Industry Leading Matcha Since 1888

For the past 11 consecutive years, Japanese food-related exports have hit record-breaking numbers, reaching JPY 1.45 trillion by 2023. We have also seen an increase in the number of overseas Japanese restaurants. In 2013, there were 55,000 Japanese restaurants globally; today, there are almost 200,000. Japanese tea has played a key role in the push of Japanese food overseas. How do you account for the record-breaking levels of Japanese food exports and the growth in popularity of washoku in recent years? How does Japanese tea underpin that?

While it may sound strange, I believe Japanese food has grown in popularity around the globe due to globalization. Nowadays, everything is more accessible, and people can understand the taste of Japanese food. I have been working for this company for 15 years. For five of those years, I lived in the US. Back then, there were Japanese restaurants in the US. However, they were not delicious. On the other hand, in European countries with food cultures, such as Italy, France, and Spain, it was easier for the people to understand the tastiness of Japanese cuisine. However, today, people everywhere can appreciate Japanese cuisine. That also applies to matcha. While we expected matcha to be in high demand in the future, we have seen high growth in the demand for our high-quality matcha much earlier than we expected. 

Japan has exported over USD 178 million worth of tea, ranking as one of the top ten global tea exporters. The US market alone was worth half of this, and there has been growth across the entire world, especially in Taiwan and China. What opportunities is this presenting for your company?

We are currently experiencing a growth in the demand for our products. The COVID-19 pandemic was pivotal in boosting the demand for matcha and Japanese tea as people’s mindsets changed. They are now more interested in living a healthy lifestyle and are choosing healthy, functional food and beverages, including matcha. Of course, matcha does not treat COVID-19. However, it does boost the immune system and makes a person’s body healthier. This functional efficacy of matcha is becoming more popular around the globe as people choose it to boost their health.

While the COVID-19 pandemic had a negative impact on businesses around the globe, there was a positive silver lining for us. We have an online store for both the US and Europe, and since the start of the pandemic, the demand for our 30g canned matcha has soared and continues to grow to this day. This clearly shows that people who are now more interested in living a healthy lifestyle as a result of the COVID-19 pandemic are choosing matcha. Due to this increased international demand and the domestic rise in the consumption of matcha, we are actually short of products and do not have enough cans to provide matcha to global consumers. That is how much the demand has grown.

At the same time, more international conglomerates are choosing to include matcha as part of their beverages for cafes and restaurants. This has greatly increased people’s awareness of matcha, with matcha penetrating their daily lives. Many cafes and restaurants have followed suit in providing matcha drinks and matcha-related desserts, which has had a great effect on our business.

Our Matcha products for retail in Japan

On one hand, there is an extreme demand for matcha globally. However, there is a population crisis in Japan, which threatens to derail plans to tap into that. Japan’s population currently stands at 125 million. However, by the end of the century, it is predicted to fall by half. We are seeing that farmers are struggling, with the majority of them being over the age of 65. For companies like yours, this presents three problems. The first is a diminished domestic base. The second is a diminished labor base to tap into, and the third is that it inhibits innovation and the challenge of being able to expand. Many companies that we have talked to are using different strategies. Some are talking about partnerships and collaborations, and many are focused on internationalizing. How much of your strategy to overcome the demographic crisis is based on internationalization?

Due to Japan’s shrinking demography, we do not foresee future growth in the domestic market. In fact, it will shrink very soon. We are currently allocating 80% of our resources, personnel, and capital to our overseas business. The remaining 20% will be used for the domestic market. That does not mean that we are letting our domestic business go but rather that we see potential for growth overseas.

You mentioned how matcha has been gathering momentum around the world since the COVID-19 pandemic. That is evident in the fact that everywhere I go, I can find matcha products on offer. Your company is considered one of Japan’s top matcha producers. However, you are facing competition from matcha producers globally. What makes Aiya’s matcha special? What differentiates your company, and why should consumers choose your product over your competitors?

To be competitive overseas, the matcha you offer needs to be fully organic. We have an exclusive contract with a trusted organic tea grower, which allows us to acquire high-quality tea ingredients stably and in mass quantities. We have contracts with farmers in Kyushu, an area renowned for its high level of technology and management capabilities. Of course, our matcha is pesticide-free and controlled by strict regulations. This allows us to provide high-quality matcha to our customers. Furthermore, as a company, we are proactive in social contributions and have SDG environmental-related accreditation. We have also received gender-related accreditation. We can proudly say that we are an avid member of society.

Matcha is produced in many locations, such as Nishio, Kyushu, Shizuoka, and Kyoto. The flavor, aroma, and green color of the matcha all depend on the preferences of the person. However, we must ensure high-quality products and stable mass production to readily provide what is needed by the customers. This, combined with our social contributions, makes our matcha stand out.

Our Organic Matcha products for retail in US

You mentioned the importance of partnerships to the internationalization of your business. We saw that recently you have been very active in the space of investing, and this year you invested in the UK matcha business OMGTea. Why did you decide to invest in OMGTea, and what does your overseas strategy look like for the future? Will it be joint ventures, M&As, investments, or collaborations?

There was a special reason behind our acquisition of OMGTea.  Conventionally, we exported our products from Germany to England. However, due to Brexit, that channel was no longer available. That was why we decided to have our own location in OMGTea, which originally had clients of ours. They have a strong brand and a unique presence in the market. We want to use OMGTea as a hub for our imports of Japanese tea from Japan and Germany.

M&A will be the strategy we use to expand our global sales network, and we are currently in talks with European companies with sales capabilities. Right now, we are discussing whether to invest 51% or set up joint ventures or collaborative partnerships. However, we are very careful when it comes to production-site M&As or joint ventures. Around 20 years ago, we had a joint venture in China that failed miserably. Recently, we received an offer from a Chinese company to set up a joint venture production factory in China. However, we have refused the offer. If we were to expand our production facilities abroad, we would do so by ourselves using our own capital to ensure that the quality remains high.

You have a strong understanding when it comes to international expansion. We know that you have subsidiaries in LA, Hamburg, Vienna, Shanghai, and Bangkok. Which of these overseas markets do you consider to have the most growth potential, and which other countries have you earmarked for future expansion?

There are different reasons and backgrounds behind choosing the locations where we have our offices. While the US does not have as big of a food culture as other regions, the health consciousness of people there is quite high compared to other parts of the world. That may be because the social insurance and welfare structure in the US does not encompass enough. People there take more supplements and food with health benefits so that they can retain their health by themselves.

Europe and China have prevalent food cultures, and matcha is well-accepted by countries and cultures that already have a deep food culture. The people in those places can appreciate the taste and the efficacy of matcha and combine it with their local cuisine and lifestyle. We were not sure if we would be successful in Southeast Asia until we actually tried and saw the market for ourselves. However, we did know that many of the countries in that region have a high affinity towards Japanese food and culture. Even before we began our operations there, matcha was being sold in the market, so we thought that it would be a good opportunity for us. It took ten years for us to pay off all of the debts, but last year, we were finally able to achieve positive profitability. While it did take some time, that is how our company progresses globally. Taking ten years to achieve profitability is an acceptable time frame.

However, we see a lot of potential in Southeast Asia and Europe since there are many different countries in those regions. There are many ways for us to tap into those markets through our current bases in each region.

Are you looking for distributors or partnerships in those regions?

Yes, we are always looking for distributors. However, they often look for exclusivity and that is something that we try not to do. Finding the right partner is always a challenge.

Your company is celebrating its 136th anniversary this year. Please imagine that we return four years from now for your 140^th anniversary and have this interview with you all over again. What are your dreams and goals, and what would you like to have accomplished for the company in the next four years? Finally, as there are many mislabelled matcha products globally, how would you like Aiya to be seen in the eyes of the global consumer market?

In the next four years, we will continue providing high-quality matcha to our customers around the globe. We hope to continue our overseas expansion by further penetrating the European and Southeast Asian markets, as that would lead to an overall increase in our sales.

Furthermore, it is my mission to protect and revitalize matcha farmers. In the Kyushu and Nishio areas, the younger generation of farmers is around 50 years of age, the same age as I am. In ten or twenty years, it will be harder for those farmers to continue working. In this aging era, we must retain and protect these tea farmers and create a sustainable business. This is not only in terms of income but also in terms of operations. Shifting from small-scale farming to large-scale company-based farming may be necessary to retain the number of farmers. It is very difficult to create new farmers, so retaining the current farmers is an absolute must for our overall growth as a company.

For more information, please visit their website at: https://www.matcha.co.jp/access/