Matcha quality decline summary and key market implications
- Japanese matcha exports tripled from 2010 to 2023 as demand surged
- Authentic Japanese matcha now accounts for only half the market share
- Lower grade matcha alternatives are growing by 10 percent annually
- Climate pressures have cut Japanese matcha yields by up to 60 percent
- Lower quality matcha risks bitter taste and reduced health benefits
Headline: Matcha quality decline: Is it a ‘victim of its own success’?
Matcha has taken the world by storm. The green flavour has, in a short time, gone from relative obscurity to omnipresence. Identified by its bright green hue, it can be found not just in teas and lattes but as an ingredient in ice-cream, chocolate and even bread.
Yet the popularity of the drink could be under threat. Supplies were already being challenged earlier this year, and now, lower quality powders are entering the market, their share increasing every year.
What is matcha?
Matcha is a finely ground powder, made of shade-grown green tea originating from Japan.
Unlike ordinary green teas, matcha involves consuming the entire leaf – in powdered form. After harvesting, stems and veins are removed and the leaves are ground down, giving it its distinctive green colour.
It has been linked to health benefits such as improving focus, helping metabolism, improving skin health, reducing inflammation and making sleep quality better (one health outcome which many consumers desire).
According to Japan’s agricultural ministry, matcha exports tripled between 2010 and 2023 as global popularity ballooned. In 2023, sales of matcha in Western markets rose by around 200%.
Why is matcha quality declining?
For the past several years, matcha’s popularity has been nearly unmatched, driven by social media frenzy and health trends. Because of this, demand has been straining supply.
According to Alice Pilkington, principal analyst at marketing intelligence company Mintel, high demand has meant that lower quality powders have been “flooding” the market.
Such powders could lead to the “cheapening” of a traditionally revered tea ceremony, explains Pilkington.
“Authentic high grade Japanese matcha has come under attack from cheaper alternatives,“ agrees Jordan Kear-Nash, principal consultant at supply chain consultancy Proxima.
“Many cafés and brands are substituting culinary‑grade matcha, intended for baking or blending, in place of ceremonial‑grade matcha, traditionally used for drinking."
This substitution has been found to be widespread in Western markets.
Moreover, alternatives are coming not from Japan but from other tea markets, such as China, India and Kenya.
All this has meant that classic matcha now only makes up around half the market, and the share of “culinary grade” replacements is growing by 10% a year.
While popularity is the main driver of the supply-demand mismatch, there are other factors at play. Japan has limited production regions of the crop, and this combined with climate pressures have reduced yields by up to 60%.
Combined, all these factors have led to the price of matcha nearly tripling.
Could this affect consumer demand?
The big question is, could such replacements actually affect demand from consumers?
If consumers notice a decline in matcha quality, the viral ingredient could be a “victim of its own success”, says Mintel’s Pilkington. In short, a decline could be the very consequence of such high demand.
Lower quality matcha could be noticeable to consumers, suggests Proxima’s Kear-Nash.
“Typically, cheaper alternatives will come from inferior leaves and will produce a lower grade which, in layman’s terms, may mean that it tastes grassy or bitter, has a duller colour, and delivers fewer antioxidants and amino acids. This can reduce both taste appeal and perceived health benefits.”
However, the impact of this on demand can be mitigated, as long as consumers are not misled.
Trust in the food industry in general is already declining. It is important for the continued popularity of matcha, suggests Kear-Nash, that suppliers are transparent. Different strains should be labelled, and there should be visibility in supply chains.
“What’s important here is that consumers understand exactly what constitutes premium compared with everyday matcha, and what they are paying for.”
