Matcha's Soaring Popularity Faces a Supply Crisis

The vibrant green hue of matcha, once a staple of traditional Japanese tea ceremonies, has transcended cultural boundaries to become a global phenomenon. From trendy lattes in bustling urban cafes to a sought-after ingredient in health-conscious recipes, the demand for this finely ground green tea powder is experiencing an unprecedented surge. Industry projections, such as those reported by Forbes, anticipate the matcha market reaching approximately $5 billion by 2028, marking a robust compound annual growth rate. However, this burgeoning popularity is now colliding with a stark reality: a looming supply shortage rooted in Japan's limited production capacity and a dwindling number of tea farmers.   Reports from Japan in 2024 signaled the first tremors of this imbalance, with major tea manufacturers implementing purchasing limits on their finely milled matcha. This constraint rippled outwards, leading to "sold out" notices in cafes across major Japanese cities, a stark indicator of the escalating demand. This situation is further compounded by the inherent nature of matcha production. Unlike other teas that may have multiple harvests, the leaves destined for high-quality matcha are typically harvested only once a year during the spring.  

Adding another layer to this complex issue is the shifting landscape of tea consumption. While domestic consumption of matcha and green tea has seen a decline in Japan, global appetite has increased dramatically. Data from Japan's Ministry of Agriculture, Forestry and Fisheries (MAFF) reveals a near three-fold increase in the country's overall tea production between 2010 and 2023, largely driven by export demands. Currently, over half of Japan's tea production is shipped overseas rather than consumed within the nation's borders. This export boom gained significant momentum during the pandemic, as consumers globally sought out beverages perceived to offer health benefits. As one industry leader noted, the perception of matcha's health benefits appears to be a significant driver of its widespread appeal, suggesting that further promotion of these attributes could fuel even greater global demand. The meteoric rise of matcha has also been significantly amplified by the power of social media. Certain brands and matcha preparations have gained viral traction online, leading to an overwhelming surge in demand, particularly from overseas consumers. The manager of a tea shop in Sydney, Australia, recounted an "insane" 250% increase in matcha sales within a mere six-month period, highlighting the potent influence of online trends.  

While the current supply constraints are most acutely felt with the "latte-grade" matcha commonly used in cafes, concerns are mounting that this shortage could soon extend to ceremonial-grade and even non-organic varieties. A tea ceremonialist cautioned that the entire spectrum of matcha grades may eventually be affected if the current demand trajectory continues. Some relief may be on the horizon with the upcoming 2025 harvest. However, the Global Japanese Tea Association has indicated that meeting the current demand will require significant effort across the matcha industry. The association emphasizes the inherently limited nature of high-quality matcha production, which relies exclusively on spring tea leaves.Furthermore, only a small fraction—approximately 6%—of the total tea harvested in Japan is processed into matcha, making it a naturally scarce commodity. The meticulous grinding process, typically done gradually to preserve quality, further exacerbates the supply challenge when faced with a sudden and substantial increase in demand. Grinding facilities have struggled to keep pace with the unprecedented surge.  

In response to the growing popularity and the emerging supply concerns, MAFF is reportedly encouraging Japanese tea farmers to increase their cultivation of "tencha," the specific tea leaves used for matcha, potentially shifting their focus away from other types of tea. The government is also said to be providing subsidies to support this transition. However, data from MAFF also reveals a significant decline in the number of tea farmers in Japan, from 53,000 in 2000 to just over 12,000 in 2020. This dwindling workforce poses a significant challenge to rapidly increasing tencha production to meet global demand. Despite the efforts to boost production, the Global Japanese Tea Association offers a note of caution, reminding the industry that consumer trends can be unpredictable. The long-term sustainability of the matcha craze remains uncertain. The current situation presents a complex interplay of global demand, agricultural limitations, traditional processing methods, and the ever-shifting tides of consumer preferences, leaving the future supply of this vibrant green powder in a delicate balance.