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Specialty tea shops selling loose-leaf tea in Japan have lost market share to supermarkets. Sales of traditional teas are on the decline in the domestic market as bottle teas gain favor. Adobe iStock.
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Specialty tea shops selling loose-leaf tea in Japan have lost market share to supermarkets. Sales of traditional teas are on the decline in the domestic market as bottle teas gain favor. Adobe iStock.
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In 2020 Japan announced plans to increase tea exports from ¥14.6 billion (US$126.3 million) to ¥31.2 billion as part of a government program to boost farm, fishery, and forestry exports to ¥5 trillion in 2030. The new emphasis on exports is working well as Japanese tea exports, led by matcha, grew in value and volume in 2021.
The Ministry of Finance reports a 26.1% increase in value to ¥20.4 billion yen (about US$176.5 million), a record high for sales that easily surpassed the ¥16.2 billion exported in 2020. Revenue from green tea exports has doubled from ¥10 billion yen in 2015, mainly on sales of high-value green teas. Matcha accounted for 65.3% of total exports by value.
Export volume increased by 17.1% to 6,178 metric tons. Japan is the second-largest green tea exporter, but export totals are far behind China which generates almost $2 billion annually in sales of green tea.
Domestic demand for leaf tea, in contrast, has declined as consumers switch to ready-to-drink tea in bottles and cans. RTD tea is quite popular in Japan, accounting for 30% of the non-alcoholic beverage market, double the share held by soda, and 10% greater than RTD coffee, according to the Asahi Factbook 2020. The popularity of bottled tea erodes the prices paid for high-grade tea.
For the first time in 2021, Shizuoka generated less revenue than Kagoshima, a rival growing region that is highly mechanized. As a result, Shizuoka is looking offshore, seeking new markets for teas once entirely consumed in Japan.
The US is Japan’s top loose leaf and matcha tea trading partner, accounting for ¥10.3 billion in sales, growing 22.1% year-over-year. Germany purchased ¥2.0 billion, an increase of 73.9%, with sales to Taiwan up 9.9% to ¥1.7 billion. Japan is subsidizing outreach to markets including France and central Europe.
Consolidation is evident as growers expand operations in Kagoshima and contract in traditional tea growing prefectures, including Shizuoka. The top three prefectures now produce 70% of Japanese tea.
In 2021 the production value of tea in Kagoshima exceeded that of Shizuoka for the first time since records were kept.
According to MAFF Statistics on Farmland and Crop Acreage, total hectares under tea declined from 44,000 in 2015 to 39,000 hectares. Commercial tea farms in Kagoshima now average 3.3 hectares (about 8 acres), more than double the 1.5 hectares average in 2000. One reason for the consolidation is aging growers. Most are over 65 years (56% in 2015), with fewer family households producing tea. Japan has the second-highest median age population in the world.
The National Association of Tea Production Organizations reports that the first flush Gyokuro earns the highest price at ¥4,928/kilo, followed by tencha at ¥3,048/kilo. Bancha sells for ¥693/kilo, and the average price for sencha, Japan’s most popular tea, was ¥1,872/kilo in 2019.
Production volumes exceeded 100,000 metric tons in 2004 but have since fallen to 80,000 metric tons, of which 69,800 metric tons is green tea. As a result, in 2020, Japan imported 3,917 tons of green tea and exported 5,274 metric tons, according to MAFF (Ministry of Agriculture, Forestry and Fisheries).
For the full "Current Outlook of Japanese Tea" report from the Ministry of Agriculture, Forestry, and Fisheries, click here.