NEW YORK (BLOOMBERG) -- Surging demand for matcha green tea is causing shortages that has one New York purveyor taking a novel approach.
At Matchaful cafes, lattes made with the tea have been shrunk by a quarter to 12 ounces to reduce milk costs and keep prices steady. Meanwhile, founder Hannah Habes is already expecting to boost costs as much as 30% for the company’s wholesale and e-commerce customers.
“We’re not able to meet all the demand,” said Habes, who has seen sales at the company’s stores gain nearly 40% this year. “The entire matcha industry is definitely feeling it right now.”
Soaring interest in the finely milled green tea is hitting up against weakening supply. Japan is the top exporter of matcha tea, and it’s faced extreme weather and tariffs that have crimped output.
The picture is similar at Kettl, another New York matcha outlet that has raised prices as much as 10% for many of its nearly 400 wholesale customers. The hikes came after the company’s matcha supplier in Japan increased some prices 200%.
“It is going to be a challenge to see how we can continue to grow with all of these pricing considerations,” said Zach Mangan, Kettl’s founder.
Matcha is scarce partly because of the painstaking way it’s made. The powder comes from tencha — shade-grown tea leaves harvested only once a year and then ground into a fine green dust. Supply struggles have been recently compounded by high temperatures and drought, said Yoshimi Hattori, a Shizuoka, Japan-based tea farmer whose farm is Matchaful’s primary supplier.
The harvest last year declined about 25% and yielded a lower-quality crop than usual for Hattori. The farm has raised prices as it received orders that exceeded the farm’s total production volume by as much as seven times.
“A matcha boom has begun worldwide,” Hattori said. “There are many offers from regions that have not previously consumed matcha, so I anticipate a continued shortage.”
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