Why the Price of Japanese Sencha Is Rising

A Structural Shift in the Tea Supply Chain

In recent months, overseas buyers of Japanese green tea have begun to notice a clear trend: sencha prices are rising, particularly for tea used in tea bags and bottled beverages.
This is not a short-term market fluctuation, nor a simple case of inflation being passed along the supply chain. It reflects structural changes in how tea is produced, purchased, and allocated within Japan.

To understand what is happening, it is important to look beyond finished products and examine raw material procurement—especially decisions made at the farm and industrial buyer levels.

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1. The Role of Autumn Bancha in Industrial Tea Supply

One of the earliest signals came during the autumn bancha purchasing season.

Autumn bancha, harvested later in the year, is not typically associated with premium loose-leaf tea. Instead, it plays a crucial role as a base material for large-scale beverage production, including ready-to-drink bottled tea and tea bags. Its value lies in volume, consistency, and suitability for blending.

In the most recent season, major Japanese beverage manufacturers moved aggressively to secure autumn bancha, purchasing at prices higher than historical norms. The motivation was straightforward: ensuring stable raw material supply in an increasingly tight market.

This behavior had two immediate effects:

・Smaller buyers found it harder to secure sufficient volume

・The higher benchmark prices set by large buyers pushed up expectations across the market

Once autumn bancha prices moved up, the effect propagated forward into other harvests used for similar purposes.

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2. Global Matcha Demand Is Reshaping Tea Production

At the same time, another powerful force has been reshaping the supply side: the global expansion of matcha demand.

Demand for matcha has grown rapidly across North America, Europe, and Asia, driven by:

・café and specialty beverage markets

・food applications (sweets, bakery, ice cream)

・wellness and functional positioning

Matcha production requires a different cultivation approach than sencha. Tea fields are shaded before harvest, and leaves are selected specifically for grinding into powder. Importantly, a tea field optimized for matcha is not interchangeable with one optimized for sencha.

As a result, many Japanese tea farmers—facing labor shortages, aging demographics, and strong price signals—have chosen to shift part of their production from sencha-oriented leaves to matcha-oriented leaves.

From a farmer’s perspective, this shift is rational:

・Matcha demand is growing steadily overseas

・Buyers often commit volumes in advance

・Pricing is perceived as more stable

However, this transition has reduced the total volume of leaves available for traditional sencha supply chains.

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3. Where the Price Increases Are Concentrated

A critical point for overseas buyers to understand is where prices are actually rising.

The most significant increases are not occurring in:

・hand-picked first flush (ichibancha) for high-end loose-leaf sencha

・artisanal, small-lot teas for specialty retail

Instead, price pressure is concentrated in:

・second harvest (nibancha)

・third harvest (sanbancha)

These harvests are the backbone of:

・tea bags

・bottled tea beverages

・blended and processed tea products

As supply has tightened—due to both early bulk purchasing by large beverage companies and reduced production volume caused by matcha conversion—these mid- to lower-grade leaves have become more competitive and more expensive.

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4. Why This Is Not a Temporary Phenomenon

It may be tempting to assume that these price increases will normalize within a year. Current conditions suggest otherwise.

Several factors point toward medium-term persistence:

・Structural shifts in cultivation take years to reverse

・Once farmers invest in matcha-oriented production, they are unlikely to revert quickly

・Large beverage companies are expected to continue securing supply early to reduce risk

・Labor constraints in Japanese agriculture limit rapid expansion of total output

Taken together, these forces suggest that the market is adjusting to a new equilibrium, not reacting to a short-lived disruption.

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Implications for Overseas Buyers

For overseas buyers, the key takeaway is not simply that prices are higher—but why they are higher.

Understanding that:

・supply constraints are structural

・competition is strongest for industrial-grade leaves

・demand from non-traditional channels (matcha) affects sencha availability

allows buyers to make more informed decisions about:

・long-term contracts

・product positioning

・alternative grades or origins

・timing of procurement

Japanese sencha remains a stable and reliable category, but the assumptions that governed pricing in the past decade no longer fully apply.

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In short:
The rise in sencha prices reflects a transformation in Japan’s tea supply chain—one driven by global demand, domestic procurement strategies, and irreversible production choices. Buyers who recognize this shift early will be better positioned to adapt over the coming years.