Kyoto Matcha Boom Drives 30% Price Surge and Sencha Shortage – What U.S. Cafés Need to Know

Kyoto tea fields transform as global matcha demand surges

A major "matcha boom" is reshaping Japan's most famous tea region, Uji in Kyoto Prefecture. Driven by strong international demand—especially from the United States, France, and the Middle East—matcha has become one of the most sought-after Japanese food products worldwide. This surge in popularity is now visibly changing how tea farmers use their land, how tea is priced at auction, and which products Japanese tea companies prioritize for production.

In central Uji, long lines form outside historic tea shops even before opening hours, with many customers traveling from overseas specifically to purchase high-quality matcha. One well-established tea house reported that its matcha products sold out within approximately 15 minutes of opening, despite efforts to increase stock. This kind of rapid sell-out reflects the intensity of current matcha demand at both retail and wholesale levels.

Understanding tencha and sencha for U.S. buyers

For café owners and procurement managers in the United States, it is useful to understand the key differences between the two main types of tea leaves discussed in this report.

Matcha is a fine powder made from a specific type of processed tea leaf called tencha. Tencha is grown under shade covers (black or silver nets placed over tea fields) for several weeks before harvest, then steamed, dried without rolling, and finally stone-milled into matcha powder. This labor-intensive cultivation and processing method makes tencha more expensive to produce than other types of tea.

Sencha, on the other hand, is Japan's most commonly consumed green tea. It is made from leaves grown in full sunlight, steamed, and then rolled into needle-like shapes for brewing as loose-leaf tea. Sencha has historically been an affordable, everyday beverage for Japanese households and restaurants.

Both types of tea come from the same plant species (Camellia sinensis), but the differences in cultivation, processing, and market demand mean that shifts in one segment can have significant effects on the other.

Tencha prices rise 30% over five years

According to recent reports from Kyoto-based tea traders, the wholesale price of tencha leaves used for matcha production has increased by roughly 30% over the past five years. This reflects sustained and growing demand from international markets, where matcha is used not only for traditional tea ceremony but also for lattes, smoothies, baked goods, and other café menu items.

One Kyoto tea company now generates over 90% of its revenue from overseas sales, with buyers in the United States, France, and Dubai among its largest customers. Some international buyers have reportedly told Japanese suppliers, "We are willing to pay more—just send us everything you have," leading certain companies to decline new orders because they cannot secure enough raw material to meet demand.

For U.S. café operators who rely on authentic Japanese matcha, this pricing environment suggests that procurement planning, contract timing, and menu pricing strategies may need more frequent review than in past years.

Sencha production drops as farmers shift to tencha

The same matcha boom that is driving up tencha prices is also having an indirect but significant impact on sencha. In Kyoto Prefecture, the total area devoted to sencha production has been declining year by year as more farmers convert their fields to tencha cultivation, which currently sells at higher prices.

In Wazuka, a core tea-growing town within the Uji region, hillsides that were once covered with open green tea fields are now extensively shaded with black nets used for tencha production. Farmers report increasing tencha output by around 15% compared with the previous year in response to both strong market prices and national policy encouragement to expand matcha production.

At a recent tea-leaf auction attended by approximately 60 buyers, multiple traders noted that sencha prices are now noticeably higher than last year. According to these traders, sencha wholesale prices have risen by roughly 20% compared with the previous year. One buyer explained that producers who used to make sencha or gyokuro (a high-grade shaded tea) are now switching to tencha because it commands a higher price, reducing the overall supply of sencha and increasing its scarcity.

Retail and bottled tea sectors face difficult choices

The price increases for both matcha and sencha are beginning to affect downstream businesses in Japan. A long-established tea retailer in Kyoto expects that when products switch over to this year's new crop in summer or autumn, there is a real possibility that shelf prices for sencha will need to increase. The shop is trying to balance the need to support farmers' livelihoods through higher-value crops like matcha with the desire to keep everyday sencha accessible for regular customers.

Bottled tea manufacturers are also being forced to reevaluate their strategies in response to rising raw-leaf costs. Industry sources indicate that major beverage companies are weighing three main options: raising retail prices on bottled tea products, switching part of their sourcing to lower-cost tea leaves from China or Southeast Asia, or discontinuing some products to reduce the overall lineup. Each of these choices has implications for brand positioning, perceived quality, and consumer trust.

An economics professor interviewed in the same news report warns that if tea continues to move upmarket and becomes perceived mainly as a premium product, "tea fatigue" or consumer disengagement could accelerate. This raises broader questions about the future of Japan's tea culture, which historically included both high-end ceremonial teas and affordable, everyday sencha for households and workplaces.

Implications for U.S. café buyers

For U.S. cafés, restaurants, and foodservice operators that import matcha directly from Japan, these trends highlight several practical considerations:

• Plan ahead for seasonal procurement: Matcha supply remains strong due to government support for increased tencha production, but competition from international buyers is intense. Securing contracts earlier in the year and confirming grade, origin, and intended use (ceremonial vs. culinary) will become increasingly important.
• Monitor pricing closely: With tencha prices up 30% over five years and sencha prices up 20% year-over-year, menu pricing and cost structures may need more frequent adjustment than in the past.
• Communicate quality and origin transparently: As matcha becomes more valuable and supply tightens, clear communication with customers about sourcing, grade, and authenticity can help differentiate your offerings and justify pricing.
• Consider diversified sourcing: While premium Uji matcha remains the gold standard, understanding the broader Japanese tea market—including other producing regions and grade options—can help manage cost and supply risk.

Matcha Wholesale Japan will continue to monitor developments in Japan's tea industry and provide English-language updates for overseas cafés, restaurants, and tea businesses.

Source

Original Japanese news article (in Japanese):
"15分で売り切れ…『抹茶ブーム』の余波で京都の茶畑に異変！生産減った『煎茶』も値上がり" – Kansai TV / Yahoo! News
https://news.yahoo.co.jp/articles/77fb653da0cbf6d319b23a8b5d739eccd0b0d9af