Matcha Industry Report - April 2026

Matcha Industry Report is Ooika's monthly coverage of the Japanese tea industry, specifically Matcha. Join our newsletter here to keep up to date.

About this Report

Today’s Matcha Industry Report will be a “throw back” to the 2025 tea harvest. This will give us some context as to the previous year’s Matcha industry. Especially as the upcoming 2026 tea harvest has already begun on May 2nd, 2026.

This date (May 1-2) is auspiciously known as Hachiju-hachiya (八十八夜.) It’s the first day of spring in the Lunisolar calendar, and has various meanings related to agriculture.

Record Production Cuts

And Climate Stress

The 2025 harvest saw a significant decline in production, with national yields dropping by 20–25%. Premium growing regions suffering losses exceeding 30% due to a multiple factors including the climate.

This downturn began with the "delayed impact" of 2024’s record-breaking heat and drought, which left tea bushes severely weakened and nutrient-depleted as they entered winter dormancy.

The result? Sparse bud counts the following spring. This physiological stress was compounded by erratic 2025 spring temperatures: a late frost in April stunted early growth, followed immediately by an intense May heatwave that scorched delicate young leaves. Some bushes were even killed.

These successive weather extremes made it nearly impossible for farmers to maintain the vibrant green color and supple texture essential for high-quality Tencha, leading to the historic Matcha supply shortage seen today.

Trends in production areas

The plight of Uji and Minamiyamashiro and the rise of Kagoshima

The regional production landscape in 2025 shifted dramatically, marked by the struggles of traditional hubs and the historic rise of new leaders.

In the Kyoto regions of Uji and Minamiyamashiro, where premium hand-picked and shaded "Kabuse" teas are the standard, rigorous quality control to filter out climate-damaged leaves led to a drastic reduction in market supply. Some historic estates reporting an unprecedented 25% drop in volume.

Conversely, Kagoshima Prefecture successfully leveraged its expansive flat terrain and advanced mechanization to mitigate the effects of the erratic weather. This ultimately caused Kagoshima to surpass Shizuoka in first-flush production, and to become Japan's top tea producer for the first time in history.

This shift has solidified Kagoshima’s growing dominance as a vital, resilient supply hub for Tencha, even as the traditional heartlands of Kyoto face their most challenging season yet.

Global Demand

Impact of raw material prices on the market

The sharp decline in harvest yields collided with an all-time high in global demand, sending the market into a state of near-panic. In the Tencha auctions of Kyoto, transaction prices for the first flush skyrocketed to 180%–220% of the previous year’s levels, with some lots more than doubling in cost overnight.

This triggered a fierce "procurement war" as global wholesale giants and major beverage corporations scrambled to secure dwindling raw materials, often outbidding smaller, traditional tea merchants who struggled to keep pace.

Consequently, these surging wholesale costs have filtered down to the consumer level, forcing a 15–20% price hike on retail shelves and solidifying a trend of sustained inflation for matcha products both within Japan and across international markets.

Bottle Necks

Balance of supply and demand

The global explosion in matcha's popularity was fueled by a powerful social media trends, a thriving international café culture, and the overarching shift toward health and wellness. All together this has pushed demand to a level that Japan’s traditional production capacity is now struggling to meet. Remember that

This supply-demand imbalance is particularly visible in major overseas markets like the United States, where reports of severe raw material shortages and soaring prices have become common. As a result, critical bottlenecks in Japan’s export and supply chains have emerged, exposing the vulnerability of the current infrastructure in the face of a worldwide "green gold" rush that shows no signs of slowing down.

Changes

5 Structural responses in the tea industry

In response to these market pressures, tea processing and agricultural enterprises are aggressively investing in new infrastructure. This includes the construction of state-of-the-art factories, the expansion of organic-certified product lines, and the breeding of resilient new cultivars to boost supply and quality.

The benefits of this modernization are not being felt equally across the sector. The relentless surge in raw material costs and chronic supply shortages have triggered a stark polarization within the industry; while well-capitalized firms innovate and thrive, many smaller, traditional tea merchants are being pushed to the brink. There’s a reported increase in business closures and a permanent reshaping of the competitive landscape.

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