Japan’s Matcha Industry is at its Breaking Point

Japan’s Matcha Industry is at its Breaking Point

this is a 7-Eleven in Japan and there’s 
a sign that says things to buy in Japan   obviously for tourists matcha chocolate matcha 
almonds even matcha haribo gummies matcha has   exploded over the last decade between 2019 
and 2024 the global matcha market grew from   $2.5 billion to $4.3 billion and it’s expected to 
reach $6.7 billion by 2029 but what happens when   demand passes supply a matcha shortage let’s say 
New York or Singapore or maybe Dubai or some of   these popular places you try to buy much even at a 
cafe it’s going to be really really expensive and   on top of that you know maybe recently in the news 
some tariffs and taxes are changing a tea farm   and a tea tour company here in Japan is feeling 
the demand surged so much so to the point where   they’re limiting the tourists who have come all 
the way here to just buying one per person with   some people now even stockpiling matcha treating 
it like a hedge just It’s like wine or coffee   beans we want everyone to be able to get a little 
bit of matcha but we can’t have one person getting   so much of it because we’re just not able to keep 
up with that demand cafes dedicated to matcha have   been popping up around Japan mostly geared at 
tourists but obviously Japanese people as well   and that has also helped contribute to this global 
movement so it’s not just drinks they’re selling   it’s not just matcha drinks they’re now selling 
lemonade they’re selling cookies they’re selling   smoothies so you can start to see how this demand 
is really going crazy but why matcha is a finely   ground powder made from specially grown green 
tea leaves unlike regular green tea where you   steep the leaves and throw them out with matcha 
you’re consuming the entire leaf and with it a   massive dose of antioxidants amino acids and 
caffeine it gives you the energy without the   crash boosts metabolism calms the mind and looks 
great on social media cbs and social media are   making it insanely popular and it’s become not 
just a drink but a lifestyle brand so what will   happen next unlike regular tea not all matcha is 
created equal authentic matcha comes from Japan   especially from regions including Uji Nishio and 
Shuoka where the climate soil and centuries old   techniques create a unique product high quality 
matcha is made from shade grown leaves has a vivid   green color is stone ground into ultrafine powder 
and tastes sweet not bitter with a certain creamy   umami finish but here’s the kicker this process 
is labor intensive and slow shade growing requires   specialized equipment and weeks of preparation 
only the youngest most tender leaves are usually   picked by hand and it can take an hour to grind 
just 30 g of matcha maybe enough for 20 cups some   of the tea farmer friends have mentioned that the 
orders are growing and there’s too many orders   for the amount of matcha that can be produced 
the result there’s no way to massroduce real   matcha quickly and demand is now far outpacing the 
supply i’ve come on a tea tour here in rural Japan   so the average tea farmer in Japan is 66 years 
old and fewer young people are taking over the   family farms skilled labor is disappearing and 
without hands to harvest production bottlenecks   are becoming chronic this farm is now relying 
on people from abroad to come for internships   my name is Emily i am from the US in New Jersey 
on the east coast and I came to Japan Wazuka to   intern at Obubu Tea Farms and I wanted to intern 
here because I have a interest in Japanese tea   culture as well as a huge addiction to matcha so 
Japan is such a mountainous country i’m standing   here in the middle of the mountain and you can see 
that everywhere there’s a couple feet of land that   you can actually harvest tea on they’re using it 
i mean everywhere even areas that are super sloped   still they found a way to grow tea here um so you 
can imagine it’s a lot of work it’s expensive and   now try doing all of this in a region that is 
extremely mountainous and then you can start to   see how such a big rise in demand could lead to 
a shortage i’m told that this all here is being   harvested to become matcha and they’re actually 
protecting it from the sun to ultimately limit   its caffeine levels so it might look like there 
are so many leaves here and that that can create   a lot of tea but actually after the process of 
going through what it needs to go through you   end up with very little actual amounts of tea 
ready for consumption so after it goes through   the drying process and all that so it really 
takes a lot of land to cultivate tea now we’re   in an interesting region where most of the tea in 
Japan is actually for the Japanese market i think   only 5 or 10% goes abroad but as the demand rises 
especially for matcha we’re starting to see that   shift and some of these fields are switching from 
sencha to matcha because of this high demand so I   can tell you right now that this is going to turn 
into matcha i can say that confidently because   it’s shaded another thing that’s interesting 
here is per Japan regulation in order to call   it matcha you need to shade the leaves for some 
period of time now this farm that I’m at shades   it for several weeks but legally technically you 
could shade it for as little as one day but that   would be considered not as high quality or not 
as premium or not as authentic to how matcha is   supposed to turn out the matcha shortage is real 
and it’s being driven by a perfect storm so first   you have exploding global demand us imports of 
Japanese matcha tripled between 2017 and 2023   in 2022 alone matcha exports from Japan hit a 
record high of over $32 million with 56% going   to the US then there’s climate change in 2023 
Kyoto and Shizuoka experienced abnormal weather   intense heat irregular rainfall and even early 
blooming which damaged tea plants and reduced   yields a single late frost can wipe out 20 to 30% 
of a crop there’s also limited areas here japan’s   geography is limited only about 5% of its land 
is suitable for tea farming and expanding matcha   production is difficult without compromising 
on quality all this has led to higher prices   limited availability and some brands quietly 
switching to lower grade Chinese matcha or   blending it to stretch supplies at the cost of 
taste and health benefits so Japanese people are   also eating you know matcha ice cream and cakes 
and cookies so I think they don’t think it’s so   crazy that people are having matcha because it’s 
also popular in Japan as a maybe a food item in   foods and stuff like that wholesale prices of 
ceremonial grade matcha have risen by 25 to 35%   in the past 2 years some premium suppliers now 
charge $80 to $100 per 100 g retail brands are   getting squeezed chacha Matcha a trendy New York 
City chain raised prices twice in 2024 matcha Bar   which supplies matcha to Whole Foods noted a 20% 
increase in raw material costs and while Starbucks   hasn’t particularly raised prices of matcha 
supply constraints are already leading to out   of stock issues in certain regions for businesses 
this creates a pricing dilemma raise prices and   risk alienating your budget conscious customers or 
absorb the cost and reduce your margins either way   the golden green powder is getting more expensive 
the matcha craze has launched hundreds of startups   from direct to consumer brands like Tenzot 
to mega retailers like Trader Joe’s everyone   wants a slice of this pie matcha products often 
have great margins so a ceremonial grade matcha   tin costs maybe $15 in wholesale but can sell 
for over $40 in retail and a matcha latte can   cost under $1 to make yet sell for $5 to $8 
then there’s supplements skincare chocolates   and protein powders with matcha that sell for 
a premium even if the matcha inside is minimal   but with the current shortage businesses face 
new challenges product delays brand reputation   risk and even marketing complications you can’t 
push premium Japanese matcha if you’re a Chinese   substitute i always knew there was going to be a 
huge demand i think I might have jumped a little   late on the trend but unfortunately yeah there 
is that matcha shortage so it does worry me if   I do start my own matcha brand the brands that win 
in this environment will be the ones who own part   of the supply chain build strong relationships 
with Japanese growers who are literally deciding   who to sell to to meet demand many companies 
are turning to Chinese grown matcha which is   now accounting for a bigger portion of global 
supply so let’s say you have sencha and instead   the market says “Hey we want more matcha.” Then 
the farmer can transition to making matcha rather   than sencha and that’s absolutely happening so 
you’ll see more matcha factories because there’s   a special kind of factory necessary to produce 
matcha there’s more of those and then also the   farmers will say there’s a lot of demand coming 
overseas china is ramping up production rapidly   so in 2023 it produced over 10,000 metric tons 
of matcha compared to Japan’s 4,000 metric tons   but Chinese matcha isn’t always up to par it’s 
grown in different climates and soil it’s often   not shade grown as long as it is in Japan you have 
lower eltheanine levels on average and it can even   contain more contaminants or pesticides now to 
be fair there is high quality Chinese matcha out   there but it lacks the prestige and century old 
tradition of Japanese matcha and for consumers who   care about authenticity this creates confusion and 
for brands it’s a transparency nightmare label it   matcha and no one knows the difference and it’s 
going to be very difficult even for those cafes   for the consumer and then tea farmers as well 
they they can’t produce enough right because the   land is limited even if they’re transitioning 
their their fields and then let’s say this is   a boom and then a crash then there’s going to be 
some trouble for the farmers or they’ll have to   transition to other kinds of tea believe it or 
not the matcha shortage has actually created an   underground reselling economy in Japan even 
certain ceremonial grade matcha is being   reserved for domestic use leaving international 
buyers scrambling for the leftovers supply chain   disruptions are now a core part of the business 
planning now there’s no easy fix here but a few   things are happening japan’s government is issuing 
grants to help young farmers enter tea farming   vertical farming and controlled environment 
agriculture are being tested to grow matcha   indoors but it’s quite expensive some brands are 
experimenting with even US matcha farming like in   Hawaii or California but it will be years before 
that is viable at scale in the short term expect   higher matcha prices more transparency wars with 
people asking where is your matcha really from   and also a flood of matcha adjacent products that 
don’t contain real matcha but borrow the branding   a lot of farms now that they can’t rely on the 
matcha factory they go to so they’re going to try   to making the process a little bit more mechanized 
they’ll try to I believe we have a spring blend   matcha i think that takes less time than those 
stone stone grinding matchas we are trying to   adapt to it this matcha boom is is huge um yeah 
it’s not a sustainable thing that you know u maybe   several years ago was like organic boom and then 
maybe gluten-free boom and there’s always some   kind of boom and maybe they’re a peak in a valley 
my guess is the boom will go up and the prices   are going up and people maybe potentially won’t 
always be into matcha and it’s going to come down

Your next Matcha Latte could soon be $10. Matcha is very complex and the demand is surging like crazy.

► Subscribe: YouTube.com/uptin

Special thanks to Michael Blodgett for the interview in this video:
B&B Owner | Tea Village of Wazuka, Kyoto | @blodgelodge_ryokan_bnb

Up Your Knowledge!
► My YouTube Shorts: YouTube.com/uptins
► Facebook: https://www.facebook.com/uptin
► Instagram: https://www.instagram.com/uptin

Watch some more of my videos!

Japan Needs Immigrants. So Why Won’t It Let People In?

How China Avoids Tariffs through Mexico