cookies said

Another Question of Transparency

I’ve had questions in regards to the pricing of resellers for a while now, but the recent talk of transparency has prompted me to put this question to fellow tea drinkers.

In the tea industry it’s more common than not to find companies who are reselling teas sourced by other companies (or blended by others). Entirely common practice. My issue is in regards to those who don’t openly disclose where they have sourced their tea from. Browsing a site like What-Cha you will see it noted where/from whom they have procured their teas. This makes it easy to weight the value of buying directly from the source (if available) or going through someone like What-Cha who offers the convenience of purchasing an array of teas from different sources all in one place.

But I’ve run into a couple companies who are reselling teas from other sources in what I feel is a dishonest way.

For example, one store is reselling a tea that retails for the equivalent of $3 25g. This store has marked the tea at $8 an ounce (~28g). If my math is correct, that’s about a 260% markup. Now, if you take into account that a reseller will probably be buying in bulk, that markup goes even further. The wholesaler lists 1kg/35ounces for $68 ($85 with shipping) making an oz somewhere under $2.

Obviously shipping, repackaging, and general business costs need to be taken into consideration, but that high of a markup seems incredibly dishonest to me. Is this just the cost of doing business? Maybe I’m expecting too much, but I feel as if it should be standard practice to disclose this information to your customers.

44 Replies

Yeah, I found myself wondering about this just today, when I found out that a chai I’d bought in a large quantity was sourced from another place, sort of a mass market tea company. I don’t like it, but also… I didn’t buy that chai at a huge markup, as I got it at a 50% discount. I would have liked to know either way though.

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Dr Jim said

In some ways I wish there was more cross-selling (with reasonable markups). We can go the the grocery store and buy products from hundreds of vendors, but it is difficult to find a single vendor that provides good flavored, decaf, and puerh teas (just to put together one combination). We need an Amazon of tea where you can pay once for shipping exactly what you want.

This is probably impossible given the transitory nature of tea’s freshness, but is one reason I value shops like Harney and Upton that do provide a wide variety.

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I have a list of companies that I don’t purchase from because I don’t believe they do any actual work besides putting their own label on the product.

It’s kind of ridiculous how many places sell something they only fronted money for. I was hypocritical for a week as I sold straight tea and thought to myself: ‘what a dick move Andrew’
Since then I haven’t sold anything I don’t put work into.

I understand the buying of tea in bulk for shops that are not selling online, but the shops that do sell online it is whack.

cookies said

Hahaha. I really don’t have anything against selling straight teas. It’s nice to go somewhere like What-Cha or Tealyra and get yourself a Darjeeling, Taiwanese oolong, and Yunnan black all in one trip. I would just appreciate knowing if I could get that Yunnan black 300% cheaper purchasing through the original vendor when all you did was stick it in a bag with your label on it, you know?

Oh, I know…
Japanese tea is this way, there are only so many farms and so much that even comes out of Japan. I only buy Japanese tea from Yunomi or Yuuki Cha. Chinese tea is much harder because there seems to be tons and tons more of it.
Aged Oolong is rather similar as many places have the same stuff for close prices, but if I ever see someone who sells the exact same tea for 200% more I will question them.
Puerh is probably the hardest to figure out (which is why I don’t try to)

If I ever see a store that links where they purchase their tea in bulk, I’ll have MAD RESPECT but will also question what they were thinking unless it’s a sold out product or something.

Dexter said

Not disagreeing with what is being said here, but on the other hand…..
There are tons of straight teas out there and I don’t have the time/knowledge/inclination to sift through them all. I would rather a vendor I respect do the leg work for me, hunt down the good ones from the bad and post them on one site for me to purchase from. They should be paid for their time and energy. I probably could buy similar (if not the same tea) from other sources (if I had the time to do the research). I’m thinking of companies like Mandala (for example – there are others) – I seem to have similar tastes to Garret (or whoever makes the buying choices for them), I know that I will like almost everything they stock. Someone goes on buying trips, sources tea, stores, repackages it, and offers it up for sale to people like me. I am grateful for the service and don’t mind paying a premium for it.
I’ve bought tons of straight tea from dozens of sources and it’s always a gamble buying online when all you have is the picture, and the vendor’s “word” for what it is. It’s hit and miss – Aliexpress is always fun, sometimes you get great tea and sometimes you get garbage. Shrug, in the long run it’s probably cheaper for me to just go to a site like Mandala and know/trust that I’m going to like what I get. To say that they don’t put any work into it isn’t totally true…..
That’s just my opinion and how my buying habits work. :))

cookies said

Sorry, there seems to be some confusion. No one is saying companies like Mandala don’t do any work. Or that sellers shouldn’t be paid for their time/effort, overhead, whatever else operating a tea business might entail. As has been stated, sellers, especially reliable ones, that offer a variety of tea in one place are great. The issue is the lack of disclosure which allows certain resellers to markup teas without any transparency.

To elaborate, the tea I used as an example was originally from Yunnan Sourcing. The company who resold that tea didn’t have to fly to Yunnan, find a translator, hire a guide, trek around the mountainside… etc. trying to source the tea. Yunnan Sourcing is the one who did all that work and priced the tea accordingly. Then another company came in, purchased the tea from them and charged +260% more for… what?

To compare. I’ve found another company (well, quite a few more) also reselling YS tea. This one purchased a tea selling for $7/50g and charge a bit over $10/50g. That’s about 50% less of a markup than the other company. This company also offers a much larger selection which = larger overhead.

Covering your costs is clearly necessary, or you’ll be out of business in no time. But it seems to me there’s a point where profit ends and exploitation of customers begins. If companies like What-Cha can operate honestly with disclosure of sourcing then I fail to see why comparable companies have to be secretive.

Dexter said

I was actually referring to LP comment “Since then I haven’t sold anything I don’t put work into.” I was just trying to say that sourcing/sampling/finding the good from the bad is work.

Cookies – in response to " I’ve found another company (well, quite a few more) also reselling YS tea". My question is: How do you know they bought it FROM Yunnan Sourcing? Is it possible they bought it from the same source/supplier/grower that YS did? As in: Did they also do the research/work to find a quality supply that just happens to be the same one as YS? I don’t know and I don’t mean any disrespect – I’m just asking…. I would assume that suppliers/growers would sell to more than one company and that YS wouldn’t have the exclusive rights to all the tea they sell.

cookies said

No disrecpect noted! For that one they stated their supplier. But of course you’re right. I assume it’s possible some may simply be purchasing from the same source as YS. I’m ignorant of that aspect of the tea business. But in that case they’d probably be doing the same amount of work as YS, so the rates should probably still be comparable. At any rate, that’s just the first example I came up with it (maybe it was a bad one). Like Owl noted below, there are a few wholesalers supplying a huge amount of companies, and yet the prices can vary wildly.
Spent a few minutes Googling, and dividing the lowest option to equal 1 oz…

$1.89 oz https://www.theteasmith.com/product/ROOI781016.html
$3.43oz https://www.etsy.com/listing/81774788/organic-lemon-cream-rooibos-tea-herbal Hmmm… they’re also noting all the ingredients as organic. Interesting.
$4.50oz http://www.clariteahouse.com/products/rooibos-lemon-souffle-1?variant=1204761661
$2.33oz http://www.adagio.com/rooibos/rooibos_lemon_cloud.html

Maybe? http://www.americantearoom.com/products/lemoncello-tea?variant=1092763717 It looks the same… does anyone know if ATR blends their own tea?

This is where transparency would be appreciated IMO. Too much to ask for full disclosure, but at the very least it would be nice to note whether it was blended/sourced by the company.

Dr Jim said

I suspect that there is an entire network of wholesale vendors that sell both straight and flavored teas. So you have shops buying from the same wholesaler and then deciding based upon their business model what they should charge.

I also wonder if there isn’t subtle quality distinction that we don’t notice. For example, I see dozens of different prices for some of the larger Darjeeling estates, but have also had very different taste experiences from the teas.

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With my trips to the World Tea Expo, a lot of it was wholesale only vendors and sellers looking for wholesale teas to buy and stick their name on it. Many go through another set of hands (that is popular too) of a service who bags the teas or packages the teas for them. It’s way bigger than most of us think. More often than not, most tea blend sellers are often from the same 3 or 4 companies – their lineups are HUGE.

Window shopping a lot you start to notice the same teas, heck they even use the same pictures and descriptions.

More and more, if you want something special look at sellers who hand blend their tea, or tea sellers hooked up with a farm, or press their own cakes etc.

Same time, there’s nothing wrong with liking the wholesaler tea – though you want to search around who has the better price. That and some wholesalers do sometimes sell the tea for cheaper than the resellers. You also got the perk if a seller goes down, there’s another one you can buy from. Your small indie tea blender who closes up is gone forever unless they pass down the reins.

edit: I swear there was an old steepster topic that tracked who was the wholesaler and who sold their teas.

OMGsrsly said

There was totally something like that. I know that my local shops carry a lot of the same stuff from the same wholesalers. Understandable, but also kind of annoying.

If any of you actually finds that old thread, I’d really like to see a link because I want to be able to compare prices too. In a couple of cases, I thought unrelated shops had the same ownership because they posted identical pictures and descriptions of teas — turned out they just used the same wholesaler.

cookies said

The company in the example actually does blend some teas themselves. And while I do have opinions on the pricing of those as well, I’ll keep it to myself for now.

I have noticed tons of companies selling what seem to be the same exact blends, often with the same descriptor. But my issue isn’t with reselling in general, but with the lack of transparency in sourcing/pricing.

Was the thread about Metropolitan? I think I remember seeing that…

I think mark ups on straight tea may be acceptable when it includes an element of exclusivity or storage. However, when it comes to blends… that’s just ridiculous. There was a huge issue with chocolate being melted down and sold as hand crafted chocolate that I’ve read about… but this is worse because they just buy and sell. I bought from quite a few places like that and never knew for awhile. However, Steepster members informed me on the DL which was very kind of them to do; big shout out to Marzipan who knows her stuff as she pointed out quite a few for me.

shezza said
yyz said

Here’s another thread http://steepster.com/discuss/2456-dethlefsen-and-balk

A number of online companies usehttp://www.teaguys.com/31-flavors-tea

In France it’s often Dammann Frères

And I’ve skimmed a few other wholesaler sites who may or may not sell to the public.

Part of me wants to post more for the sake of everyone… however, some of the places are owned/ran by tea friends of mine… I’m torn :/

cookies said

Are they upfront about reselling? Or are they one of the companies on Etsy selling pre-blended teas as handmade? If it’s the latter I think people have a right to know…

There were a few of the wholesalers that intended to make it as invisible as possible.

But really, how many sellers you know actually admit it in regards to wholesale tea blends? I’ve seen like two or three on their page state “A Whateverwholesalebrand tea blend”.

Etsy one is the bad one, you aren’t supposed to resale unless it’s supply. Those listings will get taken down if you report it.

cookies said

I know in other categories there have been a lot of complaints in regards to non-handmade items being sold on Etsy. As dishonest as I find it I do feel kind of bad at the idea of reporting resellers… Interestingly enough, one of the principles they require in order to be considered handmade is transparency.

Dr Jim said

My wife and I used to argue about this with respect to music. Do you feel that a musician is less authentic if they sing songs written by other people? I used to, but consider a symphony orchestra…

To a very real extent, the shop owner is still performing a selection process, not unlike a liquor store vendor selecting from thousands of different wines to bring you what he thinks is the best.

Sara said

I tried to get a thread like that going a few years ago – http://steepster.com/discuss/7096-companies-that-sell-repackaged-slash-rebranded-flavored-teas-from-other-tea-blenders. I think it would be a great resource for people to have, for price comparison purposes if nothing else.

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LuckyMe said

Ironically, this is one of the things I appreciate about Verdant. They go to rather great lengths to tell you exactly who produced their teas and where.

I’ve long suspected that certain teas were being sourced from the same farm or wholesaler.
Take zhangping shui xian oolong. It’s a somewhat rare oolong cake that a handful of shops carry and those that do – from What-cha to Aliexpress sellers – all seem to be sourcing it from the same tea maker in Nanyang village.

The practice itself doesn’t bother me. I just wish they would disclose what farm or tea maker their teas came from.

Well, except… There are other companies that do this, but charge less and seem to have a better track record when it comes to transparency in general. I’m afraid I’m going to be skeptical of every claim Verdant ever makes from now on.

Cwyn said

Uh, great lengths of fabrication?

LuckyMe said

Eh, I should have qualified that statement by adding “in spite of the recent controversy.” I know many of us have lost trust in Verdant but I don’t think it discredits everything they do. They have the right idea about transparency..even if they fail at it themselves from time to time.

Dr Jim said

And yet after years of “Master Han” we suddenly get “Master Zhou” and then learn that we are really buying from a cooperative. They are putting a human face on their teas, which is good marketing, but the face is at most representative.

I think they have been totally discredited at this point. We have no idea or proof whether anything stated on their site is true after the controversy. Especially since their proof turned out to be bogus.

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So this reply got out of hand and turned into an essay. Oops.

I think most of the problem is the relabeling of teas under the store’s name brand and but still using the same pictures and descriptors, that really shares that the vendor is not putting much if any thought to it. The wholesale and resale of teas seems just about as common as wholesale and resale in general, but people get picky about it because most of the vendors seem to relabeling and reselling online, and you find a wide array of prices for the same thing under different ‘brands’. Part of this is because wholesellers in the tea world aren’t as picky about relabeling or have ‘suggested retail prices’ and that’s because it’s more profitable to them that way than building a brand name. If you saw someone relabeling and reselling brand name items that aren’t tea, like Oreos, which are trademarks, you know there’s going to be alot of fuss. Name brands in tea like Lipton, Tazo, Celestial Seasonings, etc. aren’t as popular in the tea world right now, which seems to be embracing smaller sellers and blenders, so the tea wholesellers play off of that market.

Versus when you see this from day to day you kind of just shrug it off because relabeling in the real world costs much more money then most vendors bother going through because the sourcing and relabeling and overhead costs too much, if you can even find and afford something that will allow you to relabel their products. So if you are looking for a specific type of wine, the same winery, year, type, a bottle is still going to cost different from the supermarket to a beverage store to a wine market to a restaurant, and those markups are generally deemed acceptable. And part of that is distribution and playing off of a brand/winery’s reputation, you realize in that way that the supply chain is much longer because while a big supermarket chain can source alot more, they get the best prices, while a small wine market is either going through a second or third hand distributor at best or buying in such small quantities that even if they were fortunate enough to be dealing directly with the winery, their wholesale price isn’t much better than retail. When you see relabeling at this point is the really big box stores where they can afford to buy, relabel and still make profit while offering at a steeper discount than brand name, if they don’t have their own factories making off brand products already. In most cases wholesellers aren’t at all available to a retail market, you have to have special business licenses to even apply to buy from those places.

I think at this point if you’re aware and you’re buying tea blends from a vendor you know is a second or third hand distributor, then you’re mostly buying because you like the company, or their methods and how they source their teas. Or because you like the convenience of a one stop shop where you trust the taste of whoever is deciding on the vendor’s supply. If you’re buying it just for the taste of the tea and want to absorb that cost/profit margin yourself, if the wholeseller is doing retail sales at a lower cost than your vendor, you can buy direct from the wholeseller, and that’s your choice. Retail is mostly a game of trust and relationship between vendor and buyer, while at the same time keeping enough variety instock to keep old customers as well as draw in new customers. You’re paying for all the inbetweens yes, and that is the reason for the sometimes ridiculous markup (although some retailers are just greedy… but that’s a different topic). At the same time if you’re aware that they are sourcing from a wholeseller that doesn’t do retail and there’s something you want but isn’t carried in their normal line, most small business will do what they can to help you get what you want because they value you as a customer, but you know, be aware that because they’re doing ‘special orders’ that comes at a markup to them which will be passed on to you.

I guess in the end for me it’s one of those things between ‘support small business’ versus ’let’s go to walmart’. I grew up in a ‘support small business’ environment, so if I can afford it, I’ll go out of my way to not just support wholesellers that do retail, or big box companies.

cookies said

" Part of this is because wholesellers in the tea world aren’t as picky about relabeling or have ‘suggested retail prices’"
This is an excellent point.

OMGsrsly said

Yep. Some of the local tea shops have great customer service, and I appreciate the taste of the person who selects the teas. So I buy from them. Some of the teas I could get from any number of local stores, but I’ll go to the ones I had good experiences at.

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AllanK said

One vendor I always buy from is www.svtea.com, their prices are probably too good for them to have a 260% markup. Not all vendors mark up their tea that much.

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What-Cha said

I think the transparency of a tea company is directly related to their motivations as a business. Businesses which care about tea and their customers, are open about their tea and their sources as it allows their customers to make optimal buying decisions and the inverse is true about companies which only care about profit.

For me personally, as someone with a background in economics, I believe in maximising happiness (utility) rather than profit. I derive a lot of my happiness directly from the opportunity of working with something I love (tea of course!) and being able to share it with others. Additionally, I derive happiness from when customers are happy with their purchase and the inverse is true when customers are unhappy. It is obviously important to make some profit but I never expect nor want to make excess profit.

The problem lies with tea companies who are motivated purely by profit which means buying low and selling high. This is best achieved though opacity about the product making it hard for customers to realise the true value of the product.

I’m always looking for ways in which I can be more open and transparent and would love to hear and implement any suggestions.

Rasseru said

Im not sure you can be more transparent? – You say where you sourced the tea, storage info, you even state the percentage going back to the farmer when you can which I think is a bold move.

What-Cha said

Thanks, I just wanted to check if there was anything I missed or people wanted to see.

I felt it was important to give an indication of what proportion of my sale price goes to the producer when direct sourced, as I’ve witnessed other vendors justifying their high prices on the basis that they’re supporting farmers by direct sourcing their tea, while I know from the cost price of the tea, that only a small fraction is going back to the farmer.

sherubtse said

You are the most transparent tea company I have come across. I would love to order more from you, but the horrendous state of the Canadian dollar severely limits the amount of tea I order from non-Canadian suppliers.

Best wishes,
sherubtse

What-Cha said

Thanks, I do understand about the exchange rates and have suffered from the British Pound to losing a lot of ground on the US Dollar in the past year.

Exchange rates aren’t so great when it comes to the US Dollar either, but after all that has come out recently about transparency… Well, I’ll keep you in mind for future purchases for sure. You have a particularly reasonable international shipping rate — otherwise, I probably wouldn’t even consider a UK-based company.

What-Cha said

Thanks for your consideration, I do appreciate that it’s not the ideal scenario to order tea from a UK-based company, which is why I’ve worked hard to keep international shipping rates down.

yyz said

As a Canadian, I don’t mind buying from the UK if the Tea is affordable and shipping is reasonable. I usually receive my orders within 5-6 days which is faster than most of my US purchases.

cookies said

“The problem lies with tea companies who are motivated purely by profit which means buying low and selling high. This is best achieved though opacity about the product making it hard for customers to realise the true value of the product.”

I think this is the point.

It seems some sellers are more interested in fostering an aura of exclusivity. Purple descriptors of tasting profiles, tales of ancient bushes and master tea pickers & a 300% markup. There are definitely a lot of us who equate high price with good quality, so it’s not an unintelligent business practice.

After the recent Verdant fiasco, I’m just more skeptical of companies not being open with their information. They may say this tea was hand-picked from wild bushes (doesn’t that sound nice) but clearly that could be said about any tea regardless of actual origin.

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MzPriss said

I don’t have an issue with a small company buying tea from a wholesaler and putting their label on as long as a couple of things don’t occur: 1) the small company doesn’t allege the tea came from a “small family farm” when it didn’t and 2) they don’t use the same art work pictures, etc and claim them as their own.

Tea, like any other product, has to come from somewhere. Not everyone that wants to sell tea can make it to China twice a year – and that would create more overhead even if they could. I’m guessing that in buying from a wholesaler, there is a significant investment in time and money to taste samples from hundreds (if we are talking about Yunnan Sourcing for example as the source) of teas to choose the ones that best fit their brand, price points, etc.

I also don’t think that has to be disclosed UNLESS you are making claims that it was handpicked by pixies under the third full moon in the highest of the high mountains. Unless they are making outrageous claims, I don’t see anything immoral or unethical about using a proven wholesaler with a track record to provide a tea they want to sell.

I don’t believe small companies have a responsibility to make sure every tea buyer knows there is a place to get the tea cheaper after doing all their own leg work to select it, package it and the risks they take if they buy a large amount of a certain tea that doesn’t sell.

In short, I don’t see how this particular issue is different from any other business, with the caveat that if they make certain claims about their tea – they should be prepared to back them up.

I really wonder about the whole “small family farms” business every time I see it used to sell food anywhere beyond the farmer’s market. Organic dairy companies are terrible about this. But honestly, I have a very hard time believing something as ubiquitous as Stoneyfield Farms is actually just a collection of tiny family farms. Are claims like this actually regulated by the food industry at all? I guess they probably aren’t when it’s perfectly legal to claim that your product has whatever bizarre health benefits people are thinking about this month. And when it’s looking like it’s going to be up to consumers to demand accountability from a place like Verdant.

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