The Rising Demand for Matcha: From Green Craft to Gold

TOKYO — Retiree Chitose Nagao, after nearly thirty years in the advertising industry, launched a matcha cafe little anticipating the waves of customers it would attract. By the afternoon, her store’s matcha powder stock is depleted, and a global clientele awaits to taste her latest creations bursting with green goodness.

Atelier Matcha, Nagao's cafe, stands out amidst dwindling matcha supplies in Japan, thanks to an advantageous partnership with Marukyu Koyamaen, a tea producer with 300 years of history in Kyoto.

Upon hearing about unsold tea stockpiles during Covid, Nagao felt compelled to act. Fast forward four years, her venture boasts two stores in Japan and plans for a new one in Cebu City, Philippines, joining her location in Ho Chi Minh City, Vietnam.

Matcha has been part of Japanese culture since the 12th century, primarily for tea ceremonies utilizing minimal amounts. Its fame as an antioxidant-rich superfood, amplified by TikTok, and a surge in tourism post-pandemic, has driven demand and prices to new heights.

Supply Constraints in Matcha Retail

Tencha, the tea variety essential for matcha, saw its prices soar at the Kyoto spring auction to 8,235 yen per kilogram, according to the Global Japanese Tea Association, eclipsing the former record from 2016.

The doubled matcha prices present challenges, contributing to limited availability even in Tokyo, prompting stores to ration inventory and fend off bulk-buy resellers. Nonetheless, matcha remains a sought-after souvenir for Japan's influx of tourists.

Restrictions from U.S. tariffs have sparked buying frenzies, clearing out stock in online stores months in advance, retailers have reported.

Increasing Market Challenges and Adaptations

The intense competition to meet global matcha demand led the world’s largest bottled green tea seller to create a new division solely focused on matcha in May. This company predicts a significant growth in overseas sales and is set to increase product prices starting September.

Ito En, which annually procures 7000 tons of green tea and about 600 tons of tencha, finds it challenging to convince farmers to increase tencha production, given fears of an eventual decline in popularity.

Yasutaka Yokomichi, overseeing Ito En's matcha sector, prioritizes expanding milling facilities to process tencha into matcha, investing in enhanced milling capacity, recognizing the precision and time involved in producing quality matcha.

Nagao notes that educating consumers on matcha quality variations could ease supply strains. Furthermore, she’s eyeing hojicha, a different, less caffeinated and nuttier tea, as the next consumer favorite.