Tearoom’s Yanagisawa says matcha shortage may be driven by larger corporations’ hoarding behaviour (Photo by Chabashira)
With the ongoing matcha shortage in Japan driving prices up, local matcha players are trying to cater for price-sensitive matcha enjoyers by introducing more affordable, yet quality, matcha options for discerning matcha drinkers.
Matcha comes in different grades, ranging from middle-tier to high-end, which is typically known and marketed as ceremonial matcha outside Japan.
Seasoned matcha drinkers often have distinct preferences when it comes to flavour, and the growing popularity of matcha has acquainted consumers with its characteristic grassy, bitter and umami notes. With high-quality matcha sourced primarily from a single prefecture in Japan, however, avid matcha enthusiasts are left with limited options in a niche industry that must carefully balance price and flavour.
Local matcha shop and café chain Oh Cha Matcha embraces a business model focused on offering affordable matcha beverages made with a reasonable grade of quality. As part of this approach, the store recently reduced the price of its premium matcha latte from RM13.80 to RM9.80.
Oh Cha Matcha was founded by brothers Kar Wai (right) and Kar Heng (Photo by Sam Fong/The Edge)
Oh Cha Matcha, founded by brothers Choong Kar Wai and Choong Kar Heng, also caters for discerning consumers seeking a higher grade of matcha, offering a ceremonial-grade matcha latte priced at RM21.20 — more than twice the cost of its regular premium latte.
Chabashira Tea Roastery is a matcha-focused café that leans toward the higher end of the market. While it embraces premium price points, it also strives to strike a balance between cost and flavour. Its matcha beverages are priced between RM15 and RM32 and, like Oh Cha Matcha, its prices have remained unchanged since the café’s launch in 2021.
“We are still discussing how to make it more affordable for Malaysians, especially because our [purchasing power] is not relatively high, but the inflation rate is getting higher. So, we worry about that,” says Alan Mark, who co-founded Chabashira with Pamy Lam. Both are certified tea instructors and distributors of Maiko no Cha Honpo of Kyoto, Japan.
Matcha retailers are able to set individualised prices largely because their supply chains often connect directly with farms in Japan, allowing them to bypass the middleman.
As such, there is no standardised pricing for matcha powder, as costs depend on the specific tea farm — unlike coffee beans, which generally have more fixed market prices.
“In Japan, there is no proper guideline on how to grade your matcha grains. The only people who can grade the matcha grain are the tea masters themselves. If you make several types of matcha powder, it will be up to the tea master, who will taste it and decide whether it will be sold as ceremonial powder,” says Mark.
Mark, who is also involved in distributing matcha powder produced by Maiko no Cha Honpo, says the company sells its highest-quality matcha at RM178 for just 20g.
As pricing is influenced by the tea master, Chabashira focuses on managing the additional costs of the export process to keep the matcha within a price range comparable to what one would pay in Japan.
Exporting also requires careful consideration of the exchange rate between the yen and the ringgit. To manage this matter, Chabashira has set a fixed exchange rate of RM3.10 to ¥100.
“For our matcha, if the same ceremonial-grade powder costs RM100 in Japan, we would sell it in Malaysia at RM105 to RM110,” Mark says.
“If we were to follow the traditional way of shipping our products to Malaysia, the inclusion of a middleman would result in price mark-ups, making it impossible to sell our products at the same price as in Japan.”
Oh Cha Matcha’s plans, on the other hand, consist of finding opportunities in economies of scale by strategically expanding the business to acquire a cheaper price for matcha powder and maintain its margins.
“We have to, in this very niche space, grow very big, very fast. If we don’t command that authority, it’s going to be very hard for us to negotiate with our Japanese suppliers to give us the best quality or, in fact, the best price. Even as we grow, we want our matcha to be affordable,” says Kar Wai.
Oh Cha Matcha sources its matcha powder directly from farms in Kyoto, strategically diversifying its partnerships to maintain competitive pricing and secure the best deals.
The prices of matcha from Oh Cha Matcha’s partner farms range between RM250 and RM550 per kg for regular-grade powder. The brothers note, however, that, more broadly, prices of ceremonial-grade matcha can sometimes soar to as much as RM1,000 per kg.
Mark and Lam are certified tea instructors
Apart from local players, Tearoom — a Japan-based matcha wholesale distributor and culture-driven start-up — is eyeing Malaysia for expansion. While it aims to offer quality matcha at more accessible prices, its ambitions go further, leveraging strong horizontal support to compete effectively in the market.
Noriko Yanagisawa, head of the global department at Tearoom, says: “We are already very rooted in the matcha tea industry; we have our relationships and we also have our own tea manufacturing factory. Our spectrum is quite wide compared to other companies because we do everything from producing, to marketing and selling on a global scale.”
Although Tearoom first entered the market through Singapore, Yanagisawa says Malaysia is a key expansion priority, citing its strategic location and favourable trade taxes as ideal for setting up a packing or production facility.
Despite the current shortage, matcha’s growth shows no signs of slowing. Its popularity has climbed steadily over the past decade, with the pandemic only accelerating the trend.
“In just 15 years, we do see that maybe we won’t be as big a market as coffee, but we’ll be significantly bigger than what it is now. In just five years, there will be tremendous growth,” says Oh Cha Matcha’s Kar Wai.
Other matcha players echo the sentiment: While climate change has affected the land as well as quality of matcha leaves, surging demand remains the primary driver of the supply gap.
Yanagisawa also points out that the shortage may be driven by larger corporations’ hoarding of matcha, disrupting supply for smaller businesses. The labour-intensive nature of matcha cultivation compounds the issue — processing the leaves through sautéing, steaming and drying for an hour yields just 40g of matcha powder. While machines can assist in processing, leaf picking is still done manually, increasing labour demands. Higher-quality matcha introduces further complexity, as only the top three leaves are harvested, with tea masters evaluating their premium quality.
“The spring harvest produces the best yields. Every year, the highest grade is cultivated at its first peak from the spring harvest. So, that’s where we get the ceremonial grade matcha, and this happens only once a year,” explains Oh Cha Matcha’s Kar Heng.
While matcha players are still holding up despite the current circumstances, Chabashira’s Mark sees a silver lining.
“Our sensei in Japan says the market is changing. Most of the farmers are looking forward to farming more matcha instead of normal Japanese green tea due to popular demand; and it seems like Japan is doing something about it, such as making forecasts and changing their strategies,” he says.
