Introduction to Matcha
The world’s fondness for matcha is about to be tested by steep price increases. Global demand for the powdered tea has skyrocketed around the world, fueled by consumer interest in its health benefits and by the bright green matcha lattes bubbling up on social media. In the U.S., retail sales of matcha are up 86% from three years ago, according to NIQ, a market research firm.
The Troubled Matcha Market
The matcha market is troubled. In Japan, one of the biggest matcha producers, poor weather reduced this year’s harvest. Matcha is still plentiful in China, another major producer, but labor shortages and high demand have also raised prices there. For Americans, there’s the added impact of tariffs. Imports from China are currently subject to a 37.5% tariff, while the U.S. has a 15% tariff on imports from Japan.
Impact of Tariffs on Matcha Prices
It’s not clear if tea will be exempted from tariffs because it’s a natural product that’s not grown in significant quantities in the U.S. — an accommodation that the Trump administration has made for cork from the European Union. The Commerce Department and the U.S. Trade Representative didn’t respond to messages left by The Associated Press.
Price Increases for Matcha
Aaron Vick, a senior tea buyer with California-based tea importer G.S. Haly, says he paid 75% more for the highest-grade 2025 crop of Japanese matcha, which will arrive in the U.S. later this fall. He expects lower grades of matcha to cost 30% to 50% more. Chinese matcha — while generally cheaper than Japanese matcha — is also getting more expensive because of high demand, he said. “People should expect an enormous increase in the price of matcha this year,” Vick said. “It’s going to be a bit of a tough ride for matcha devotees. They will have to show the depth of their commitment at the cash register.”
The Production of Matcha
Even before this year’s harvest, growing demand was straining matcha supplies. Making matcha is precise and labor intensive. Farmers grow tencha — a green tea leaf — in the shade. In the spring, the leaves are harvested, steamed, de-stemmed and de-veined and then stone ground into a fine powder. Tencha can be harvested again in the summer and fall, but the later harvests are generally of lower quality.
Challenges in Japan
There are ways to cut corners, like using a jet mill, which grinds the leaves with high pressure air. But Japan has other issues, including a rapidly aging workforce and limited tencha production. And despite Japanese agricultural ministry trying to coax tea growers to switch to tencha from regular green tea, many are reluctant to do so, concerned that the matcha boom will fade.
The Rise of Chinese Matcha
That’s giving an opening to China, where matcha originated but fell out of favor in the 14th century. Chinese matcha production has been growing in recent years to meet both domestic and international demand. Chinese matcha has historically been considered inferior to Japanese matcha and used as a flavoring for things like matcha-flavored KitKat bars instead of as a drinking tea. But the quality is improving, according to Jason Walker, the marketing director at Firsd Tea, the New Jersey-based U.S. subsidiary of Zhejiang Tea Group, China’s largest tea exporter.
Companies Using Chinese Matcha
“We are seeing more and more interest in Chinese matcha because of capacity issues and changing perception,” Walker said. “It used to be the idea that it has to be Japanese matcha or nothing. But we have a good product too.” Starbucks is among the companies using matcha from China for its lattes. The company said it also sources matcha from Japan and South Korea. Dunkin’ and Dutch Bros. didn’t respond when asked where they source the matcha.
The Future of Matcha
Josh Mordecai, the supply chain director for London-based tea supplier Good & Proper Tea, said he is approached almost daily by Chinese matcha suppliers. For now, he only buys matcha from Japan, but the cost to acquire it has risen 40% so he’ll have to raise prices, he said. Mordecai said he saw more demand for matcha in the last year than in the previous nine years combined. If matcha prices continue to rise, he wonders if consumers will switch to other tea varieties like hojicha, a roasted Japanese green tea.
Will the Demand for Matcha Last?
Julia Mills, a food and drink analyst for the market research company Mintel, expects the social media interest in matcha to die down. But she thinks matcha will remain on menus for a while. Mills said matcha appeals to customers interested in wellness, since it contains antioxidants and l-theanine, an amino acid known for its calming effects, and it’s less caffeinated than coffee. Millennials and Generation Z customers are more likely to have tried matcha than others, Mills said.
Conclusion
The rising demand for matcha has led to a shortage in supply, causing prices to increase. While Japanese matcha is still considered to be of higher quality, Chinese matcha is improving in quality and becoming a more viable option. As prices continue to rise, it remains to be seen whether consumers will continue to demand matcha or switch to other tea varieties.
FAQs
Q: Why is the price of matcha increasing?
A: The price of matcha is increasing due to a combination of factors, including poor weather in Japan, labor shortages, high demand, and tariffs on imports from China.
Q: Will the demand for matcha last?
A: While social media interest in matcha may die down, matcha is expected to remain on menus due to its appeal to customers interested in wellness and its unique taste and preparation method.
Q: Is Chinese matcha a viable alternative to Japanese matcha?
A: Yes, Chinese matcha is improving in quality and becoming a more viable option as Japanese matcha prices rise.
Q: How much will matcha prices increase?
A: Prices for high-grade Japanese matcha are expected to increase by 75%, while lower grades may increase by 30-50%.
Q: Will companies continue to use Japanese matcha or switch to Chinese matcha?
A: Some companies, like Starbucks, are already using Chinese matcha, while others may consider switching due to rising prices and tariffs on Japanese matcha.
