What is matcha? Why is the matcha latte so hot? The Starbucks matcha latte comes from …

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In Japan, popular beverages have evolved from carbonated coffee-tea beverages. In the 1990s, tea drinks became popular in Japan, and matcha gradually became a mainstream taste in Japanese society. A not-so-well-known fact is that matcha, as a typical Asian taste, has already deeply influenced Western taste buds. Among them, Americans continue to rise in favor of matcha, consuming nearly half of Japanese tea exports, and the word "MATCHA" is widely used.

However, in China, the birthplace of matcha, what once troubled tea sellers was how to make young people fall in love with tea. But today's china has much in common with japan in the 1990s. Both have experienced rapid economic growth and then slower growth, while consumer hunger for good products is rising. With the current tide of consumption upgrading in China, tea drinks are being sought after by more and more young people.

Starbucks CEO Howard Schultz intends to replicate Starbucks 'success with Teavana, which launched two tea drinks in China. More local Chinese companies have joined the ranks of tea sellers, including 500 million yuan invested by Liu Qiangdong's tea.

Matcha category opportunities in China. Data from various consumer upgrade communities and platforms show that Chinese consumers 'attention to matcha is rising rapidly, and users who used to consume matcha essence and cheap matcha powder are starting to look at high-quality matcha. We believe that the growth in demand for matcha will drive the upgrading of matcha supply chain in China.

Before betting on Matcha, understand what it is

The correct way to drink matcha-order tea. (Source Network)

Matcha originated in China, rose in Tang Dynasty and flourished in Song Dynasty. During the Southern Song Dynasty, the method of ordering tea was introduced into Japan by Zen master Rongxi. The method of making tea by stir-frying in the Ming Dynasty was not introduced into Japan in time due to the implementation of the sea ban, so the Japanese tea ceremony was refined on the basis of Song tea.

Green tea can be divided into raw leaf tea and powder tea from the morphology. Raw leaf tea is the mainstream green tea product in China, while Japan has both. The drinking method of matcha is to pour boiling water into the tea bowl filled with matcha powder, stir the tea quickly and vigorously, so that the surface of the tea soup forms a fine and uniform foam, this way of drinking tea is called "tea".

Matcha from picking to grinding to go through a series of complex processes. From selecting tea trees to shading, picking, steaming, drying, cutting tea and grinding, there are specific standards for every step of its production.

To make matcha, choose tree species with high amino acid and protein content. Matcha is made only from "one tea" picked between March 1 and May 31 each year. In the first 20 days of picking, tea trees should also be shaded from direct sunlight.

In order to retain the chlorophyll in the tea leaves to the greatest extent, so that matcha appears emerald green, the tea leaves after picking should also be sterilized with steam.

The dried and cut tea leaves are called "ground tea", which is the raw material for making matcha. They are usually stored in tea cylinders and need to be ground into matcha powder before being taken out for grinding.

Stone grinding is a key step in making matcha. The thermal conductivity of stone mill is poor, and the temperature during grinding will not affect the color of matcha too much. The ground matcha powder has a particle size of 2-20 microns, i.e. 680-6800 meshes. (The number of holes per square inch.) The larger the mesh number, the finer the powder and the higher the grinding process.)

After grinding, the substances in the tea become smaller particles, and the tea polyphenols, alkaloids, amino acids and other ingredients are more easily dissolved in water, so that the nutritional value of matcha is maximized.

Matcha is not a food additive, but a special powder form of green tea. Compared with simply grinding tea leaves into powder, the production process of matcha is more strict, complex and has higher nutritional value.

Matcha in China: Under the trend of consumption upgrading, the rise of demand forces supply

In Japan, matcha production has strict quality review and grading standards, and has formed a complete supply chain system. Although Matcha is also produced in China, it was mainly manufactured by Japanese enterprises before, but most of the products produced and circulated in the Chinese market are green tea powder, which has simple process and low value.

The price of low-end matcha powder (green tea powder) on Taobao is 10-20 yuan/100 grams, while the price of authentic matcha should be 40-60 yuan/100 grams.

Why is there such a big difference between Matcha industry in China and Japan?

From the supply side, Chinese manufacturers have low requirements for raw material selection, and the production process (especially the key links such as shading, steaming and stone grinding) is rough.

On the demand side, the mainstream demand faced by Chinese manufacturers is cheap green tea powder and even matcha essence. Most consumers cannot distinguish matcha powder from green tea powder and are sensitive to price.

However, with the upgrading of consumption, consumers 'demand for matcha will force the supply, thus promoting the integration and upgrading of matcha industry chain:

The education of the new product to the market will deepen consumers 'understanding of matcha, which will generate a large demand for high-quality matcha, and matcha essence and green tea powder will be eliminated.

Thanks to lower land and labor costs and richer raw material resources than Japan, China has an advantage in the supply of factors of production.

Matcha has no technical barriers in its production process.

► For industries with immature supply chains such as Matcha, the opportunity for start-ups lies in building brands, aggregating single quantities, and then using single quantities to promote the upgrading of back-end supply chains, thus gaining a first-mover advantage in integrating supply chains.

Matcha in Japan: Like coffee chains, it is a mature format

In Japan, popular beverages have evolved from carbonated coffee-tea beverages.

In the 1970s, carbonated drinks were popular.

In the 1980s, Japan's economy took off, Western culture entered, the expansion of vending machines brought convenient sales channels, and coffee drinks became mainstream drinks.

In the 1990s, the tea beverage market grew rapidly. This is due to the maturity of canned and bottled green tea technology and consumers 'emphasis on health and lightness.

After 2000, the overall size of the Japanese beverage market stabilized, and the tea beverage market reached 931.3 billion yen in 2005, accounting for 25.8%, comparable to the coffee beverage market (955.1 billion yen, 26.4%), of which the green tea beverage market was 447.0 billion yen, accounting for 12.4% of the overall [1].

Since then, the coffee market has remained basically stable, while the market size of tea beverages (including green tea) has declined slightly, accounting for 26% and 24% respectively.

What exactly had Matcha experienced to be so popular?

Matcha became the mainstream food taste in Japanese society, which also began with the rise of tea drinks in the 1990s. Haagen-Dazs introduced matcha ice cream in Japan in 1996, Starbucks introduced matcha cappuccino in Japan in 2001. The popularity of these products has pushed matcha flavors into the mainstream.

Matcha has many mature application forms on the market. It can be used as food flavoring agent, but also can return to the original tea drink, matcha coffee chain in Japan has been mature format.

Application 1: Food Flavoring

Matcha is the only tea food flavoring agent, taste slightly astringent suitable for sweet, since the 1990s, matcha widely appeared in Japanese ice cream, cake, biscuits and other foods, occupying a special position in the Japanese market.

Take matcha ice cream for example. The Japan Ice Cream Association's annual survey of "Consumers 'Favorite Ice Cream Flavors" shows that matcha flavor was still in the fifth place in 2010, and has risen and stabilized to the third place in 2015, with a preference rate of nearly 50%.[2] The annual consumption of ice cream in Japan has steadily increased [3]. Overall, the Japanese matcha ice cream market has grown steadily in recent years.

▲ Results of Japan Ice Cream Association's annual survey on "Consumers 'Favorite Ice Cream Flavors"(Source: Japan Ice Cream Association's 2015 White Paper on Ice Cream)

▲ Annual consumption of ice cream in Japan from 2006 to 2015 (data source: Japan Ice Cream Association)

Application 2: Matcha drinks

Although the mainstream tea beverage varieties in Japan are raw leaf teas such as oolong tea, green tea and barley tea, matcha has a large and mature consumption demand in both liquid tea (mainly latte form) and solid tea beverage markets.

▲ Itoen Group Oi OCha series and matcha new products (first from right)(source network)

In terms of liquid tea, the Oi OCha series of Itoen Group, which has the largest market share of Japanese tea beverages, launched a new green tea beverage containing solid matcha precipitate. Japan's Coca-Cola, which has the third largest market share, also launched latte cans with matcha in 2011.

In terms of solid tea, Japan has mature solid tea beverage consumption habits, and the market size of Easy-to-use solid tea beverages is about 25 billion yen. Itoen sells instant tea with matcha flavor with annual sales of more than 10 million units.

Application 3: Green Tea Cafe

In Japan, matcha coffee chains are mature, Nana's Green Tea is one of the most popular matcha coffee chains among young people in Tokyo, with 75 chains across Japan.

There are also larger tea chains in the United States, with Teavana being the most popular, with more than 400 stores nationwide. China's tea chain is still in its infancy, because taste tea (inWE) in Shanghai, Beijing, Suzhou and other places have 11 direct-sale stores, Liu Qiangdong 500 million yuan investment.

▲ Teavana Matcha series products

Matcha in the United States: supporting half of Japanese tea exports

Demand for matcha is growing overseas. Kotaro tanimoto, vice president of the japan tea exporters association, points out that growth in japanese tea depends on overseas markets. In the United States, which accounts for nearly half of Japan's tea exports, the term "MATCHA" has become widely used, and juice and coffee drinks incorporating matcha elements are becoming more common.

Retail sales of matcha powder in the United States increased by 54.9%, and sales of ready-to-drink matcha beverages increased by 253.1%. Despite the current small market base for matcha, the North American market is expected to grow at a CAGR of 25% through 2018 [4].

▲ The US market has contributed greatly to Japan's matcha exports.

The growth of overseas markets has led to the production of matcha in Japan. According to the statistics of the National Federation of Tea Production Groups in Japan, the production of ground tea in Japan increased by 10% year-on-year in 2014 to 1969 tons, and is expected to increase further by 6-7% to 2100 tons in 2015. The popularity of ground tea is particularly prominent against the backdrop of an overall downturn in Japanese tea production.

On the other hand, the expansion of demand for finished products has also pushed up the price of raw materials, making the price of ground tea at a high level. According to the statistics of Japan National Agricultural Association, the average unit price of fried tea in Kyoto new tea market decreased by 7% year-on-year, while the first tea of ground tea increased by 27% year-on-year to 4720 yen/kg (as of mid-November 2015)[5].

Some references:

[1] Ito En: Japan’s green tea market

[2]Japan Ice Cream Association 2015 Japan Ice Cream White Paper

[3]Japan Ice Cream Association Type Sales Volume·Amount| Japan Association for the Advancement of Women

[4] Food Navigator-USA: Matcha green tea market on fire, says report: ‘This is not a passing fad, but a major trend’

[5]Nikkei Chinese Net: Demand for Matcha in Japan

[6] Ito En Report 2015

A picture shows you how cappuccino is different from latte