2025 Harvest Season with Marc from Ooika Part 2

Ryan · 0:00

Hi, hello and welcome to the Specialty Matcha Podcast. My name is Ryan. This is my co-host Zongjun, who also goes by Sam. Hello, hello. And we're the cofounders of Sanko Matcha Products. Yeah. We launched this podcast to discuss our learning journey and matcha startup stories and interview experts. And today we have Marc Alexandre back on our podcast. Hello, Marc.

Marc · 0:19

Hi guys. Welcome to talk with you again. Welcome. Where does this podcast find you today? Right now I'm in Shizuoka. Cool. And I, I visited one of the tea fields that is where you can see Mount Fuji. It's like kind of a kind of a tourist feel, you know, it's real, but it's so cloudy today that you can't see Mount Fuji.

Marc · 0:40

And it's kind of sad, but it's OK. It's so beautiful. I've seen that photo, I really like it. It's seems like the most iconic Matcha Japan photo there is. It is, yeah. It kind of looks like a Windows wallpaper. I have it on my computer right now and I open it up.

Marc · 0:57

It's like paper, overly blue, saturated, green saturated. But it is, it is very beautiful. In person it was great too, but again, so cloudy you you couldn't actually see Mount Fuji, which is just, I don't know, maybe 30 kilometers away.

Ryan · 1:11

Wow, so close. Yeah, maybe I'm wrong about that, but that's what I I remember reading when I was looking up some information about it. But it is pretty close to here, like the base of it. So you're like a few weeks off the Ooika trip and we did like a before the scenes or before the trip and we thought it'd be cool to do an after the trip. So thank you for agreeing to come on and kind of love to hear like, how'd it go?

Marc · 1:35

Yeah, it was amazing. It was such a great trip. I learned a lot, First off in terms of the business side of running a tour, because I had never done something like that. And the feedback from the students or the participants and, and how to structure the tour and for the future.

Marc · 1:50

So I kind of learned all that. That's like 1 camp of stuff, which is the business side of operationally and logistically getting people together and setting expectations and pricing in the business model of it. And the other side of it is the producer. And to paint some context, obviously during the spring, the farmers are quite busy and they're busy harvesting the tea, especially the higher level ones are, are hand harvesting it, getting the material picked.

Marc · 2:15

They go in their truck, they pick up the material, they bring it to the tea factory and they process it. And then that cycle kind of repeats every day, multiple times a day. And then you stretch, stretch that over 3-4 weeks and it's exhausting.

Marc · 2:29

So it is, it is. And during this harvest I really got to participate in in a lot of that. Your bones hurt and you don't sleep and then it rains. And if it rains, you have to go out the next morning before the sunrise and blow all the bushes, try and then repeat, right?

Marc · 2:46

So this is the life of the tea farmer this time of year. So bringing guests to the tea field is obviously an additional thing that they have to worry. Now, even if they're only spending an hour with you, that's still a pretty considerable amount of their time.

Marc · 3:02

So there is a sense of like, is this something that is a burden to them or is it something that they would really enjoy? And that's not something I I would know necessarily ahead of time, even if they invite me to come.

Marc · 3:14

But what I realized is that the experience from the farmers was overwhelmingly positive. They really genuinely loved the the these participants coming. And I know that in two ways. One, the feedback in the conversations after a lot of the farmers I'm, I'm quite close with even, you know, take care of their kids. But the other way is just these moments, these beautiful moments where the student, the students are there with them. They make a bowl of tea and you watch the reactions as the participants drink the tea and you see the faces of the folks like absolutely light up.

Marc · 3:57

And it is not choreographed. It is not exaggerated. You, you, you see these like candid reactions and you kind of get the sense like they're thinking and I, this part I'm projecting, but man, all this work is worth it because they're seeing people really enjoy it. Not just, you know, a few business people who are coming to buy tea from them, but these are people from Czech Republic, Thailand, Hong Kong, where else, Mexico, US like all around the world coming Philippines and, and just really connecting and, and drinking this tea together and seeing those reactions was really, really quite, quite

Ryan · 4:35

beautiful. So I, I really enjoyed that aspect. It was probably my favorite part. Must be, I mean like in the past those experience have been all abstracted away, right, by all these big companies buying their TS procures.

Ryan · 4:47

Like these farmers don't really get to see, you know, the consumer feedback, you know, not necessarily. And this is something really wonderful, I guess, for them. For sure. Yeah, that's that's very true. And you had a really unique group because they were like, they weren't beginners. Like everyone was so primed to appreciate and like ready and had all the context.

Marc · 5:10

Yeah. And what was interesting too is we had a few people that were, let's say, I guess, newbies in a sense. Like, for example, we had one girl who was from Russia and no real knowledge or experience of of tea. Your name was Petra.

Marc · 5:23

And she got into it. And right after the tour, on her social media, I'm seeing all these posts of like matcha bowls that she bought and like, drinking matcha. Before then, she wasn't doing that. So it's kind of amazing what a great experience for her that she has to carry with her now. Like the ultimate beginner's journey. It's like, yeah, probably doesn't get any better. Right.

Ryan · 5:45

It's sort of like when you're starting a new, yeah, you're starting a new habit or pursuit or sport, and you go out and buy like the best stuff and like everything that's unnecessary and you just go all out. Sometimes that backfires, but sometimes it actually commits you into the thing.

Zongjun · 6:01

It's like too late to back out of it now. Yeah, but it's also too like the weird thing about the Internet is you have these like tea hermit cultures. People like usually don't like learn from each other in person. But being with, I don't know what 15 other people who can give you the context to appreciate early on.

Marc · 6:18

Like I'm sure it's a very special type of inoculation because you can probably ask 1000 questions. You understand what they like about it, which is really hard to get in a pure way on the Internet. Yeah, very true, very true. People, the, the Internet brings out the worst and the best of people sometimes, but it also is kind of isolating. And if you think about the context of tea, it wasn't really something that was done in isolation ever. At least in Japan, if you were to have matcha, it was always done in the context of, for most normal people, some kind of event, some kind of social event. So for example, there's Tamai

Marc · 6:53

and tea ceremony that's performed for two young people to matchmake and actually kind of like start dating. So that's one temae and there's other temae that are done for weddings and for business meetings and holidays. So in that way, tea has always been communal in, in, you know, matcha. And now you have this new culture where people are at home alone making a bowl and it it's almost more meditative. And I wonder if that's how it would have been when some of the early monks were drinking it or if that would have been communal too.

Marc · 7:27

I actually don't know the history well enough, but it it is pretty, pretty cool. We're kind of returning to, at least with this trip, the communal part of of sharing matcha together in a group. Awesome. Not that chanoyu doesn't exist, but you know what I mean.

Marc · 7:42

Very different context though than most people like. Enjoy Matcha. For sure. Yeah. So we, we started in Fuji and then we went down to Takayama where the cha center made. And then we went to Okayama where Bizen yaki pottery is from. And we also went to Wazuka and then to Yame and visited a larger refinery and then to Hoshinomura. So the kind of cool, the philosophy of or the, yeah, it was great.

Marc · 8:12

It's kind of wide. And it was to give them a taste of the breath of matcha, right? So not just the top producers, not just the hand picked honzu in Uji at Yamasaki's farm, right? But also let's let's go to Wazuka, let's get some more commercial or daily lot tea.

Marc · 8:30

Let's check out the tools. Let's go to the larger refineries instead of these like in Kuruzumi's case in Hoshinomura, the second oldest Tencha factory in Japan and then was kind of a modern refinery in Yame. So I feel like everyone got a pretty wide view of the industry and that was really exciting. It's awesome.

Marc · 8:51

Do you see a divergent of people liking Uji versus Yame or certain producers versus the other? My sense and I, I don't know why I necessarily think this. Maybe it's just from working at Ooika and seeing people's reaction to different teas, but I think Americans tend to prefer the taste of yame when it comes to daily lot tea.

Marc · 9:17

They like having a little bit more hika and of course with the more specialty matcha, Uji's preferred because of the name and the history. But I do think that people do really like at least Americans, Westerners, I should say that I've that I've interacted with, tend to like the more hika notes that you get from yame producers.

Marc · 9:37

I don't know, producers in a way I I kind of feel like are in matcha because matcha is getting so popular and cool are are becoming maybe to a small degree, like mini celebrities, right? So the sort of like at least with Suji, you definitely have this like following around him, right? So I think you'll maybe see more of that in the future. I don't know, I think it's kind of exciting, but even with a lot of these producers, you only get to see, you don't get to experience them.

Marc · 10:05

They're just kind of like this archetype of T farmer from Uji. You know, you read about the awards, but you don't get to meet their personalities. And I think that was a really great part of the tour. Is it humanize some of these producers? Makes sense.

Ryan · 10:18

What would you say are some of like the highs and lows of the trip, like some like cool anecdotes to sort of give some color, especially from like the experience of both the farmers and the participants and and their expectations?

Marc · 10:31

Yeah, yeah, OK. I can tell you kind of a funny one just to make me look stupid, but I think it's kind of cute. So on the first day of the tour, you know, we did have a lot of people. So there are about 20 people and of course I'm always late to everything because that's Western culture. But actually in Japan and with the tea farmers, that's not something we really want to do.

Marc · 10:52

So the first day was a little bit more flexible and we had some people come late, not by much, but it came a little late for the meeting time we're supposed to meet at which probably my fault. I probably should have done a better job making the meeting point a little easier to, to find, but that's another topic. Anyway, we decided as a group, we, we talked about this and said, you know, from today on, just to protect the producers time, we need to make sure that we're on time. And if, if you know, on the dot when we're supposed to leave, we leave and then you have to find a way to get to us basically. And we all agreed.

Marc · 11:25

And that was that was that. And then when we went down to Hoshinomura, we had to rent a like a private bus basically. And I remember so busy, we all went to sleep. The bus was leaving 8:00 in the morning. And of course, I wake up at 8 O 5 the next morning and 5 minutes late, not even out of bed and this is going to see Curtis me and we it takes a couple hours to get out there and he was only available in the morning during a specific window.

Marc · 11:57

So if we miss it, that's it. There's no like, staying late. So that was traumatic. And I remember like, jumping out of bed and running like a madman as fast as I could to the bus. And like, all the participants saw me like, screaming up.

Marc · 12:11

And of course, I was thinking to myself in the moment, like, just go without me. And then I'll pay like $300.00 of taxi fees to get there. But I can't do that because I have to be there with the farmer and into like, you know, spur some of the conversations. And also, so yeah, I felt horrible about that. I felt so bad about that.

Marc · 12:31

But anyway, lesson learned. Make sure you set multiple alarms with multiple phones. So that's that's one anecdote, but there's also positive stuff too. And one of the things that I found really charming that I don't know why it stuck out my my brain.

Marc · 12:45

But when we went to visit Kuma, who's a tea farmer in Ujitawara and Yame near Hoshinomura, we went up to visit one of his fields, and we were talking about the difference between Western tasting notes and the Japanese method of discussing the flavor of tea. And this is a whole topic that I'm really interested in and something that I talked with a lot of producers on this trip about.

Marc · 13:14

Because in the West, when you drink a fine matcha, you write notes like everyone does this. Every competitor, every tea matcha company, we always write like, what does this taste like? What other things does this taste like?

Marc · 13:28

For example, chestnuts. And in Kuma's field, all of his tea tastes like chestnut. And I, it's not just me, our staff at Ooika, I have taste our single origin matcha. And I also asked them like, what is your tasting notes?

Marc · 13:42

And some teas, it's kind of like vague, like people have different guesses. But in some cases, like Kuma's tea, every staff, not every, but the majority of them have taste. They say, oh, this tastes like chestnut. So there's obviously something happening there.

Marc · 13:56

But when we're as a group with Kuma in his field, which has chestnut trees above it, that's constantly dropping chestnut trees into the field. And every person and customers write in to tell me that the tasting notes for this are spot on. Chestnut, He says.

Marc · 14:12

What doesn't taste like chestnut. He was so adamant that it doesn't taste like chestnut. So that kind of led into bigger discussions later, which is the Japanese tea blenders than chashi don't think about matcha or tea in that way. They're not.

Ryan · 14:32

They're not taking a sip of matcha or tea and thinking what other foods it tastes like. They don't do it like that. And that was shocking because. That is shocking. Do that. What is the reference for them to make decision or describe the taste of the tea?

Marc · 14:53

Yeah, that was the that was the big question. And that's what I kind of wanted to figure out on this truth because I couldn't understand it. And finally, Macho Who's who's a member of Ooika staff and I were at Kuma's Tea Field after the tour had ended.

Marc · 15:06

We went back and we had a conversation with a fifth dan chashi. So he's a tea blender and there's like different ranks. 5th dan is an important one because 5th dan is where you get to. That's like a normal person where if you want to go 6th, 7th, 8th, 9th, you have to kind of commit your entire life to only tea blending and like you kind of lose any other thing you want to do. But I asked him this question and he said two things. Well, three things.

Marc · 15:34

So 1, he said that the way his brain works, in his opinion, is it's like a library filled with hundreds or thousands of little drawers, and each drawer is a tea, a taste that he's experienced. So when he's doing blending, he's referencing his memory of all the different matchas and teas that he's tasted before, and that's how he comes up with the blend. But the other thing is two other things. The second thing is they're comparing the taste not to other foods like we do in the West, Like, oh, this is chocolatey, this is nutty.

Zongjun · 16:08

This is that. They instead compare it to the cultivar, like the archetype cultivar, like this tea I'm drinking. How close is it to that archetype? I thought that was pretty fascinating. Yeah. Well, one thing in the previous company that Ryan and I was working on, you know, we use AI to kind of assess, you know, different flavors. And one thing that's universally very difficult and complicated is, you know, the understanding, the sheer understanding of let's say strawberry or chocolate is different from, you know, groups of, you know, different cohorts of people with different, you know, background.

Zongjun · 16:48

So using that as a kind of reference notes that's not directly related to a product is sometimes can be, you know, confusing. So it's understandable that they're not using, you know, vocabularies from non tea products to describe, you know, the tea.

Marc · 17:07

The last thing that they do is they they have kind of a grid in their head and I've seen a lot of Japanese companies do this and I didn't really understand why actually a lot do this. And not just macho, but in tea and coffee too.

17:23

You ever see in like trading card games, they have like that little grid. It's like Japanese media uses all the time where it's like a 5.*. Yeah, 2 byte. It's bigger. There's that one and there's also like the pentagram where like the the hexagon shape or whatever gets larger inside.

Marc · 17:38

Oh yeah, it's like a radar chart, Yeah. Yeah, radar chart, yeah. So they they do it like that where they're thinking about OK, this tea what is the bitterness level? What is the astringency? What is the sweetness? What is?

Marc · 17:49

So they kind of divide it into those experiences and then plot it out. So that's how the chashi, the multiple chashi that we spoke with kind of think about tea and also some of the farmers I spoke with, because it really dawned on me how different the experience of writing about tea is to consumers. Because I can't.

Marc · 18:15

I'm pretty. I have low confidence that I can sell a matcha, for example, without providing a customer with some kind of reference to experiences that they already have, be it strawberry or chocolate or chestnut or yuzu or whatever. Makes sense.

Marc · 18:31

And I mean, it's really complex, right? Because there is no universal flavor profile. Everyone has their own perception like Chashi's have what is almost certainly the strangest incomprehensible flavor, primary sensory experience with those products that is just literally inconceivable to everyone else because they've had those formative tasting experience of thousands of references and like they are so distanced from perceptual space from the consumer.

Marc · 19:04

That and the language part doesn't help. What's really interesting is we did a lot of work in Japan at our last company in flavor work and Japanese language is a mess to map back to English because a lot of flavor and texture characteristics are relative. Like there's like, I think there's like 6 different types of crunchy and like they're all self referential. It's not like we say crunchy or more crunchy or even more crunchy.

Marc · 19:32

And it is really difficult mapping. Yeah, they have like different types of crunch describe like cartilage and like certain like crunchy Jelly type consistencies and all these like really interesting things. But what's so fascinating about the chashi specifically is you think it's just like almost, I don't want to use the word like Eastern medicine, but it almost is poetic and subjective and it just kind of happens that they kind of acquire skill and they talk about it in a way that might not.

Marc · 20:06

I'm kind of talking around the Bush here, but I've always thought there's a level of mysticism with the chashi blending. But actually it's more objective than I thought. And what I mean by that is these chashi, the high level ones, can taste the tea and actually tell you. With a high degree of accuracy, like what city in Japan it comes from and like how long it was steam. Now that that might be a little easier to kind of tell deep steam from light steam.

Marc · 20:32

But like what cultivar, what city, what region, like how approximately long it's been shaded like that stuff is objective. You, you can get a response and then check it against something And when you see how accurate it is with some of these chashi, I don't know how they're deriving it, but it's being derived from.

Marc · 20:55

I don't know what the the correct English is, but that to me is so fascinating that there's something real to it beyond just intuition and luck and poet poetic poetics, I guess. That skill so badly. I want the references, the ground truth references to know OK this this city steamed for 30 seconds and shaded for 39 days.

Zongjun · 21:21

It's it's amazing. And they have to know it because they go to auction and they have to bid on the stuff and they have to make blends. Yeah, it's. Wow, that's very. It's good news and bad news though. Like good news is that, you know, the art really exists. Bad news is that it's a self referencing architecture. You know, you can't really let them or make them to articulate what exactly they're tasting.

Marc · 21:45

They will be just telling you. Yeah, it's that tea. I've tried it before. Yeah, sure. Right. And yeah, that's why Ooika, like I I'm never going to make a blend, right. And it's because of that you need to have skills, you need to have certifications and leave it to the experts, I guess.

Ryan · 22:02

But it is, it is pretty amazing that they have that ability. But anyway, that's something that I learned on the tour, I guess. Very cool. I, I'm very curious and I'm sure you've had like discussions with farmers recently. We keep hearing that there's quite a bit of hesitation to reinvest into creating more tencha or the ability to create more tencha supply because they don't know, like, is this a hype and how much is this going to grow? What's your like best argument for or against trying to encourage reinvestment in producing and getting more tencha supply?

Marc · 22:39

Like what are the really bullish people in Japan saying and what are the really bearish people saying like that are more hesitant? I don't know what other people are saying, but I can definitely give my own thoughts on what maybe the future looks like and what some of the farmers have said as far as why they are or are not creating more tea.

Marc · 22:56

So it's so regional and there's so many answers, but I can tell you one, one place was a refinery in Yame that we work with and they are very hesitant. They have the capacity, the potential, I should say, not capacity.

Marc · 23:08

They have the potential to really invest in a lot of expansion and greatly increase their production. But it's going to be a sizable financial investment, one that will take maybe a decade, maybe more to recover from. So if matcha is a passing trend to them, they've expressed this to me, if matcha is a passing trend, then that's that's a problem, right? Because there's a potential that they don't get to re, they don't return on their investment.

Marc · 23:37

Another example is I can't remember, I think this was in Wazuka, one of the factories there, but I think it was, I believe I was talking with Morisaki San and he was telling me that by the way, I'm sorry if I got the farmer wrong.

Marc · 23:50

This might be someone else. It's all blur. I don't have my notes in front of me, but one of them was telling me that even if they were to create more tea bushes, if they were to get more land and create more tea bushes, there's actually not enough capacity for the factory to process it. Because you have farmers that come together and Co-op and put material through a factory.

Marc · 24:08

And you can't just have tea leaves, pick tea leaves sitting there for days as you clear out the queue. So there's sort of like a maximum capacity that your factory can run through and that's already met in some regions. So you would actually need to expand the factory or create another factory, and that's expensive and that's challenging.

Marc · 24:27

So there are big hesitations about doing this because it's not as simple as going outside and planting more tea bushes, especially if you're in a place like Uji where yes, there are abandoned tea fields in Uji. There there is an ability to a degree to expand production or let's say cultivation.

Marc · 24:49

But as a whole, there maybe isn't a lot. Uji in other regions that the investment is quite big. And yes, there are government grants and there is money in the, in the government that's going to these purposes and some farmers are taking up on it. But again, it still kind of comes down to we're talking about an industry that's been around for a very long time that has gone through wars, world wars, it's gone through everything you can think of in history and it stayed consistent.

Marc · 25:17

And I would argue that this industry is one of the most risk adverse industries. The traditional crafts in Japan are are very risk adverse. I'd argue that there are examples of people that are doing interesting things. For example, Furukawa Seicha in Uji is doing very interesting things with organic matcha, probably producing the only good organic matcha. Let me let me be careful how I phrase this. The only high quality exceptional organic matcha in Japan is coming from them possibly. And so you do have people innovating, but the industry as a whole is, is not geared towards risk and reacting to an immediate shortage, an immediate

Marc · 26:01

boom is pretty risky. Now, if, if this continues like this for 5-10 years and there's still shortages, maybe people start investing more and more. And I think people are going to start investing more and more now anyway.

Marc · 26:13

But this is The thing is matcha just going to fall off in the next few years? And I guess the best argument against this is even if matcha is a great example, right? So we have, we are growing and even if matcha declines, we're still growing and we'll still have needs of tencha.

Marc · 26:34

And if one particular refinery we work with has higher amounts of tencha that they invest in, we're probably going to buy from them in the future more and more and more. Even if the industry slopes, we're still going to be buying.

Marc · 26:48

So that's sort of what I tell them without telling them too hard because I don't want to take responsibility if it doesn't work out that way. But yeah, I feel like things will grow, although this is maybe a secondary topic here, but I personally think there's going to be a a crash, a matcha crash in the coming years. So whether it's a crash that like kind of dips down and goes up again and goes down and up again or whether it just kind of like stabilizes, I I don't know.

Marc · 27:14

I think it'll probably continue going up, but I think there will be a a correction do. You think that's going to happen soon or do you think that? I mean, I, I actually personally hold the opposite view. I think we're just getting started. Like I think that these like, movements are slow and take time and like, we are now in a stage where you can find it in every major city and people are just going to want a better and better and better thing.

Marc · 27:34

So here I agree and that's what I personally think that we will keep growing. But I do think there'll be a correction. How severe that correction is, I don't know. So let me give let me be specific. OK. So one of the people on the tour is a now a friend of mine who've been hanging out. His name is Kevin.

Marc · 27:49

And what Kevin was saying and we were talking about this is it's matcha prices are going to go up. I can't guarantee that and I can't go too big in the details, but I believe in the next year and the next few months, you're going to see pretty significant price increases in the entire industry.

Marc · 28:04

And according to Kevin, who knows business a lot better than me, there are what are considered transient consumers. I think that's the term you use. And these are consumers that buy matcha, but once it exceeds a certain price, they'll just go to whatever else is within the price that they expect.

Marc · 28:20

So the price of matcha doubles. Maybe not going to buy matcha. Maybe start buying hojicha, maybe start buying coffee, maybe start buying yuzu lemonade refreshers. We're talking about like your typical matcha cafe. So I think that if the price increases continue the way that I think they're increasing, then there's going to be a percentage of consumers that pull back. And you'll still have consumers that want to pay the expensive stuff, especially for, you know, home use and people that are really into it that can't get any matcha now. But I think you're going to have these cafes that lose customers buying matcha, even if they have

Marc · 28:56

it for a period of time. And I think more importantly, what will happen is if the prices continue going up, you're going to see a lot of these matcha companies or tea companies that only sell matcha and think these matcha cafes, I think they're going to be in a lot of trouble even right now.

Marc · 29:12

For example, one of the, I don't know how much I'm allowed to say about this, but one of the big key companies that services the West sent an e-mail out that they're cancelling all sales, domestic and international, indefinitely.

Marc · 29:27

And they supply a lot of companies. Wow. Yeah, including us. Crazy. So that's why we got the e-mail. And then I can, I can send you, just so you know, I'm telling the truth, right? But I can send you personally post from a tea company that basically said, yeah, we're, we're there's no more matcha. So that's it, you know, goodbye.

Marc · 29:50

We're going to start selling coffee anyway. I'm just saying that there's a lot of movement right now. And I think you're going to see a lot of price increases. You're going to see a lot of cafes pull back from matcha as much as they want it. Or what you're going to see is maybe more hojicha being sold or more matcha from not Japan.

Marc · 30:06

And I think that there's going to be consequences to this in the short term, which could be a little dip, a little crash, but maybe not. I don't know. I hope not. Yeah, wow. Complicated. Good points though. Yeah, could be. I mean it continues to, they can still consume a lot of matcha from coming from Japan and then really slowly turning into a luxury product that will be remained or confined A. Lot of, I think there's a lot of consumers that are just very price and sensitive.

Marc · 30:37

And a really sad future would be that like the people that buy like Hermes and Louis Vuitton indiscriminately end up like becoming the market for Uji matcha where the tencha was actually grown in Uji, which would be a pretty sad future where basically like normal people are priced out.

Marc · 30:57

Yeah, but what I'm kind of thinking too is I'm not Even so much talking about matcha going from $60.00 a jar Indy or even 60 to 80. I'm I'm talking about like your typical cafe or matcha house that wants to sell Japanese matcha in a latte format. And right now to make a matcha latte with 4 grams of matcha, you can sell it for like 7667 dollars. But if the price of matcha goes up 50%, sixty percent, 70%, the cost of goods, the the cost of your ingredients to make a matcha latte, all of a sudden we're talking about an 8A9, a $10 matcha latte.

Marc · 31:42

And the issue there is, are consumers willing to pay $6 for hojicha latte, $6 for a coffee latte, and then $10.00 for matcha latte? That's sort of what I mean is I don't think consumers are going to be super into that if that happens. It might not.

Marc · 32:01

I mean, Ooika slightly raised our price, I think $0.50, but you know, there's a place that open near us and they sell matcha that's not from me even Japan, and they're charging $8 for matcha latte. So I think consumers have more wiggle room on how much wiggle to pay.

Marc · 32:20

Yeah, it's yeah, it's amazing, right. So I think there is more wiggle room, but like what is that level? And once it crosses that, crosses that threshold, that's where you're going to have that consumer base that kind of steps away and says, all right, well, maybe this isn't for me. And if that happens, that makes sense. When that happens, I don't know.

Marc · 32:37

But I think you're right. I think there's going to be more and more and more demand, which makes the price higher and higher and higher. And at some point, people are going to step away and the price will correct, I think.

Ryan · 32:46

But I don't know. So where do you see that money going? Right? That's a lot of money that's basically should be going to the bottom line of the producers and the farmers. So like, how is that? How do you see that getting reinvested? How?

Marc · 32:59

How have you heard that conversation? Yeah. So what I'm going to say might be a little controversial, so please kind of understand that. But my understanding is a lot of this money goes to farmers. However, it's it's not going to the farmers that are doing the hand picking. It's not going to the farmers that are doing like the highest level of Japanese tea.

Marc · 33:24

It's going to, it's basically rewarding the farmers that are selling at auction houses that are producing high volume, low quality, mass produced machine cut, you know, single cultivar shaded tea because that's where the money is.

Marc · 33:42

You need volume of material. These farmers produce it. It goes to the auction houses. At the auction houses, I can only talk about Kyoto. I don't know other prefectures, but at the auction houses some of the machine cut tea grown outside of Uji, this is a fact, has sold more for more than some tea sold at the auction house in Kyoto that is handpicked, handpicked honzu shaded, which is bizarre like that.

Marc · 34:08

That world doesn't make sense, and yet here we are. So. It's because it lives in the wholesale system because like buyers are directly purchasing it from the farmers versus auction. No, no, I'm saying that this is just the auction.

Marc · 34:22

There's there's Tezumi, hand picked. Material. Just the auction. In Uji, grown in Uji, hand picked material grown in Uji in the auction house that has sold for less money than machine cut tea grown outside of Uji in the auction house.

Marc · 34:38

Now that could just be a timing thing. Is that just because the is or the smaller the smaller quantities? That's what I thought. I thought maybe it's because right now what you need is high volume of material that can be the base of your blends and you really need that. You need high, high volume that you could, you know, blend with and have good quality.

Marc · 35:02

I think it's probably like high quality, nice, consistent, super high volume machine cut tea and this more high end small lot. It's it's, I don't want to say more trouble than it's worth, but it doesn't give you the flexibility that these giant lots do. So maybe that's why it might also just be a freak thing where stuff at auction at the earlier parts of auction goes for more because they have more money and they're desperate and they need the tea.

Marc · 35:28

So the bid goes up high. I don't know. But this the fact that it has happened and we're not even talking about direct sales because it's a whole other topic, but one farmer, 1 farmer put this in a funny way. He said farmers in this one. I'm not going to say the name of the region, but in this one region where they're known for growing more daily lot economy teas and those farmers are now buying themselves really nice cars right now.

Marc · 35:53

And the farmers that are, you know, growing like the Super high end material, they're they're scared. They're worried that because of doing direct sales, their, their material is going to not be so different than previous years.

Marc · 36:08

And it's incentivizing more daily lot tea, which I don't want to give that a judgement. It's not necessarily good or bad. I definitely prefer that over tea coming from like Indonesia for matcha, but but it is a fact of life, I guess here now that who knows what will happen.

Ryan · 36:23

I don't know, Yeah. Do you know what the hurdles are to purchase at auction? Like it's it's My naive thought is that it's very unfortunate that for most foreigners cannot buy tea at auction, because then they could sell it as single origin single cultivar with all the specifics instead of it getting blended. But like, what are the merits and demerits of having that be a closed access system?

Marc · 36:50

Yeah, it definitely is. And not even. It would give Westerners access to the commodity market, right? And it's every other industry. Yeah. Anyone could get. Yeah, it's not just Westerners, it's also not all Japanese can get access.

Marc · 37:06

Yeah, to be fair, I don't know what the qualifications are to get access to it, but I know that even just being a Japanese company or like Japanese farmer, you can't go to the tea auctions. Like there's, there's certain.

Marc · 37:20

I think you have to be a member of the association and then that's like a whole process that you apply. I I don't know exactly how it works, but yeah, it's definitely not something that's open to foreigners, foreign companies in at least in a direct or easy way that I know of.

Marc · 37:36

Maybe I'm wrong, but it is pretty closed down and it has pros and cons, right? So maybe one of the pros is that it allows the Uji tea companies and also other tea. I'm just talking about Uji because that's where kind of I have more experience, but across any other prefecture maybe has different rules or access, but it allows these Uji companies to get dips to get the material to continue the craft, right?

Marc · 38:02

So imagine they open the gates and all of a sudden all these other companies come in with a lot more money. Think about places in New York or places in Beijing or Shanghai or anywhere. Come in and just run the bids up to crazy high levels. Buy all this material.

Ryan · 38:22

What is left for the tea companies to make their blends? Makes sense. I think that's, I mean if we had access, we would come in and like bid up like because it's like it's so expensive. And if we had access to close to commodity pricing or like plus 20% or plus 30%, right, like that's massive. Like that's what you can build a business on top of. Yeah, for sure.

Ryan · 38:46

It's. Actually very frustrating from a western perspective that we're just so stuck. There's just so few people you can buy from. If you want to start a match company you can go direct to the source, which is super hard. Or you have to pay crazy prices and it's still hard like finding someone that will sell to you.

Marc · 39:03

It is. It definitely, definitely is. It's a very closed system. And yeah, I don't know, I have mixed feelings about it. Obviously, I would love to go to the auction house and place bids and get material, but I understand that if I did, then tea companies and other producers would not be able to get the material that they need to do what they're doing. I see that.

Marc · 39:25

And I also recognize that the tea companies are as important to Uji as the farmers, even if the Western market doesn't see that. The Western market is also not like the primary market now, but that may change. I mean, it's a shame for like the traditional players doing the very intensive agriculture to produce an insanely good product because you let capitalism do it's work and like every Western company would come in and bid up that honzu, shaded Asahi, whatever. Yeah.

Marc · 39:59

And have it go for the price that it's actually worth. Yeah. And I agree with you. Yeah. Because I can understand both sides of the argument. Well, here's one. One thing I would say, I agree with you that Matcha is dramatically underpriced. I've talked about this before.

Marc · 40:16

I think that Matcha should be much more expensive. Now, of course, I'm happy that it's not in a sense because I don't know how many, what percentage of my customers would would buy it at 300% higher or whatever. But I will say that some farmers do sell to the West and they choose like they, they do have the option to sell a lot more to the West, right? So that's an option, but they choose to sell. Oh, I need to be specific.

Marc · 40:44

The farmers that I'm talking about in Uji who are like the top level farmers, they do some of them, not all, but some of them do sell to Western companies, but in limited amounts. And they could choose to sell to the West a lot more and get a lot more money and even maybe auction and price bid between the Western companies.

Marc · 41:02

That could happen. However, here's the thing, the tea companies, I've been with them for hundreds of years. Nuku Koran is what 300 year old company, Taishi's farm, Shimizu son's farm, 300 year old farm. So there's a long history that these people share. And the way it works, for better or for worse, if you are one of these tea farmers and you decide to not work with these tea companies, to step away, to not like you go to them, you give them their tea, they give you up to months later how much they're going to pay for it.

Marc · 41:31

And you can say yes or no, but you don't say no. And if you say no, you're probably never going to work with that company, ever. So here's what it means. No one knows what's going to happen with the West. If a tea farmer like, just goes completely Western and sells only to the West and cuts the tea companies out and doesn't help them and doesn't, you know, whatever, that's fine.

Marc · 41:52

But if the West's interest in tea vanishes or drops or whatever. Yeah, they will be screwed. Right. And, and you can think about it like this. There's one year of track record, maybe 2 years of track record of the West being involved in matcha, and there's 1000 years of track record of Japan and Japan. Even if all the matcha craze dies out, there's still gonna be for the next 1000 years coming, Japanese chanoyu still doing their tea ceremony, still buying matcha, the tea farmers still getting by.

Marc · 42:24

So you are sacrificing a lot of security for potentially a short term increase in profit. So right now they have a pretty good balance where a lot of these farmers will sell material to Ooika, but the most of it's going to the TT blenders and the stuff at auction for the like daily lot farmers.

Ryan · 42:45

Now that's a question. I don't know. That might be interesting. I don't think they have any allegiance to anything because all their tea goes to the market. They the auction houses. So I don't see why they wouldn't make it more accessible other than maybe they can't or don't have it's too early.

Marc · 42:59

And maybe some entrepreneurial person will make an international auction houses that that local farms, let's say in in Wazuka all submit on. I, I don't know, but it makes sense that the, the more traditional heritage producers are not doing that. But again, everything I should mention, everything I'm saying in this whole podcast is just my intuition or feeling from what I've seen or talked to the farmers about. And it may not be representational of the market in general or, you know, anyone else's opinion. Yeah, especially more than the more mass market, you know, mass produced regions, they probably

Ryan · 43:33

operate on a very different mentality than places like Uji and Yame. Yeah, yeah, So interesting. Some really strange dynamics. It's such a weird industry. I met someone recently who is trying to introduce matcha to a country where there's not that many specialty vendors and he has literally the world's greatest go to market plan.

Ryan · 43:57

He's doing a bunch of consumer testing. He realizes preferences might be different. He wants to work with Tchashi and all of this, this whole very detailed plan, which I don't won't share publicly, but it's like the best go to market plan I've ever seen.

Ryan · 44:09

I am trying to make like, like connect this guy with the right people to, to like find a tchashi and like kind of help make this come to life just because it's such a good plan and no one will take him. Fuck, it's I can't think of a single industry where you have someone who's this motivated and has such a good plan that's consumer centric.

Ryan · 44:32

No one will like most people won't even answer the answers that we are getting are no, no, no, no, no. Like no one cares. Like, it's so bizarre how like there's all this care for the product and for history and for culture, which I appreciate, and they're slamming the door on everyone else. Nope.

Marc · 44:53

We don't want, we're not dealing with this country. We're not dealing with you. We're sold. We're at capacity. No, no, no, no, no, no, no. And it's just, it's a weird environment and it's makes it really hard. One for new players, but two, like for the spread of matcha and the culture itself.

Marc · 45:09

It's I don't know. Well, I mean, there's a very inherent power dynamic or discrepancy between these people that want to sell matcha and those people who produce the matcha. It's not balanced. It's a very, you know, the, the, the power shifts towards the producer, not towards the the vendor or the sellers, which is not very common in other industries.

Marc · 45:36

It's the situation we're seeing here in Matcha. I'll tell you a quick anecdote from the tour. We went to visit Kodazumi and we asked him what he thought about the the matcha boom. And his response was kowai, like it's scary. And we asked, well, what do you mean? Why?

Marc · 45:55

What do you mean? He said, the answer to your game is not, not what I expected. The answer was because the shortages are such that consumers are going to be pushed away from authentic Japanese matcha into non authentic matcha and won't know or care about the difference.

Marc · 46:14

That was so interesting. And I think that's the real problem here is yes, it's great, shortage is great. Ooika has material we can sell, we'll do great. We have less competitors to worry about. But actually that's a bad way to think about it because consumers will want their matcha. And if it's coming from Kenya and it's in a matcha latte and it's half the price and it looks green on social media, then I think a lot of consumers are going to be fine with that. And I think that's sort of the issue is I want more production. I want more affordable Japanese matcha and I want it in the hands of entrepreneurs that are

Marc · 46:54

going to compete with me because at least it's going to be authentic Japanese matcha. And I think so many people want to do interesting things in matcha and start their cafes. And of course there's money in this. There's there's sexiness in this.

Ryan · 47:06

It's an exciting industry. It's one that's trendy and cool, right? You can look at that new place in New York that just opened. It's so trendy and like not in a bad way either. This is something that people find aesthetic resonance in. And I think that's resonance in and I think that that's fantastic.

Marc · 47:23

But if there's no material out there and it's so gate kept that you can't get it and it forces you either to give up or to go to auxiliaries, I think that's a missed opportunity. And it's, it's short term, probably right in the next few years. It's going to take at least 5 to 10 years to solve because it takes about 5 to 10 years to plant new bushes and new fields and new infrastructure.

Marc · 47:46

I think this will be OK in the future. One of the tea fields here, for example, in Shizuoka just supplied something like less than 100 tons to a matcha company in New York of material for this year coming up. And they're going to be greatly increasing their production.

Marc · 48:01

They got new fields, so these problems will go away, but probably. But maybe the damage is done by then. That was what I think Kuruzumi was hinting at when he said kowai and also he explained it after. But yeah, maybe more interesting if I just say that. And ambiguous whispers are sometimes louder than directly shouting.

Zongjun · 48:25

Yeah. You know the market finds a way, and that's both good and bad. Yeah. It's the really weird dynamic that we're seeing. No easy answers. Yeah, and it's also worth noting 2 things. One is that it's it's really easy to dramatize this and people love the, the, the mystery and the drama and the excitement of like shortages and like, it's, it's morbid and fun, like watching a train wreck.

Marc · 48:51

But I think is it that big of a problem? Is it actually even bad? Think about it like this. I I had this conversation with Shimizu yesterday with a reporter who was interviewing his company in mind and they came in with these judgements, which makes sense.

Marc · 49:11

Companies are going to be in trouble. All the stuff is going on. It's so dramatic, blah blah blah headlines. Look at Reddit people posting about how terrible the shortage is and how bad but, but, but it reminds me of that old anecdote of the farmer whose horse ran away. Did you ever hear that?

Marc · 49:29

OK, so I'll make it really quick. Farmer had a horse. Horse runs away. Neighbor comes over and says, oh, that's a shame, it's too bad. And the farmer said we'll see. The next day the horse comes back and it brought a mare.

Zongjun · 49:41

OK, yeah. So I'm not going to say the whole thing, but you guys can Google it and you'll get the the whole, you know. That's right. Right. Yeah, great too. So the point of the anecdote is that things may look bad but may be beneficial in the long run. You just don't know, so don't apply so much judgement on it. And the best example of this is like, yeah, but actually, is it that terrible that matcha for 10 goes up a few dollars? Is it that bad that your matcha latte costs $0.50 more? Is it that dramatic?

Marc · 50:18

Actually? Like, if you want matcha, you can still get it. Maybe Mercury Clay Man, for example, your favorite blend is sold out and has a restocking in a week. OK, You know what I mean? Like is it that big of a deal? Think about this.

Marc · 50:30

The sencha farmers and gyokuro farmers and cut, the kukicha farmers and the bancha farmers. Like these people that are producing the high level gyokuro for example, the NAFF is coming to them and saying yeah, just give up and just grow tencha.

Marc · 50:46

Like, come on, like it's done, you know, not that dramatic and not that like dismissive, but they're encouraging farmers to switch over to tencha production. And like, if you're a producer who's made gyokuro and it's like your father and his grand and your grandfather and going back all the way, like, you know, no one cares.

Marc · 51:04

The West doesn't care about gyokuro. The West doesn't. I mean, there, there are of course some people who do, but as a generalization, there's no gyokuro boom and there probably never will be. So I have reasons that I think that, but maybe there will be.

Marc · 51:18

I don't know. But the point is like, if you are a matcha producer, you know intrinsically that your farm is going to last another generation without any concern. But that's not a luxury that a gyokuro producer has. So it's also worth kind of reflecting on this and recognizing that, hey, there's there's beauty in this.

Marc · 51:37

There's beauty in the fact that people around the world found this niche material, this niche craft that no one cared about. And now everyone cares. And that's wonderful and that's beautiful. And that may mean in the short term that there are some growing pains.

Marc · 51:54

But really, you know, do you cut off your legs when you're growing cuz you have growing pains in them as a kid? Like, yeah, it sucks, but it's towards something bigger and better. It's an optimistic way to think about about it maybe. But I think there there is truth to it. For sure.

Zongjun · 52:08

Yeah, that's true. Hard to predict what the future will actually be, and it's very easy to think that it's easy to catastrophize everything. It's a good word. One thing could be interesting is that, you know, for, you know, people outside of Japan, vendors outside of Japan kind of, you know, share the risk of expanding potential production like through investment or, you know, I think that that will be something very beneficial, you know, you offloading the risk from the farmer's shoulder. But also it's also a statement of, you know, we are going to be here, you know, with you for for the future. Yeah.

Marc · 52:45

Yeah, for sure. It's hard though, like so without getting into too much detail, Ooika has had interest in putting in some infrastructure in Japan. Obviously Ooika has a godo gaisha. So Ooika is a Japanese corporation, to my knowledge is only one other American company that has Japanese incorporation that that's from America. And we're we're going to put infrastructure here. But what I will tell you is the for better or for worse, the governmental policies in this country do a very effective job in preventing investment, at least in agriculture. So.

Zongjun · 53:23

The exact opposite of the rest of the world. So that's crazy and I'm not trying to put too much judgement on that, but try to make a godo gaisha like a Japanese corporation. Unless you're married to a Japanese woman or man, it's pretty challenging.

Marc · 53:36

Now, maybe it's not as bad as China where you have to give 50% of your, you know, 51%, but there's all these best way to put it for at least this is my perspective having gone through the process. There's many catch-22s and even little things like getting an apartment.

Marc · 53:50

If you're a foreigner, getting an apartment in Japan is is a nightmare. So if you want to put infrastructure here and invest here and spend time here, there's basic day-to-day stuff you have to solve, such as getting an apartment or opening a bank account or getting a phone number that every aspect of the culture kind of sets up to prevent you from doing from government to company, you know, at every level. And you know, on a, on a certain level, like that's good because the more barriers there are, the harder it is for competitors to do it.

Marc · 54:21

This is just not related to Matcha so much. But my personal feeling is the Japanese economy could be improved with more innovation and investment from from foreign markets. And it's something that, at least from my perspective, is not something that is welcomed with encouragement. And again, that might be good or bad for Japanese society. I don't know.

Marc · 54:40

I'm not Japanese, so I don't know. It's their house. They can do it what they want with it. But I just feel like the matcha industry, it's like there's so much room to grow, but there's no furniture to put in the house.

Ryan · 54:54

It was interesting because we were you were hosting that live stream the other day and I was just like struck the number of people that want to import ishi usus to their country. And like you've become a subject matter expert on doing that.

Marc · 55:09

And there's just there's not going to be enough. There's never going to be enough. And like everyone wants to contribute to the value creation of matcha in some way in their country. And like we all know that grinding fresh really changes the game from a quality perspective.

Marc · 55:30

And, like, people want some agency over that, and it's weightless or long. Like finding a stone Mason to resharpen your stones can take years. Yeah, if you're even. Prioritizing all almost a bigger problem than getting the mills to begin with.

Marc · 55:45

And people don't that's the thing. People who want the mills don't realize that if you get a, if you're lucky enough, you have enough money and you're willing to wait potentially years to get a mill, as soon as you get that thing, it's going to have to be resharpened.

Marc · 55:57

And that's a whole other world of pain. But you're right, people want to give value creation to Matcha and not just be a reseller. Yeah. I mean, that's what the backbone of what Ooika is or they're taking the greatest agency over that quote UN quote, last manufacturing step to produce a product that literally no one else can at any form of scale, at least on the East Coast.

Zongjun · 56:23

But I wonder if one day someone will try to take even more agency because I was thinking the coffee model, you know, people bringing in unroasted green coffee, roasting it, blending it and then doing the preparation work to serve it.

Zongjun · 56:37

But I wonder if someone could import shiage equipment, so have access to aracha on the commodities market and do even more value creation by doing the shiage processing country and then having an ability to mill it, whether or not it's ishi usus or you know, we're working on infrastructure to help solve that problem and then doing the serving of the customer because like matcha's made three times like on the farm during processing and the preparation. So going even further back could be interesting. Curious to hear it could be what you think this. Is my my feeling.

Marc · 57:14

I think that in the next couple of years we're gonna see an explosion of specialty hojicha. I think that's going to happen because hojicha is affordable. So you can produce it cheap for cafes, you can powder it, which means you can make lattes and mixed drinks and foods and etcetera out of it and you can roast it. So I think what will happen is you'll have people contacting farmers and it doesn't have to be tencha farmers. It can be gyokuro sencha anything and have single origin single origin tea that's affordable from Japan and then roast it like you roast coffee with skill with you know, Kung Fu in America and have different

Marc · 58:01

places have their own because everyone wants to add value right? You you the the reason matcha lattes sell well. There's a few reasons, but one, cafes can add value by making a matcha latte look beautiful. So the more value you can add as a company or producer, the more attractive that product is. So I think Hojicha is going to be like that next thing where people are going to get Hojicha roasters and roast it have their own skill and like, oh, I roasted it. You know, this green bean, this green tea, I, I roasted at this level versus this level from this region, from this producer. This is a blend.

Marc · 58:35

This is and the thing about blending hojicha is no one cares. Like you're not going to offend a chashi. Blending hojicha matcha is different but hojicha is just like a mottainai product, a product that is just a waste product.

Marc · 58:48

Like for example one of the the tea factories that we could get some of our Yame cha from has almost infinite but free kukicha, free stems. So I can get infinite hojicha basically. No one once said. Right. Yeah, yeah.

Marc · 59:05

So the point is like, that's kind of cool. And I think that this is where people totally untapped. But yeah, it's so true. the hojicha has no cultural baggage. Like we can really do a lot of things with more, you know, offending anyone. Yeah, and the volume is is huge.

Marc · 59:23

There's no shortage and they'll probably never be a shortage of of Japanese material for hojicha. So this is actually something that Ooika is going to be pursuing pretty aggressively. But what's cool about this is this can be open to anyone. Anyone can get a hojicha roaster. Anyone can work with any of the farms in Japan. It doesn't have to be matcha tencha specific. And you can roast hojicha and do your own. You know, I think there are some companies in America that do small scale hojicha, but kind of approaching it like a coffee shop, I think is kind of interesting. But with hojicha, I think that will

Marc · 59:57

be something that substitutes the matcha. And matcha gets more and more difficult to get access to. Makes sense, So if you're a little. I know you thought that'd be super cool. From tencha, definitely from stems. It's possible. I don't know, we haven't tested it. It's possible.

Marc · 1:00:18

We might be able to adjust the pressure or the gap between the plates too, or we might need to grind it a few times, but it's possible. Yeah, or release like a special edition. Or we just. Changed grinding like different plates or something?

Marc · 1:00:31

I would buy that. Would be a cool future. Yeah, Hojicha needs a specialty moment too. It's a we're. Not there, but I think it could be now. Very few people make any quality distinctions. Right. Yeah, I think it could be. And you can add value again by doing your own blends and roasts.

Ryan · 1:00:50

Cool. I think it's a great place to stop. Thank you so much, Marc for coming on again, 1/3 time guest. I really appreciate it. As always, if you enjoyed this podcast, please consider sharing with a friend and we'll see you on the next one.

Marc · 1:01:03

Thanks. See you in. The future bye bye bye.