Matcha Mania Pushes Tea Prices to Record Highs

Shizuoka's second-flush harvest wrapped up mid-month with raw tea prices forecast to hit roughly ¥2,000 per kilogram, a 70% jump year-on-year and nearly four times the depressed levels seen just two years ago. The surge stems from buyers scrambling for cheaper grades after first-flush prices climbed out of reach, compounded by a smaller overall harvest this season. For growers, it is an unexpected windfall after years of thin margins. But tea merchants now face the opposite problem: squeezed profitability, thinning inventories, and difficulty passing costs downstream. The imbalance highlights a structural tension rippling through Japan's tea trade, where producer fortunes and merchant survival are increasingly pulling in opposite directions as the market recalibrates around scarcity and global demand.

Kagoshima's prefectural tea council convened its tencha trading session on July 16, posting an average price of ¥8,738 per kilogram, 1.5 times last year's figure, as matcha's global popularity keeps lifting valuations. The prefecture produced 2,670 tons of tencha in 2025, up 24% year-on-year, extending its run as Japan's top producer for a sixth straight year and now accounting for 43% of national output. Yet council leadership tempered the celebration with caution, warning that runaway price spikes could eventually push consumers away and destabilize the sector long-term. It is a reminder that even amid a historic boom, Kagoshima's growers are wary of pricing matcha out of the everyday markets that built its global following in the first place.

The same July 16 Kagoshima session delivered striking results for second-flush tencha, with top lots reaching ¥15,911 per kilogram, a 1.6-fold increase over last year, while averages climbed to ¥8,738 per kilogram. This follows an even steeper first-flush rally, which rose 1.8 times year-on-year, suggesting sustained momentum rather than a one-off spike. Overseas demand for matcha continues to be the clear driver, lifting values across both harvest cycles and rewarding growers who supply the stone-ground base material behind the world's matcha lattes and desserts. For buyers and importers, the pattern signals that premium tencha pricing may be the new normal this year, not a temporary anomaly tied to a single auction or flush.

Mechanically, the July 16 Kagoshima auction saw twenty local processors submit 42 lots totaling around 4.1 tonnes of tencha, with the session averaging ¥8,738 per kilogram, 50% above last year, and a record top lot at ¥15,911 per kilogram, up 60%. Unlike the direct producer-to-merchant deals that typically dominate Japan's tea trade, this open forum format allows buyers to compare quality and price across multiple suppliers in one setting. Industry observers say that transparency is proving valuable as global matcha demand intensifies competition for limited supply. For overseas buyers watching from afar, these auction results offer one of the clearest real-time signals of just how tight, and lucrative, the tencha market has become this season.

In a historic first, Japan's Ministry of Agriculture, Forestry and Fisheries has granted geographical indication status to 'Japanese Tea,' with the entire country designated as the production region, an unprecedented national-scope GI. The Japan Tea Association filed the application in October 2024, and the designation now brings the country's total GI-protected products to 170. The move is squarely aimed at shielding domestic matcha and tea producers from being undercut by rising Chinese and Vietnamese imports as international demand for Japanese tea, matcha especially, keeps climbing. For exporters and brand owners, the GI offers a powerful new marketing and legal tool, reinforcing 'Japanese Tea' as a protected, verifiable designation rather than a generic descriptor open to imitation.