Global demand for the powdered matcha tea has skyrocketed around the world, fueled by consumer interest in its health benefits and its increasing application in bubble tea shops, in food and beverage products, as well as on social media.
According to NIQ market research agency, the US retail sales of matcha jumped 86% within 3 years. Rising demand for matcha however is not matched by production. In Japan, one of the largest matcha producers, poor weather reduced this year’s harvest. In China, production of matcha is still strong however strong domestic demand has raised its prices.
For the US customers, there is an added impact of tariffs. Imports from China are currently subject to a 37.5% tariff, while the US has a 15% tariff on imports from Japan. This will further increase the price of matcha.
Growing demand has also strained supply as producing matcha requires a labour intensive process – from growing the green tea leaf to harvesting, steaming, de-stemming and de-veining, and then ground it into a very fine powder. Major producer, Japan faces an ageing population while the younger generation is not really keen to work in this sector. Meanwhile, China is making up for the shortfall in supply, however the quality is inferior compared to Japanese matcha and is often used in secondary products like chocolate bars and snacks, instead of being used as a beverage. However, its quality is gradually improving, and the country will soon become a major exporter of matcha, probably surpassing Japan in the not too distant future.
