The Japanese tea industry undergoes a structural shift driven by green tea exports.
The global matcha boom is driving a sharp increase in Japan’s green tea exports and reshaping the country’s tea industry. As overseas demand continues to grow, tea producers are increasingly shifting from traditional sencha (infused tea) production to tencha, the shade-grown leaf used to make matcha, marking a significant structural change in Japan’s tea production landscape.
According to trade statistics released by the Ministry of Finance, green tea exports in 2025 reached 13,125 tons, a 42% increase from 9,272 tons in the previous year. With global demand expanding, prices have also soared, and export value has ballooned to JPY84.7 billion ($528 million), 2.2 times the previous amount.
The breakdown of exports shows that powdered green tea, including matcha, accounted for approximately 70% of the total, while other green teas, such as sencha, fell below the previous year's figures. While overall domestic tea production is gradually declining, production of tencha, the raw material for matcha, has increased for four consecutive years up to 2024.
Unit prices have also risen, and production is shifting from sencha, which was previously the mainstream, to tencha. Sencha, whose supply is decreasing, has also become more expensive. In April, the average price for new tea leaves sold at the auction in Kagoshima Prefecture was JPY6,573 per kilogram, a 60% increase from 2025.
The government is supporting farmers making the switch from sencha cultivation to tencha. Although both can be grown in the same fields, tencha bushes are covered with sheets before harvesting to block sunlight. The Agricultural Ministry is providing subsidies for the purchase of these sheets and machines that process tencha leaves. The price of tencha in 2025 was about six times higher than in 2024, prompting farmers to switch.
However, according to Teikoku Databank, the number of tea businesses that ceased operations or dissolved in 2025 reached a record high of 13, significantly exceeding the eight cases reported the previous year. With approximately 40% of tea plantations located in mountainous and hilly areas and with the workforce aging, the transition to tencha is revealing both successes and closures.
In the meantime, the Japanese beverage market reached a record high of JPY38,680 billion in 2025, up 1.1% year-on-year (YOY). Tea beverages accounted for the largest share at 28% of the total, followed by coffee beverages at 23%. Sales value for green tea and other tea beverages was JPY4,680 billion and JPY5,200 billion, respectively. The market share of convenient RTD tea has significantly expanded.
The country’s largest tea producer, ITO EN, Ltd., holds a 37% share in Japan’s green tea market. Their tea-based beverage foreign-operation sales reached JPY34,975 million in the first half of the fiscal year ending April 2026, up 19% YOY, while domestic-operation sales grew only 0.3% YOY.
Its Oi Ocha green tea brand is gaining traction worldwide. In the first half of the fiscal year ending April 2026, bottled green tea sales volumes increased by 30% in ASEAN and 11% in North America compared with the same period of the previous fiscal year. Sales volumes of green tea bags grew even faster, rising 49% in ASEAN and 36% in North America. The United States has become the biggest destination for green tea bags.
To support this growth, the company plans to double its production capacity by adding new production lines and establishing a more efficient manufacturing system. It also aims to expand into India by mid-2026 and enter African markets by 2030.