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Navigating the Matcha Shortage: Insights on Supply, Demand, and Alternatives

General Report February 28, 2025
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TABLE OF CONTENTS

  1. Summary
  2. Understanding the Matcha Shortage
  3. Effects on Businesses and Consumers
  4. Exploring Alternatives to Matcha
  5. Conclusion

1. Summary

  • The ongoing matcha shortage has emerged as a significant concern in the tea industry, profoundly affecting both consumers and businesses worldwide. This situation has unfolded amidst a marked rise in global demand for matcha, which has transitioned from its traditional roots in Japan to becoming a highly coveted ingredient across various culinary applications. Notably, the health benefits associated with matcha have fueled its popularity, attracting attention not only from tea enthusiasts but also from a broader audience captivated by its vibrant green hue and versatility in food and drink. According to recent data, matcha exports from Japan surged to approximately ¥29.2 billion in 2023, nearly doubling the figure from 2019. This skyrocketing market interest has created a landscape where premium matcha, especially the 'first flush' varieties, has become increasingly scarce due to stringent production timelines and selective harvesting processes that occur just once a year.

  • Consequently, the ramifications of the matcha shortage extend far beyond mere supply constraints. Social media platforms have played a pivotal role in amplifying consumer demand, cultivating a cultural phenomenon where matcha is no longer perceived merely as a beverage but rather as a lifestyle emblem associated with health and wellness. The influence of social media on consumer preferences has resulted in an urgent collective behavior among consumers, who are eager to secure their matcha products before stocks dwindle. Amid this heightened awareness, many businesses have begun to grapple with significant price hikes, often reaching 10 to 15 percent, as they struggle to maintain their offerings amid escalating costs and limited supply.

  • Amidst this turbulent environment, it is crucial to highlight potential alternatives for those who seek to continue enjoying matcha amidst the scarcity. Exploring culinary-grade matcha, engaging in subscription models with various retailers, or diversifying shopping practices to include different suppliers can empower consumers to adapt to the current market dynamics while still savoring the flavors they cherish. Overall, comprehending the complexities surrounding the matcha shortage, including its multifaceted causes and consumer responses, is vital for navigating the evolving landscape of the matcha market.

2. Understanding the Matcha Shortage

  • 2-1. The Rise in Global Popularity of Matcha

  • The global ascent of matcha has transformed it from a traditional Japanese beverage to a sought-after ingredient with universal appeal. Matcha's rise can be largely attributed to its health benefits, aesthetic appeal on social media, and the influence of notable celebrities. The market's interest surged dramatically over the past years, with Japanese tea exports, including matcha, hitting unprecedented levels, amounting to approximately ¥29.2 billion in 2023—nearly double the exports recorded in 2019. This increase clearly indicates a burgeoning global market hungry for matcha products.

  • Matcha's incorporation into culinary creations—ranging from lattes and pastries to ice cream—further fueled its popularity. The food and beverage industry has been quick to adopt matcha in various forms, catering to a consumer base that is increasingly health-conscious and visually driven in their preferences. The emergence of catchy establishments like Cha Cha Matcha in New York served to align matcha with contemporary café culture, creating spaces that echo millennial aesthetics while serving matcha-based beverages. This trend has highlighted how important visual appeal has become for brands, particularly in an age deluged by social media influencers and platforms such as Instagram and TikTok, creating a cultural moment where matcha represents not just a drink but a lifestyle choice.

  • 2-2. Impact of Social Media on Consumer Demand

  • Social media has played a pivotal role in amplifying matcha's visibility and desirability. Instagram, with its emphasis on aesthetics, transformed matcha into a visually appealing product. Matcha drinks and desserts became staples among the foodie community eager to share visually stimulating content. During the mid-2010s, the 'Instagrammable' quality of matcha products was first recognized, leading to a surge in cafés specializing in matcha drinks and desserts. This included creative offerings that captured users' attention through visually striking presentations, like vibrant lattes and elaborate matcha green cakes.

  • The recent influence of TikTok, especially amidst the 2020 pandemic, introduced a massive reach and engagement that traditional advertising struggled to achieve. Viral recipes and aesthetic trends permeated the culture of younger demographics, transforming the way matcha is consumed—from finely sweetened lattes to minimalist-style preparations. The creation of specific aesthetics such as 'clean girl' and 'balletcore' propelled matcha further into the lifestyle of these trend-conscious communities, resulting in increased consumer interactions with matcha in both traditional and innovative ways. The consumption of matcha became synonymous with daily rituals and lifestyle branding, igniting a consumer frenzy that few could have predicted.

  • As these trends coalesced, they further solidified matcha's image and allure as not just a beverage, but a symbol of health, elegance, and environmental mindfulness, altering its position in global markets and standardizing its appeal across demographics.

  • 2-3. Production Limitations in Japan

  • Despite the burgeoning popularity of matcha, production limitations in Japan have resulted in significant supply constraints. Unique to matcha, the best tea leaves are selectively harvested within a limited timeline of approximately two months each year, usually from late April to early June. This results in an inherent scarcity of high-quality matcha, as producers cannot rapidly increase output to meet unexpected surges in demand. Therefore, significant overconsumption has led to an alarming depletion of available stock—specially the premium 'first flush' variety known for its vibrant flavor and color, which cannot be replicated once the annual harvest concludes.

  • Japanese producers, including renowned brands like Marukyu Koyamaen and Ippodo, have been forced to impose strict purchase limits and increase prices due to the prevailing shortages since October 2023. The output of lower-grade matcha harvested later in the season, often referred to as 'second flush' and 'third flush, ' failed to sufficiently satisfy the high expectations set by consumers craving the quality associated with top-tier matcha. As a result, price increases ranging from 10% to 15% were reported across various markets, leaving both consumers and businesses grappling with higher expenses and limited availability.

  • This fragile balance between demand and supply not only highlights the operational constraints faced by Japanese matcha producers but also emphasizes the risks tied to relying heavily on a single country's production capabilities for a globally desired product. With the next anticipated harvest not due until mid-2025, the market faces an uncertain landscape while enthusiasts and retailers alike confront the implications of this ongoing shortage.

3. Effects on Businesses and Consumers

  • 3-1. Increased Prices and Consumer Sentiment

  • The global matcha shortage has precipitated a significant rise in prices, directly impacting consumer behavior and sentiment. Reports indicate that businesses in Singapore have raised prices of matcha products by 10 to 15 percent since mid-October 2024, reflecting the challenges faced by suppliers who are struggling to keep up with demand. This increase in price has stirred mixed feelings among consumers. While many enthusiasts are willing to pay a premium for high-quality matcha, others express dissatisfaction, lamenting the financial burden of maintaining their matcha consumption habits in light of skyrocketing costs. The acknowledgment of these price rises often leads to discussions about the supply chain intricacies and the effects of limited availability on purchasing decisions, maintaining a consistent demand curve despite escalating expenses.

  • Consumer sentiment during this period has been heavily influenced by social media and the visibility of matcha as a trending product. Viral posts showcasing matcha drinks and desserts have intensified interest in the powder, leading to a sense of urgency among buyers. As queues form outside tea shops and cafes in locations such as Tokyo, consumers report feeling compelled to purchase matcha products lest they miss out, spurred by limited stock alerts and purchase restrictions set by retailers to manage their dwindling supplies. This scenario has fostered a compilation of brand loyalty shifts, with many consumers exploring alternative sources or lesser-known brands to secure their matcha essentials, underscoring the changing landscape of consumer behavior in response to scarcity.

  • Amid these price fluctuations and shifting consumer sentiments, small local businesses have reported varying impacts based on their positioning and ability to adapt. For some, the increased costs have become a point of contention as they struggle to balance quality while remaining competitive. New retailers attempting to enter the matcha market, like Matsu Matcha, face considerable hurdles with supply chains impacted by the broader market trends. Finding and securing quality supplies has been strenuous, which not only affects their operational capability but also contributes to consumer frustration when products are out of stock or when orders take longer to fulfill. Thus, the intersection between price and consumer sentiment encapsulates a broader narrative of resilience and adaptation across the matcha retail landscape.

  • 3-2. Case Studies of Affected Businesses in Singapore

  • The matcha shortage has resonated deeply within the local business landscape of Singapore, particularly among establishments reliant on this sought-after ingredient. A compelling case can be observed with Matchaya, a tea company that has reported a reduction in matcha supply by approximately 10 to 20 percent over the past year. This shortfall necessitated smaller and more frequent orders, escalating shipping costs. Despite the financial strain, Matchaya has pursued partnerships with other tea farms in Japan to mitigate the crisis, showcasing proactive measures in the face of adversity. The incident exemplifies how traditional supply chains are being tested amid unprecedented global demand.

  • Similarly, Nana's Green Tea has experienced shipment delays caused by production hiccups in Japan, although they reported no impact on stock levels in their cafes. These experiences highlight the variation in business resilience, with some being better equipped to navigate the turbulence of supply chain issues than others. The case of Tealife, on the other hand, presents a stark contrast, as they faced a staggering 60 percent drop in monthly supply. According to Yuki Ishii, Tealife's community manager, the drastic measures implemented by Japanese producers to hike prices and limit supply to new distributors have severely constrained their capacity to serve their regular clientele, leading to a palpable sense of frustration among customers.

  • Moreover, newly emerging businesses like Matcha Masta have stepped into the breach created by the shortage, appealing to health-conscious consumers with innovative products that infuse matcha with plant-based protein. The founders noted the importance of diversifying their supplier base to secure stock and maintain their operations. Each case collectively paints a vivid picture of an industry grappling with rapid shifts in demand and supply, underscoring the resilience and adaptability required for businesses to thrive in these challenging times. Essentially, these case studies reflect the varied responses to the shortage and illustrate a complex interplay of market dynamics that can serve as crucial lessons for both new and established players in the industry.

  • 3-3. Challenges Faced by New Retailers

  • Entering the matcha market as a new retailer in the current climate presents a unique set of challenges. For example, the emergence of brands such as Matsu Matcha has been met with complications in securing adequate supplies from Japanese producers, which are essential for maintaining quality offerings. These startups are often met with the dual challenges of high demand from consumers eager for matcha products and the reality of limited resources. As they navigate this landscape, new players must demonstrate agility, creativity, and strong supplier relationships to thrive amidst these constraints. The significant increase in matcha's global popularity has attracted multiple entrants into the market, intensifying competition and making differentiation crucial for success.

  • Meetings with suppliers and strategic adjustments are necessary for establishing reliable channels, as seen with Matcha Masta’s founders who wisely opted for multi-farm sourcing to safeguard their inventory. Balancing the quality of matcha with accessibility often requires these new entrants to explore less conventional supply arrangements, allowing them to remain competitive while also ensuring product integrity. In this quest to carve out a niche, the importance of brand loyalty and customer education is paramount. Instilling confidence in the quality of their matcha offerings can set them apart in a crowded marketplace, helping potential customers distinguish between the numerous available options.

  • Marketing strategies that capitalize on the growing trend of matcha-related content on social media can elevate a brand’s visibility and engagement, allowing these newcomers to capture the interest of discerning consumers. However, they must also be wary of the pitfalls associated with overselling or misrepresenting the quality of lower-grade matcha, as consumer dissatisfaction can lead to significant reputational damage. Ultimately, as new retailers strive to establish their place in the matcha ecosystem, they must grapple with navigating these challenges creatively and sustainably, ensuring that they are well-prepared for the dynamic shifts in consumer demand that characterize the current matcha marketplace. The convergence of innovation, adaptability, and understanding of consumer preferences forms the bedrock for success in this evolving environment.

4. Exploring Alternatives to Matcha

  • 4-1. Suggestions for Maintaining Matcha Consumption

  • In light of the ongoing matcha shortage, it is essential for consumers to adapt their habits while still enjoying the rich flavors and health benefits associated with matcha. Many enthusiasts find themselves searching for creative ways to maintain their consumption of this celebrated green tea powder amidst supply challenges. One approach is to explore culinary-grade matcha, which is often more accessible than ceremonial-grade matcha. Although it may not have the same nuanced flavor profile traditionally sought after for tea ceremonies, culinary-grade matcha serves as an excellent substitute in lattes, smoothies, and baking, allowing consumers to still enjoy its vibrant color and antioxidant properties. Another suggestion is to engage in the subscription model offered by various new and existing matcha retailers. Many businesses have introduced plans that enable customers to receive regular shipments of matcha powder. This not only helps to ensure a consistent supply but also allows enthusiasts to explore different grades and types of matcha, possibly discovering new favorites along the way. Moreover, those who are less reliant on specific brands may benefit from broadening their shopping practices to include multiple suppliers, thereby increasing their chances of finding available products.

  • 4-2. Potential Substitutes

  • For those looking for alternatives to matcha, there are several green tea options that can fulfill similar tastes and caffeine needs without compromising on flavor. One notable suggestion is yerba mate, a traditional South American drink known for its smooth caffeine release, which provides an earthy and herbaceous taste profile. Yerba mate can be brewed and enjoyed hot or cold, making it a versatile choice that appeals to varying preferences. Gyokuro, often hailed as one of Japan's most luxurious green teas, is another noteworthy substitute. Grown in the shade, gyokuro shares characteristics with matcha, notably in its umami flavor and sweet finish, and is highly regarded for its rich taste. Brewing gyokuro requires careful attention to temperature and timing, but its unique profile can satisfy those familiar with matcha. Hojicha is yet another wonderful alternative, produced from roasted tea leaves that provide an earthy flavor. It has less caffeine than matcha but maintains a robust taste that consumers are increasingly enjoying in lattes and desserts. Hojicha is also exceptionally easy to prepare, making it an accessible option for both tea enthusiasts and casual drinkers.

  • 4-3. Innovative Solutions from Local Brands

  • In response to the matcha shortage, local brands have risen to the occasion, offering innovative solutions that cater to the growing demands of consumers. For example, Matcha Masta, a newly established brand in Singapore, focuses on a unique blend of matcha and plant-based protein, catering to health-conscious individuals who seek both caffeine and nutritional benefits in their beverages. This innovative approach allows consumers to enjoy the matcha experience while addressing dietary preferences. Furthermore, brands like Mori Matcha have emerged, aiming to provide high-quality matcha at accessible prices. By sourcing from smaller farms in Japan, these brands ensure that they can meet the demands of their growing customer base while maintaining quality standards. New cafes and retailers such as Matsu Matcha have also sprung up, spreading awareness and increasing accessibility to matcha alternatives. Innovative menu items featuring matcha-inspired beverages and desserts have become increasingly popular, inviting consumers to experiment and explore new flavor combinations. As these local brands adapt their sourcing strategies and product offerings, they contribute significantly to mitigating the effects of the matcha shortage while enhancing consumer experience.

Conclusion

  • In summary, the matcha shortage serves as a lens through which significant shifts in both consumer behavior and market dynamics can be observed. The market's response illustrates an increasingly interconnected relationship between supply chains and consumer demand, all shaped by cultural influences such as social media. As businesses confront the realities of escalating prices and diminishing availability, the need for innovation and adaptability becomes paramount. Exploring alternatives, whether in the form of different grades of matcha or entirely new substitutes, not only provides options for consumers but also highlights the resilience of the industry in challenging times.

  • Moreover, this situation underscores the importance of strategic awareness for both consumers and retailers. Understanding the factors driving the current matcha shortage, including production limitations in Japan and the impacts of heightened global demand, will enable stakeholders to make informed decisions about their purchasing habits and business strategies. As the tea landscape continues to evolve, those who remain attuned to these dynamics will better navigate the upcoming changes, ensuring that they are not only prepared for future shortages but also equipped to seize opportunities that arise within the market.

  • Ultimately, the coffee and tea industries must recognize and adapt to the shifting preferences and availabilities brought upon by these fluctuations. The lessons learned from the matcha shortage serve as a poignant reminder of the importance of resilience in supply chains and the necessity for market participants to find balance within the burgeoning demand for quality products. Such awareness and flexibility are essential for understanding the current market dynamics.

Glossary

  • Matcha [Concept]: A finely ground powder made from specially grown green tea leaves, popular for its health benefits and vibrant color, traditionally used in Japanese tea ceremonies.
  • First Flush [Concept]: The first round of tea leaves harvested from the tea plant, prized for their quality, flavor, and color, particularly in matcha production.
  • Culinary-Grade Matcha [Product]: A lower grade of matcha that is more accessible and suitable for cooking and baking, though it may lack the nuanced flavor profile of ceremonial-grade matcha.
  • Ceremonial-Grade Matcha [Product]: A premium grade of matcha specifically prepared for traditional tea ceremonies, known for its fine texture and vibrant green color, offering a rich flavor experience.
  • Social Media Influence [Concept]: The impact of social media platforms like Instagram and TikTok on consumer behavior, significantly amplifying the visibility and desirability of products like matcha.
  • Subscription Model [Process]: A business approach where consumers receive regular shipments of products, such as matcha, to ensure consistent supply and encourage customer loyalty.
  • Yerba Mate [Product]: A traditional South American beverage made from the leaves of the yerba mate plant, known for its smooth caffeine release and versatile enjoyment options.
  • Gyokuro [Product]: A high-quality shade-grown Japanese green tea recognized for its sweet, umami flavor and considered one of the finest teas available.
  • Hojicha [Product]: A roasted green tea that offers an earthy flavor, lower caffeine content than matcha, and is growing in popularity for use in lattes and desserts.
  • Supply Chain Resilience [Concept]: The ability of businesses to adapt and maintain operations despite disruptions in supply, especially relevant during shortages like the matcha crisis.
  • Matsu Matcha [Company]: A newly established brand that specializes in matcha, facing challenges related to securing supplies due to the current market dynamics.
  • Matchaya [Company]: A tea company in Singapore that has been affected by the matcha shortage, reporting a significant reduction in matcha supply.
  • Nana's Green Tea [Company]: A café in Singapore that has experienced shipment delays linked to production issues in Japan, demonstrating the effects of the matcha shortage on local businesses.

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