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Japan has a matcha shortage despite record levels of production. Shops are selling out of the green tea powder as soon as they hit the shelves.

On today’s Big Take Asia Podcast, host K. Oanh Ha talks to Bloomberg’s Mia Glass about the world’s obsession with matcha – and why producers can’t keep up with the rising demand.

Further listening: Japan’s Small Businesses Have a Problem. They Don’t Know How to Raise Prices

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Here is a lightly edited transcript of the conversation:

K. Oanh Ha: Jasmine Smith is a designer living in Japan. She and her sister Freya make videos about their everyday life in Tokyo in their spare time. 

Jasmine Smith: Welcome back to a day in the life living in Tokyo. Today we’re heading to the Harry Potter studio… 

Ha: And there’s one thing they love about living in Japan – Japanese green tea. Also known as matcha.

Freya Smith: Matcha just tastes amazing. We both used to be coffee drinkers actually, but at some point matcha just took over as our go-to caffeine source. And it’s been part of our morning routines ever since.

Ha: They started posting videos on TikTok in 2022, sharing their favorite matcha cafes, daily morning routines and telling their thousands of TikTok followers where they can get the best matcha powder online and in Tokyo. But a couple of months ago, they were surprised when they went to get their usual matcha fix at this tiny store in their neighborhood. 

Freya: It’s just run by an elderly woman and she told me that, yeah, she has nothing to sell to me, unfortunately, and recently she told us that a lot of foreigners, a lot of young people are visiting her shop. So every time she restocks, she instantly sells out, which never used to happen.

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Ha: Bloomberg reporter Mia Glass, who is based in Tokyo, also noticed this happening at matcha stores around her. 

Mia Glass: Matcha has just completely blown up overseas, people come to Japan and they know about matcha from social media, they’ve studied it, and they really want that high quality type of matcha when they come here. So there’s a huge shortage of matcha in Japan. 

Ha: Welcome to the Big Take Asia from Bloomberg News. I’m Oanh Ha. Every week, we take you inside some of the world’s biggest and most powerful economies, and the markets, tycoons and businesses that drive this ever-shifting region. Today on the show — the matcha mania. What’s driving this matcha boom? And why can’t matcha makers in Japan keep up?

Ha: Mia, it’s great to have you. Thanks for joining us.

Glass: Thank you so much for having me.

Ha:  So because today’s episode is all about matcha, I’ve got a cup of  cold matcha with almond milk here with me in the studio in Hong Kong. Mia, what are you drinking? 

Glass: So I got an iced matcha latte, which is my go-to order. And I got it from this matcha cafe that’s actually near our office building. It’s by this amazing family-run Japanese tea company that’s been around for like 300 years.

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Ha: Oh, that is amazing. Now shall we give these matcha drinks a taste? 

Glass: Yes. Cheers. (laughter)

Ha: Cheers. Mmm…This one is not quite bitter enough for me. I think it’s been, it has too much almond milk, unfortunately. But I can still get the flavor of the matcha, you know. 

Glass: I just love how unique the taste is, kinda like this mix of umami, but also bitter, sometimes a little sweet so it’s just a flavor you can’t really get from anything else.

Ha: Mia, tell us exactly what is matcha? 

Glass: Yeah, so, matcha is a Japanese word. It means powdered tea in Japanese. So it’s a type of green tea where the entire leaf is grounded into this powder.

Ha: This way of making green tea originated from China. In the 12th century, a Japanese monk who was traveling there was so impressed with the energy boost the drink gave him, that he brought it back with him to Japan. It’s said that Japanese monks used to drink matcha to stay awake during long meditation sessions. And today matcha is at the center of Japanese tea ceremonies that are performed for cultural and religious purposes. 

Glass: Depending on the tea ceremony, there will be different types of matcha, like a thinner matcha or a thicker one. There’s specific steps that they have to go through. It’s carefully whisked into this frothy drink that you drink at the end. And it’s a practice that emphasizes a lot of Japanese values like mindfulness, harmony, tranquility, respect, those kinds of things. 

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Ha: And matcha isn’t just for traditional ceremonies, you’ll find it everywhere you go in Japan – 

Glass: In Tokyo, there’s a matcha cafe on like every block here, everything is matcha now. Bubble tea, cakes, cookies… Even in coffee shops here, they usually have matcha now, so you can pick between the two. 

Ha: Japan is one of the world’s largest producers of matcha. The country made about 4,000 tons of the powdered tea in 2023. That’s almost a threefold increase from 2008 and an all-time high. And in recent years, it’s becoming more popular overseas. Last year, Japan’s export of green tea, which includes matcha, reached a record high of about $245 million. That’s a roughly quarter increase from the previous year. But despite the record level of production, Japan has a matcha shortage. Shops sell out of matcha as soon as they hit the shelves, forcing people to go out of their way to find the tea powder. And some of the most prominent matcha producers have also stopped selling certain products, and limits the number of cans of matcha customers can buy at a time. Mia says there’s one clear driver for the increasing demand.

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Glass: People on TikTok and Instagram and other social media platforms have really made an aesthetic out of matcha. It has this bright green color that is really attractive for social media. And so people will show off that bright green matcha latte or desserts. And people even have matcha stations, complete with traditional mugs and whisks and strainers and things like that. And they’ll decorate it, so it’s really this aesthetic that people have jumped on. And then of course the nutritional aspect as well.

Ha: The craze for matcha comes at a time when there’s been a growing interest in health and wellness products. You’ll hear social media influencers talk about the health benefits matcha offers. It’s rich in antioxidants and caffeine, which some studies suggest can help boost energy and lower risk of diseases. And on top of these viral social media videos contributing to the shortage, Mia says there’s just a lot of people traveling to Japan and buying matcha in person. 

Glass: There are so many tourists in Japan right now, mainly thanks to the weak yen, so basically everything is on sale once you get to Japan, and there’s also just generally more interest in Japan. Last year 37 million people visited the country, which is a record, and it’s up 47 percent from 2023. A lot of videos on TikTok and Instagram show a lot of people hoarding matcha. I saw a few videos of people literally having a suitcase full of matcha, you know, from different stores to try the different flavors and stuff like that. Because they’re only in Japan for, you know, a week or two. They’re like, oh my god, I have to buy up all this matcha while I’m here. So people definitely are buying a lot of matcha and that’s definitely contributing to the shortage.

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Ha: While Japanese have been drinking less green tea over the years – outside of Japan, the appetite for matcha is expanding. Cafes and tea stores as far as Sydney in Australia, have seen sales skyrocket, forcing owners to limit customer purchases because they’re unable to source more of the tea powder from Japan. After the break, why can’t Japanese tea producers just… make more matcha?

Ha: Growing fine quality matcha has a lot to do with the land and the climate. The plant needs to be shaded. The soil needs to drain well, but also retain a decent amount of water. And while matcha is produced in a variety of regions in Japan, there’s one particular place renowned for this highly-prized tea.

Glass: So the most famous region is Uji, which is on the southeast border of Kyoto. And that’s where matcha farmers have mastered techniques of growing and harvesting the best matcha, and they’ve been doing this for centuries.  

Ha: Mia, can you walk us through the life cycle of matcha? How is matcha made?  

Glass: So it’s a very long process. So basically in a farm, you have just rows and rows of tea plants. In April, the first shoots of the season are going to appear, and then the tea plants are gradually shaded over time, so that blocks the direct sunlight for the plants. That gives it that chlorophyll, that bright green color, and it also enhances the taste, and also gives it antioxidants, which gives you that nutritional component.

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Ha: The highest grades of matcha are usually grown in almost darkness before they’re harvested around late April or May. The green tea leaves are handpicked, and hours after they’re harvested, they have to be steamed for less than a minute. That stops the oxidation process and keeps the leaves green. Then the leaves are left to dry. They’re destemmed and deveined. 

Glass: At this point they are called tencha. So this tencha will be blended together basically to make different flavor profiles. So that’s also a part of the farmer’s experience and knowledge. They know how to blend the matcha to make certain flavors. And then after it’s been stored in a refrigerator, it’s going to get grinded to turn into the matcha powder that we know in stores. 

Ha: So that does sound like a long and arduous process – but certainly not impossible, right? Why can’t supply just keep up with the demand?

Glass: Yeah, so the whole process that I just described, it only happens once a year for the most premium types of matcha, so farmers can’t harvest more on demand. The annual supply is usually determined well in advance. And it’s obviously a really slow, precise process as well. So the traditional stone mills only grind about 40 grams of matcha per hour. And specialized matcha processing machines are super limited in number. So increasing production speed would definitely compromise the quality of the matcha. And also a lot of these types of produce are pretty much made by family-run businesses in Japan, and obviously Japan has a declining population, it’s aging, and there’s not enough people to take over those farms in the future, so there’s really just a decline in supply for that reason as well.

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Ha: Another reason for the matcha crunch is that Japanese tea producers tend to prioritize long-standing customers. Marukyu Koyamaen, one of the leading brands of matcha in Japan, says it needs to restrict sales to make sure there’s enough supply for customers at temples, shrines and other venues that use matcha for religious or ceremonial purposes. Mia, is there any protective policy in place here? Why can’t Japan just import, for example, fresh tea from overseas, and process it at home? 

Glass: There’s definitely some national or cultural pride at play here. It’s not like Japan has any rules about importing from other countries or regulations, but it’s really more just about what people want. I think a lot of people in Japan really just love Japanese matcha and they really trust the quality that these Japanese farmers bring because they’ve just been doing it for centuries. So I think a lot of Japanese people, although they’d be fine with drinking matcha that’s imported from other countries, they probably want to have that Japanese matcha. 

Ha: Mia says farmers in other countries like the US, South Korea and China are trying to make more of their own matcha, but it’s hard to replicate the kind of matcha you get in Japan and that’s because of the combination of climate and soil so specific to the country – not to mention the centuries Japan has spent on perfecting the growing and processing techniques. Mia – is there anything that the Japanese government can do to help the matcha supply catch up? 

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Glass: The government is basically promoting more farmers to make tencha rather than other types of teas right now because that can be turned into matcha. And they’re also supporting the tea industry as a whole through various subsidies and programs to encourage tea growing, and also just promoting research in general, because the problems like the aging population and also climate change heavily affects the production of matcha. They’re really trying to research what’s the best method to continue to make more matcha.

Ha: Those government measures will take some time to bear fruit – if they ever do. Meanwhile, Mia says, for matcha lovers living in Japan now, the difficulty in getting this unique green tea powder is just another inconvenient side effect of Japan’s tourism boom.

Glass: Yeah, it’s definitely one of the ways that the tourism issue is manifesting in Japan. I know there are a lot of locals who are really angry that there are so many tourists in the streets and in shops. I also hear complaints about people don’t want Airbnbs in their neighborhood because of the garbage and the noise and things like that. And then I know in Kyoto, for example, the buses have been so crowded that a lot of the locals who are going to work have to wait for like three buses to pass because there are so many tourists, especially with like huge suitcases. So I think there are a lot of locals who are a bit upset about the overtourism right now.

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Ha: Despite some of these public complaints, the Japanese government says it wants to attract more tourists. Its goal is to welcome 60 million foreign visitors a year by 2030 – that’s a jump of more than 60% from last year’s record. And that Mia says might add more pressure on matcha’s supply.

Glass: Your matcha lattes will probably become more expensive if the shortage continues. And I know a lot of new matcha businesses and cafes, not just in Japan, but all over the world are having a really hard time finding tea producers with enough to sell. So I’ve heard that wholesalers in Japan just have to turn down new clients because a lot of the matcha for the next harvest is already reserved. So that’s going to cafes in Japan that are trying to start out and cafes abroad. I know a lot of cafes in foreign countries are starting to jump on this matcha trend, but it’s almost too late because there’s just no supply.

Ha: Mia, I think we should drink our drinks, our matcha drinks, while we can still afford them. (laughter)

Glass: Of course.  

Ha: Enjoy. 

Glass: Cheers. 

Ha: Cheers. 

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