Japan's Matcha Boom Drives Shift from Sencha to Tencha Production in Nara's Yamato Tea Region

Japan's matcha boom is reshaping the country's tea industry from the ground up. In the Tsukigase area of eastern Nara City — one of Japan's most storied tea-growing regions — local farmers and cooperatives are making a decisive shift away from sencha (green tea) production toward tencha, the shade-grown leaf that is ground into matcha. For U.S. cafés, restaurants, and matcha buyers sourcing directly from Japan, this transformation signals both a tightening of the supply chain and a new era of quality-focused Japanese matcha production.

What Is Tencha? The Foundation of Authentic Matcha

Tencha (碾茶) is the unground, shade-cultivated tea leaf that serves as the direct raw material for matcha. Unlike sencha, which is steamed and rolled after harvest, tencha leaves are steamed and dried flat — preserving the deep umami, vivid green color, and high L-theanine content that define premium matcha. Without high-quality tencha, there is no high-quality matcha. This distinction matters enormously to U.S. buyers who care about traceability and grade.

Nara's Tsukigase Region Invests in Tencha at Scale

In late March 2026, the agricultural cooperative Green Wave Tsukigase (グリーンウェーブ月ヶ瀬), based in Nara City, completed the installation of a new tencha processing line inside its factory. The cooperative had been planning since 2024 to convert one of its two sencha processing lines to tencha production, with installation costs partially covered by a Japanese government subsidy supporting agricultural facility upgrades.

The new line is capable of producing approximately 700 kg of tencha per hour — a scale that the cooperative's chairman, Katsuya Ioka, described as "rare for a large-scale machine of this kind in the Kansai region." Production is scheduled to begin in May 2026, with a target output of approximately 130 metric tons of tencha for the current fiscal year.

The Economics Behind the Pivot: Tencha Prices Have Surged 1.5x Since 2020

The financial case for switching to tencha is compelling. According to the National Federation of Tea Production Organizations (全国茶生産団体連合会), the national average wholesale price of tencha in 2024 reached ¥3,278 per kilogram (approx. USD $22.50/kg), up approximately 1.5 times from ¥2,168/kg (approx. USD $14.90/kg) in 2020. Over the same period, national tencha production nearly doubled — from 2,736 metric tons in 2020 to 5,336 metric tons in 2024 — driven squarely by the global matcha boom.

Sencha, by contrast, has faced persistent headwinds. The rise of bottled green tea beverages has suppressed consumer demand for loose-leaf sencha, and the COVID-19 pandemic dealt a further blow by emptying Japanese inns and traditional restaurants — the primary domestic buyers of high-grade sencha. Average sencha prices have remained essentially flat in recent years, making it increasingly difficult for growers to sustain viable operations.

Yamato Tea: A Heritage Origin With a Future in Matcha

The Tsukigase area sits within the Yamato Highlands (大和高原), at elevations ranging from approximately 200 to 600 meters above sea level. This terroir — cool temperatures, morning mists, and well-drained slopes — produces Yamato Tea (大和茶, Yamato-cha), prized for its refreshing aroma and mellow umami. The history of tea cultivation in this region traces back to the Heian period (794–1185), when the monk Kukai is said to have brought tea seeds from Tang Dynasty China and planted them at Butsuryu-ji Temple in Nara Prefecture.

According to the Ministry of Agriculture, Forestry and Fisheries' 2020 Agricultural Census, the Tsukigase region had 271 hectares of commercial tea cultivation — accounting for more than half of Nara Prefecture's total 488 hectares. Yet the number of commercial tea farming households in Nara City has collapsed: from 257 in 2005 to just 94 in 2020. The cooperative's general affairs director, Tadashi Tokuda, acknowledged the harsh reality: "Until now, we couldn't tell our children to grow tea — not when it comes to income." The shift to higher-value tencha, he hopes, could become "a catalyst for new farmers to enter the industry."

Government Support and a Three-Year Transformation Plan

Nara City has put institutional weight behind the tencha transition. The city's fiscal year 2026 initial budget includes ¥16.2 million (approx. USD $111,000) earmarked for a program supporting the shift to tencha-suitable tea cultivars and subsidizing external processing costs for farms that lack their own manufacturing facilities. The city's agricultural policy division described the move toward tencha regionalization as "urgent," and plans to concentrate support over the next three years.

What This Means for U.S. Matcha Buyers

For American cafés and foodservice businesses that import Japanese matcha, these developments carry practical implications. As domestic Japanese demand for tencha rises — driven by both the global matcha trend and structural investment in new processing capacity — competition for premium-grade tencha from established origin regions like Nara will intensify. Buyers who have established direct-source relationships with Japanese suppliers are best positioned to secure consistent supply of ceremonial and culinary-grade matcha as this transition unfolds.

The Green Wave Tsukigase cooperative is entering tencha production from scratch after 32 years of sencha focus — a fact chairman Ioka acknowledged candidly: "There is anxiety about how well we will do in the market, but we won't know until we try. We want to make a good product." That spirit of reinvention, backed by government funding and market economics, reflects a broader realignment happening across Japan's tea belt.

Source: Yomiuri Shimbun (読売新聞), April 18, 2026
https://www.yomiuri.co.jp/local/kansai/news/20260417-GYO1T00141/