Growing Conditions

Among the many reasons for Matcha’s sharp price increase are record heatwaves in Japan. The production of Tencha, the leaves essential for Matcha, is already highly demanding, making current growing conditions very restrictive. Farmers must shade the tea bushes from the sun, process them immediately after harvest, and at the same time face a shortage of labor. It is therefore no surprise that the price of Tencha, according to the Global Japanese Tea Association, rose by 170 percent year-on-year in spring 2025 to 8,235 JPY per kilogram. This broke the previous record from 2016, which stood at 4,862 JPY per kilogram.*

Unrelenting Demand

While supply struggles with nature and a lack of labor, on the other side of the price equation – demand is rising exponentially. Japan’s Ministry of Finance reported that the United States became the largest importer of Matcha last year, accounting for 44 percent. In addition, tourists in Japan are buying up supplies as souvenirs, and stores across the region are introducing purchase limits. Given today’s era of social media, TikTok also fuels demand – competitions for the most beautiful Matcha latté, smoothie, or dessert photo. Ultimately, in 2024 Japan exported green tea worth 36.4 billion JPY, four times more than in 2014.

Business Environment

Key players in the food segment naturally don’t want to miss this opportunity. ITO EN, the largest bottled green tea retailer, will increase the prices of selected products by 50 to 100 percent starting in September, while also launching a new division dedicated exclusively to Matcha, aimed at strengthening Tencha supplies and expanding processing capacity. Based on these steps, the company expects an 11 percent increase in foreign sales for 2025.[1] Other publicly traded companies through which investors could potentially benefit from this trend include Nestlé, Unilever, and Starbucks with its legendary Matcha latté.

A Promising Business

The story of Matcha is a perfect example of how a traditional product can, thanks to the combination of culture, global trends, and social media, turn into a promising business that investors can also take advantage of. Finally, even if Matcha fails to maintain its current pace in the long run, stable companies can always optimize and adjust their strategies according to prevailing market conditions.

*Past performance is not a guarantee of future results.

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not a guarantee of future performance. They include risks and other uncertainties that are difficult to predict. Results may differ significantly from those expressed or implied in any forward-looking statements.