The Matcha Price Surge: Why Your Latte is Getting More Expensive

The Matcha Price Surge: Why Your Latte is Getting More Expensive

Matcha prices have been on the rise, primarily due to a combination of factors affecting both supply and demand.

Supply Chain and Production Challenges

  • Low Yields and Climate Issues: While the quality of the 2025 harvest was high, the quantity was low due to cooler temperatures and a late frost in some of Japan's key tea-growing regions. This resulted in an estimated 11% drop in yield compared to the previous year. For example, in Kyoto Prefecture, home to prized Uji matcha, production dropped significantly.

  • Labor-Intensive Production: The traditional methods for producing high-quality, ceremonial-grade matcha are very labor-intensive. This includes hand-picking only the youngest, most tender leaves and a slow, meticulous stone-grinding process. The aging population of farmers in Japan and a shortage of successors also contribute to the supply issue.

  • Difficulty Scaling Up Production: Matcha requires specific growing conditions and traditional processing methods that are not easily scaled up. While some farms are shifting to matcha production to meet demand, it's not a simple process and requires significant investment in equipment. 

Soaring Global Demand

  • Growing Health and Wellness Trend: Matcha is no longer a niche product. Its popularity has surged globally as a healthy alternative to coffee, with consumers attracted to its high antioxidant content and promise of sustained energy without the jitters.

  • Social Media Influence: The vibrant green color of matcha makes it highly "Instagrammable," and viral videos on platforms like TikTok have fueled its popularity, especially among younger consumers.

  • Rise of Matcha-Based Products: Matcha is being used in a wide range of products beyond traditional tea, including lattes, smoothies, baked goods, and even cosmetics. This has created a massive new market for the ingredient.

  • Tourism to Japan: A post-pandemic surge in tourism to Japan has increased interest in authentic Japanese culture and traditions, including the ritual of preparing and drinking matcha.

Economic and Market Factors

  • Fierce Competition at Auctions: With reduced supply and soaring demand, competition at major tea auctions in Japan has become intense. In 2025, the average price at the Kyoto tea auction saw a dramatic increase of over 180% from the previous year, with companies bidding aggressively to secure the limited supply.

  • New Tariffs: New tariffs on Japanese goods have also increased import costs for many companies, which are being passed on to consumers.

Impact on Prices

The combination of these factors has led to significant price increases across all grades of matcha, with ceremonial-grade matcha experiencing the most substantial hikes. Consumers are noticing higher prices in stores and at cafes, with some businesses reporting price increases of 15-30% for high-grade matcha powder in the past year.

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