The global matcha boom has transformed the situation for Japanese tea producers

Two decades ago, farmer Toshiyuki Nishi inherited a family farm on the island of Kyushu in Kagoshima during a period of decline in the local tea industry, when sales were shrinking and prices were falling. The situation changed amid a global surge in interest in matcha, which the farmer described as a miracle.

Last year, Japanese green tea exports reached 12,600 tonnes, three times the figure of a decade ago, and product prices increased. Kagoshima Prefecture, previously little known compared to Kyoto or Shizuoka, became the country's top tea producer for the first time in 2024. Today, about 40% of tencha — the leaves used to make matcha powder — is grown here.

At the same time, the Japanese tea industry faces serious challenges, including an aging farmer population, labor shortages, and competition from China, which produces 70% of the global matcha volume. Domestically, demand for tea leaves is declining amid changing population habits: consumption dropped from 527 grams per person in 1970 to 233 grams in 2024. From 2005 to 2025, the area under tea plantations decreased by 31% as farmers left the business or retired without successors.

Not all producers can switch to matcha production, since growing tencha requires shading the bushes before harvesting and expensive processing equipment. Market participants consider the premium segment promising. According to Mr. Nishi, Japan should position itself as a matcha region akin to Champagne in order not to lose out to the competition.