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Business Trends

Matcha buzz powers Japan's record-breaking tea exports

Green tea shipments hit 30-year peak in first five months of 2018

Pickers harvest leaves for premium Uji tea outside of Kyoto.   © Reuters

TOKYO -- Japan's green tea exports are on track to reach record heights this year as drinks and desserts made with matcha catch on in the U.S. and across Asia.

In the five months through May, Japan shipped out 1,978 tons of green tea, a 4% increase on the year and the highest-ever total for that period in records going back to 1988. Exports are therefore on track to beat the 2017 record of 4,642 tons.

Driving this increase is matcha -- powdered green tea that can be drunk or used in food. Many large cafe chains outside Japan have put green tea lattes using matcha on their menus, and the ingredient is increasingly popular in desserts.

The U.S., which takes in 30% of Japan's green tea exports, has received 569 tons so far this year, or 2% more than a year earlier.

An economic partnership agreement between Japan and the European Union, signed Tuesday, could give exports an additional boost. The EU will abolish its 3.2% tariff on portions of green tea weighing less than 3kg when the pact takes effect.

Fresh demand for Japanese tea has driven up prices in recent years, as has the preference for expensive matcha over ordinary tea leaves. Currently, one kilogram of tea sells for an average of $27 or so in cases where the sale is settled in dollars, close to the highest on record. Tea bound for the U.S. averages $38 per kilogram, 80% more than three years ago. Similar growth has occurred for tea exported to Hong Kong and Germany.

Growers are scrambling to keep up with demand. JA Kagoshima Chagyo, a major producer, began making matcha in-house in March, putting an end to its practice of outsourcing the milling process to a Kyoto business. The company plans to produce five tons of the powder this year, primarily for shipment to the U.S., and hopes to look into exporting organic matcha with farmers who can meet the standards for organic certification, which require that no pesticides or fertilizers are used.

JA Kyoto Yamashiro, another grower, installed equipment for matcha production in April, and has had the product certified as halal -- that is, complying with Islamic dietary restrictions -- in preparation for export to the Muslim world.

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