Why Matcha Prices Are Rising — and Why They Probably Won't Come Back Down

If your ceremonial-grade matcha costs noticeably more than it did a year or two ago, that's not a pricing quirk at your favorite cafe — it's a real shift in the global tencha (raw matcha leaf) market, and industry sources are saying openly that the old price floor isn't coming back.

The Numbers

At Kyoto's tencha auctions — the benchmark for Uji-region pricing — the numbers moved sharply through 2025. The May 2025 auction closed at 8,235 yen per kilogram, a 170% increase year-over-year and well above the previous record of 4,862 yen/kg set in 2016, according to Reuters reporting. By an August 2025 auction, average pricing had climbed to 10,251 yen/kg, up from 4,089 yen/kg the year before — total auction value nearly doubled to 9.629 billion yen even as volume sold fell, Ooika's own market tracking shows. Hand-picked premium Uji tencha, the input for the highest ceremonial grades, moved from roughly 20,024 to 47,096 yen/kg — a 135% jump in that specific category alone.

Why: Demand Outran Supply, Then Climate Made It Worse

Japan produced 5,336 tons of tencha in 2024 — 2.7 times the volume of a decade earlier — and it still wasn't enough. Green tea exports rose 25% by value in 2024 to 36.4 billion yen (about $252 million), with one Japanese wholesaler describing roughly ten-fold demand growth. That's the demand side. On the supply side, extreme heat has been directly cutting yields: Masahiro Yoshida, a sixth-generation tea farmer, told Reuters, "Last year's summer was so hot that it damaged the bushes, so we couldn't pluck as many tea leaves" — his own harvest fell about 25%, from a typical 2 tons down to 1.5.

Those two forces — demand climbing faster than a slow-to-expand crop can follow, compounded by heat damage during the narrow spring harvest window — are the actual mechanism behind the price jump, not a single dramatic event.

What the Industry Is Saying

Marc Falzon, founder of Ooika, a matcha milling company that buys directly from Uji-region farmers, told Reuters he expected conditions to get worse before they improved: "I think many were hoping for a higher yield harvest this year to reduce some of the shortages … but it doesn't seem like this is going to be the case," adding, "I suspect we'll see even more dramatic price increases." Yuki Ishii, founder of the tea retailer Tealife, put the retail-side reality more bluntly: "I'm basically always out of stock."

Why Farmers Can't Just Grow More

Tencha cultivation isn't a crop you can simply plant more of to meet a demand spike. New tea bushes take 3-5 years before they produce leaves suitable for premium matcha. Hand-harvesting during the narrow first-flush window requires skilled, seasonal labor that's increasingly scarce — Japan's tea-farming population has aged substantially, with the average tea farmer now commonly cited in the mid-60s, and shading infrastructure and stone-grinding capacity are similarly slow and capital-intensive to expand. Kyoto Prefecture, home to Uji, accounts for roughly a quarter of Japan's total matcha production — concentrated enough that a bad heat year in one region measurably moves the global price.

Will Prices Come Back Down?

Industry sourcing accounts describe supply conditions gradually improving into 2026, with expanded production capacity in regions like Kagoshima helping fill some of the gap. But the more consistent message from people actually buying tencha, including Falzon, is that the pre-shortage price floor is gone for good — once a market resets at a higher price after a genuine supply shock, tea buyers don't expect a full reversion, only a slower climb from here.

What This Means for Your Cup

The next time a cafe's ceremonial matcha latte costs a dollar or two more than it used to, that's very likely a direct pass-through of what's happening at Uji auctions, not simple markup creep. Shops sourcing genuinely high-grade, hand-picked matcha are paying meaningfully more for the raw leaf than they were two years ago — and if a shop's prices haven't moved at all during this period, it's worth asking what grade of matcha they're actually serving.

Pricing and market conditions in this piece reflect 2025 data and reporting; check current sourcing pages or ask your cafe directly for up-to-date pricing.

Sources:

• Kyoto tencha auction pricing (May 2025, prior 2016 record) and quotes from Masahiro Yoshida and Marc Falzon: Reuters, republished via KFGO
• August 2025 auction totals, per-kg pricing, and machine-harvested vs. hand-picked tencha price movement: Ooika — Why Prices Are Going Up For Matcha (2025)
• 2024 tencha production volume, green tea export value/volume growth: Reuters reporting as above
• Marc Falzon / Ooika company background: Ooika — About Us

Photo: AI-generated illustration, Matcha Maps