The Japanese tea sector is experiencing tough times these days due to the ever-declining domestic demand and production, which negatively affects local producers.
Tea has been drunk in Japan since the Kamakura period, from the 12th-14th centuries, as a luxury item and medicine. It was only in the Edo period in the 17th-19th centuries that it spread to the masses, while it gained massive popularity in the country only in the 20th century.
However, with the beginning of the 2000s, the Japanese tea sector faced serious stagnation due to the beginning of a well-known economic slump in Japan, which started in the early 1990s and lasted for over twenty years. During this time, Japan struggled with weak economic growth, low GDP rates, and stagnant business expansion. One of the major reasons for this was the rapidly aging local population, which seriously limited the country’s economic growth.
Similar to other sectors of the Japanese economy, the situation in the country’s tea industry seriously deteriorated.
This is also confirmed by some official state statistics. According to analysts of the Japanese Ministry of Agriculture, Forestry and Fisheries, currently both the cultivation area and production volume of tea in Japan are still on a downward trend. In the 17 years from 2006 to 2023, tea production volume in the country has decreased by 17-18% (decreasing at a rate of minus 9,400 tons per year), while the cultivation area has decreased by 25%. There is a trend of the massive exodus of tea farmers from the profession, as many of them are unable to deal with the ever-rising production and other costs.
As the domestic tea sector continues to experience stagnation, the biggest hopes of producers are traditionally put on foreign markets.
Tea has been traditionally considered as one of the country's key export items for Japan, while in recent years, Japan has been able to expand its geography of supplies.
According to analysts of the Japanese Ministry of Agriculture, Forestry and Fisheries, during the period of 2022-2023, the export value of Japanese green tea was close to a record high of 22 billion yen annually. This was mainly due to the growing interest in Japanese tea and food in some major foreign markets as well as the traditional association of Japanese teas with strong health benefits. This contributed to the growth of foreign want for some types of Japanese teas, including powdered tea (primarily matcha), the demand for which has grown by several times in the last few years. That, however, has not had a serious positive impact on the domestic market, where prices for most tea still remain at the lowest levels.
Despite maintaining high demand for Japan’s green tea abroad, many local analysts predict tough times for the Japanese tea sector over the next several years.
The biggest concerns are related to the aging of producers and farmers as they enter retirement from the profession and the market faces a lack of new players. Other concerns include rising costs, including for chemical fertilizer raw materials and energy sources, given that almost 100% of Japanese demands in them are met by imports.
As chairman of the Japan Society of Tea Science, Katsunori Kowata said the situation in the domestic tea industry "is getting tougher, with low tea prices and no clear signs of improvement." From their side, experts of the Society plan to accelerate their R&D activities for the development of new original formulas of Japanese teas.
In the meantime, Kotaro Shinbara, founder of Japanese tea specialty store Susumuya Tea Shop, said in an interview with the Japanese Note paper they are investing their biggest hopes for a future for the Japanese tea sector in the growing demand abroad for some traditional Japanese teas. According to him, this includes mainly matcha products. He also predicts green tea will be used not only in sweets as it has been in the past, but also in things like protein and green juice. Shinbara believes that will contribute to the further development of some major Japanese matcha-producing regions, as the volume of supplies, including those to abroad, will continue to grow.
"If that happens, the supply of matcha in Kagoshima and Shizuoka cities, where the production base is located, should grow dramatically," said Shinbara. "These two prefectures already have well-established production systems, so they will be able to produce high-quality matcha and sencha powder."
Despite generally unfavorable forecasts, local analysts are putting their hopes in the growth of demand for traditional Japanese teas among local young people, as this trend has been observed in the last several years.
According to official state statistics, at present, the total annual expenditure per household on tea drinks in Japan is estimated at about 11,000 yen (US$77). A significant part of these expenditures accounts for green tea as demand within the country remains generally strong. In recent years, the local demand for bottled tea has also increased. Analysts expect growing demand for certain types of green tea in Japan in years to come, which will provide support to the entire domestic market.
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