Rising Japanese Tea Costs Now Hitting Bottled Green Tea: What It Means for U.S. Matcha Buyers

Japan's bottled green tea giants are raising prices in 2026, and the reason goes far beyond inflation: a global matcha boom is disrupting Japan's entire tea leaf market. For U.S. cafés and restaurants relying on authentic Japanese matcha, this shift in Japan's domestic market is a direct warning sign about future costs and supply stability.

In December 2025, ITO EN's president announced that the company would have "no choice" but to revise prices for its flagship bottled green tea brand "Oi Ocha," citing a sharp surge in raw tea leaf costs. From March 1, 2026, the suggested retail price for a standard 600 ml PET bottle will rise from 200 JPY to 220 JPY, while Coca-Cola Bottlers Japan is also implementing a second consecutive price increase on its green tea brand "Ayataka" from the same date.

Behind these price hikes is not a decline in demand, but the opposite: an unprecedented global boom in matcha, the finely milled green tea powder that has become a staple in lattes, desserts, and health-focused beverages worldwide. This boom is reshaping how Japanese tea farmers use their fields, how tea leaves are priced, and ultimately how much cafés abroad will pay for Japanese matcha in the coming years.

Matcha boom is pulling Japanese tea exports to record levels

Japan's tea exports have been rising for years, but 2025 marked a clear acceleration driven by matcha. According to the Japan Tea Export Promotion Council, exports of powdered tea—mainly matcha—reached around 7,800 tons between January and November 2025, up about 1.7 times year-on-year and already surpassing the full-year total for 2024. This follows a historic milestone where Japan's total tea exports exceeded 10,000 tons for the first time in 71 years, largely supported by overseas demand for matcha.

Global interest is being fueled by health-conscious consumers and high-profile influencers who promote matcha as a "clean energy" drink rich in antioxidants. As a result, overseas buyers—from specialty cafés to major beverage brands—are competing directly with Japanese domestic users for limited high-quality tea raw material.

How Japanese tea leaf pricing works – and why lower-grade leaves are spiking

To understand the current price shock, it helps to know how Japanese tea leaves are classified by harvest timing. In Japan, tea leaves are typically divided into "first flush" (ichiban-cha or shincha), "second flush" (niban-cha), "third flush" (sanban-cha), "fourth flush" (yonban-cha), and "autumn–winter bancha" (aki-fuyu bancha). First flush leaves are considered the highest quality and are often used for premium teas and matcha, while second and later flushes are more commonly used for PET bottled teas and everyday loose-leaf products.

What is surprising in 2025 is not only the rise in premium leaf prices, but the extraordinary jump in prices for lower-grade material. Data from the Kagoshima Prefectural Economic Federation's tea division show that the average price of second flush leaves in 2025 climbed to 1,494 JPY per kilogram, about 2.2 times the previous year's 668 JPY. Third flush prices tripled, fourth flush rose to 3.3 times, and autumn–winter bancha surged to 2,431 JPY per kilogram—around 5.8 times the previous year's level.

These later-harvest leaves are a key raw material for mass-market bottled green tea brands such as "Oi Ocha" and "Ayataka." As their costs soar, beverage makers are being forced to pass on the increases through retail price hikes, despite concerns about consumer sensitivity to yet another round of inflation.

Why farmers are shifting from sencha to tencha

Tea industry officials in Kagoshima, one of Japan's major tea-growing regions, report that many farmers are switching production from sencha (the steamed loose-leaf green tea) to tencha (the shade-grown processed leaf used to make matcha), in response to booming global demand for matcha. While both sencha and tencha come from the same tea bushes, they require different cultivation and processing methods, and fields cannot fully supply both at once.

As more acreage is devoted to tencha, the supply of sencha—especially the lower-cost second and later harvests that are typically used for bottled green tea and everyday loose-leaf products—has declined. This shift is a key reason behind the unusual situation in 2025 where autumn–winter bancha, normally the cheapest category, has become more expensive than some first-flush teas, further tightening the market for raw material used by major bottled tea brands.

Why matcha demand is distorting the entire tea market

The core issue is that matcha and bottled green tea are now competing for the same underlying resource: Japanese tea fields and farmers' time. ITO EN's management notes that, amid a global matcha boom, offers for matcha are now reaching farmers directly from overseas buyers, frequently bypassing traditional intermediaries. Farmers who previously focused on sencha or bancha are shifting production toward tencha because it is more profitable under current market conditions.

This shift reduces the supply of leaves dedicated to traditional green teas, tightening the overall balance and driving prices up across all grades, not just for matcha. At the same time, the matcha supply itself is under strain: companies such as Ippodo Tea report that matcha demand, especially from outside Japan, has risen so sharply that they have introduced purchase limits and are warning of an ongoing matcha shortage in Kyoto's tea market, where average matcha prices reportedly reached about 2.7 times the previous year.

For U.S. buyers, this means that the "cheap" side of the market—low- to mid-grade green tea used in bottled drinks—is no longer insulated from the premium matcha segment. As more fields convert to tencha production and overall tea output falls due to aging farmers and limited new entrants, all Japanese tea categories are becoming more expensive and more competitive to secure.

What this means for U.S. cafés importing Japanese matcha

For cafés and restaurants in the United States that rely on Japanese matcha for lattes, specialty drinks, and desserts, these developments carry several important implications.

• Expect continued upward pressure on matcha prices. With Japanese tea exports rising, domestic beverage makers paying more for leaves, and Kyoto matcha market prices already reported at roughly 2.7 times year-on-year, there is little reason to expect meaningful price relief in the short term.
• High-quality matcha will be the tightest segment. Producers and wholesalers note that the shortage is especially severe for premium and organically certified matcha, where supply cannot expand quickly due to land, labor, and stone-grinding capacity constraints.
• Competition with large beverage brands will intensify. As major Japanese beverage companies pay more for tea leaves and seek to secure long-term contracts, overseas buyers may find spot purchasing more difficult or volatile.

On the positive side, ITO EN's leadership also points out that higher tea prices are revitalizing some tea-producing regions. As tea becomes more profitable, there are early signs of younger successors returning to farming, which could, over time, support a more sustainable production base—though this is unlikely to offset shortages in the immediate future.

Practical steps for U.S. matcha buyers

Given the current market, U.S. cafés and foodservice buyers importing matcha from Japan may want to consider several strategic adjustments.

• Secure supply through reliable long-term partners. Rather than chasing the lowest short-term price, building relationships with established Japanese suppliers can help ensure consistent quality and volume in a tight market.
• Review menu pricing and portion sizes. With Japan's domestic bottled tea prices rising and export demand staying strong, incorporating modest price adjustments or recipe optimization now can help maintain margins without sudden shocks later.
• Consider diversifying by region and grade—within Japan. While Kyoto (Uji) remains the most famous origin, other Japanese regions such as Shizuoka and Kagoshima are expanding their matcha capacity and can offer authentic Japanese matcha at competitive quality levels.
• Communicate the story to customers. Explaining that rising matcha prices are driven by global demand and higher prices paid to Japanese tea farmers can help guests understand and accept necessary menu price adjustments.

The current "matcha boom" is not only a social media trend; it is a structural shift in how Japanese tea is grown, priced, and exported. For U.S. cafés that depend on authentic Japanese matcha, staying informed about these developments in Japan is critical to planning purchasing strategies, protecting margins, and continuing to offer quality matcha experiences to customers.

Source: https://news.yahoo.co.jp/articles/c43182b713ae7e7f6ef8c3a75ed14f5cf8a4601b