and you pay a bit for freight. Buy it from India, and the freight can be more than the actual cost of the tea.

So to decide whether a tea is cheap or not, we need to build in all the factors.

Most people do not buy tea the way we do, in great big boxes with a foil seal inside with up to 25 kilos of tea inside. So, instead of one great big cheap box, it comes in a package of some sort.

The general thrust is this: if it comes in a nice package / and or you buy it in a swish retail environment, it costs more. But is that fair?

Under new laws here, supermarket price labels have to bring the cost back to a standard price. So if you have a 350g tin of Mr Rupert’s Outstanding Baked Beans at $4.50 and a 275g tin of El Cheapo Baked Beans at $4.00, the supermarket labelling will tell you that Mr Rupert’s at $1.29 per 100g is actually cheaper than the El Cheapo at $1.45 per 100g.

So conversely, if fancy packaging is adding to the cost, you’re going to know about it.

But should you pay more or fancy packaging? For marketing? For fancy retail stores?

It costs an awful lot to have a fancy store in a mall. You even offer tastings. And yet, there’s a a percentage of people who will taste your teas and then order the same tea on-line for half the cost. So, you’ve really got to get the people who actually buy from you to pay for the people who don’t.

Setting a tea pricing strategy is highly complex.

If you are merely selling to people who walk in the door, then it’s a balancing act between your costs and what the market will bear at retail level. And that’s the easiest strategy! It doesn’t matter if it’s a physical door or an online one.

We have on-line stores in three countries. In each one, postage is different. Is that fair? Not really. Can we do anything about it? Not really. Does it have an effect? Yes, in Australia, where postage is relatively expensive, we don’t get many small orders. Does this mean people order more or just cancel orders? We examine that all the time.

We also have a one-of market stall. We have several outlets that sell our tea as a hot beverage, some that sell it in packets, and some that do both.

Is it wrong to sell someone tea at a discount at market, against the online price? Is it fair to offer a bundle on line and not in a Cafe who resells?

What about wholesale pricing? What is a fair cut for someone who resells your tea?

I hope no-one reading this blog is looking for specific answers here.

My only answer is that if you are proud of your product and you’ve worked out a fair price, it’s the best you can do.

You’ve possibly got it right,  possibly wrong, probably a mixture of the two.

One thing I do know, is that selling ‘good’ tea at prices to compete with ‘bad’ tea – whatever those two words mean – rewards the bad tea sellers only. They’re the ones actually making a profit.

Every time you buy bagged tea, a loose leaf tea fairy dies.

And that is too high a cost.