Breaking: Japan Seeks GI for "Japanese Tea"

Ryan · 0:07

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 co-founders of Sanko Matcha products. Yeah, we launched this podcast to discuss our learning journey, matcha, share startup stories and interview experts.

Ryan · 0:20

And we're here actually breaking some news. Every once in a while we have the opportunity to cover something that's happening in real time and we also published a Substack about it. But Japan is filing for GI status for quote the Japanese tea.

Ryan · 0:36

Yeah, that's very interesting. So what what? What is the GI Ryan? So GI is geographic indication and it's around protecting a product that's grown in a place from a certain style. And so the idea is that it's encompassing and protecting something that is very regional and worth protecting and has specific methods or specific terroir or specific heritage from counterfeits, impersonation, and also the Gray zone.

Zongjun · 1:06

So you don't need to have GI status in some countries to prevent against outright fraud. You can't take pure Chinese tea, label it Japanese tea and sell it in almost every country. There's existing laws and framework that prevent that from happening. Just straight up illegal.

Ryan · 1:22

Straight up illegal, but there's quite a bit of Gray zone. Some of the Gray zone could be milling and shiage processing. So for example, within the world of matcha, we're all very aware that there's a lot of tencha that's being grown in China, imported into Japan, and you know, it's getting blended into Japanese products where there's a significant transformation step. And after that transformation step, right, you can call it made in Japan, maybe the leaves are not grown from there. And then, you know, it's also going to depend on, you know, where you're exporting it to those different laws. Yeah.

Zongjun · 1:55

Normally they would use that trick to get rid of tariffs to some. Yeah, there can be some pretty big incentives around different like tax policies. Geographic indication is like important for supply chains. It's important for trade relationships between countries.

Ryan · 2:12

And it really only means anything where you have reciprocal GIS. So GIS are reciprocal. So they're only worth anything in the country that they're indicative of. And this is the first, most interesting piece of the news to dissect is that the number one market, at least in the case for matcha outside of Japan is the United States. And the United States does not respect GI. So what is it just EU?

Ryan · 2:36

EU, some Southeast Asian countries. It's a handful of countries, the most relevant ones. The EU and Japan set up a bilateral negotiation in the mid 2000 and 10s, I think 2017 if I remember correctly. What it allows you to do is tap into to remove Gray area products. So if if Chinese producers, for example, want to label something as Japanese style matcha, for example, or Uji style matcha or Uji ceremonial matcha and sell it into, let's say the EU, for example, there's a whole regulatory network and system and departments to get that cleared off shelves and monitoring agencies.

Zongjun · 3:19

But these, this type of framework doesn't exist in the States. And it's one reason why you can have Parmesan made in Wisconsin, where this product can definitely not exist. How about producers and the blend houses within Japan that's selling to domestic Japanese consumers but using materials outside of Japan?

Ryan · 3:38

I don't think you could label it as the GI product. And that's the other interesting thing about the Japanese tea industry is that you can have both GI and non GI for the same type of tea. Really. So like Yame. So there's two great examples.

Zongjun · 3:53

One of them is traditional authentic Yame Gyokuro, Honzu Gyokuro, but there's also Yame Gyokuro that's non GI. So it's not a requirement. No. It's a choice. It's a choice, and there's some rules about what you can do for processing, what you can do for sourcing. So it really makes you wonder what all of the Yame Gyokuro is if it's not the GI Yame Gyokuro.

Ryan · 4:18

I mean, supposedly or according to the rules, it has to be honzu jikagise shaded and but there's remarkably few acres that actually grow it. So it begs the question, are there producers in Yame or anyone making Yame style Gyokuro labeling it as Yame tea? And we know this is a big problem across Japan. Actually, we learned from Oscar Breckel that until recently, you could have a lot of Shizuoka Sencha, had Kagoshima material blended into it and was labeled as Shizuoka Sencha. This is also the case in Uji, which is, you know, most of the Uji Matcha or Uji Cha doesn't come from Uji, doesn't even come from Kyoto, can come from any of

Ryan · 4:53

the four prefecture trademark zone, Nara, Shiga, Mie and Kyoto Prefecture, so long as the finishing is in Kyoto Prefecture. So you know, you have a couple different things going on. You have trademarks which are trying to defend origin and define provenance and process that you have this GI system which is bilaterally recognized.

Ryan · 5:15

Saying that there's this very unique product from this very unique place that's worth protecting because it's done in a very particular style, like Champagne from Champagne or Parma ham from Parma. And it's to get rid of the imitators and to remove this Gray zone of Japanese style Uji grade.

Zongjun · 5:33

I've seen that from some Chinese matcha tea suppliers in China. Well, but in this case, if we really looking to what's going on in this GI filing, it protects Nihoncha, the kanji and the romanization, Nihoncha, the romanization for Nihoncha and the English Japanese tea and Japan tea.

Ryan · 5:56

It's very smart because it does kind of block people for doing tea laundering between China and Japan or other countries between Japan. But, you know, it still allows the freedom for people to do laundry within Japan. Well, yes and no. They wouldn't be able to label that product then as GI. So it's a little bit unclear in this filing. Does that mean every Japanese producer has to label GI? Or maybe there will be some that want to use foreign materials and we'll just opt out of this GI system, which leads you to think through the implications of this a little bit, right? Because who does this GI

Ryan · 6:28

actually help, right? If you are a really nice cafe in the EU or in the UK, right, You probably have a direct to producer relationship, right? If you're really artisanal specialty and if you have a direct producer relationship and you're like hopping on a video call with them asking how their harvest seasons going, you know where that materials coming from, right? People in Thailand that buy from Goku show or Shirakawa or any of the famous producers and Aichi or in or in Kagoshima or Yame, right?

Zongjun · 7:01

Like they know these A lot of the times the producers are named like these people. This material doesn't need GI status. If you're transparent about your label and your sourcing details like this is just kind kind of like unnecessary to verified provenance, maybe it kind of gives you a guarantee that someone has audited.

Ryan · 7:20

Ideally, you already have that trust that you trust that Suji Sons material is actually coming from Chirikawa or that the Gokou material is actually coming from Gokou. Or if it's not, then it's clearly labeled as a blend.

Ryan · 7:34

You know, where they're, you know, lubing in material from others areas, mixing it in their own and creating blended products, which is also fine so long as it's too close. But they're definitely some more shady to use a horrible matcha pun players within the Japanese tea industry that we've heard of and that we know about that are importing foreign tencha, blending it into products and labeling it's matcha.

Zongjun · 8:00

So this really fights back against that. Yeah, basically putting a endorsement or a legal seal on made in Japan, so to speak. Yeah. And to to help fight against all of this. So we, we looked up the numbers because we were curious like how much foreign tea, foreign tea material is imported to Japan and turns out that it's about a little bit over 5000 tons.

Ryan · 8:25

And this is across all types of tea, not just for matcha or tencha. I mean about 90% of that number is coming from China. And we've actually tasted a lot of these materials in China that we know are being exported to Japan. And what's interesting is that it's really good. And if you're just looking at the organoleptic or the sensory differences between that Chinese grown tencha and the tencha commodity tencha that's being traded around Japan to create matcha, it's nearly indistinguishable. There's a lot of yabukita, okumidori. We've heard of even Asahi being grown in mainland China, although we don't think it's

Ryan · 9:01

particularly spread because we cannot find it. We're very interested in finding it. But so where does that material go now? Let's say that's all being blocked. Do these larger companies just create an international matcha blend and kind of backtrack that material saying, you know, we're creating a new blend. It's not AGI blend, but it matches our Japanese tea master blenders criteria for something something Noshiro. Or does that material just not enter Japan, and in which case there's literally thousands of tons of material that needs to find a new market, which is an interesting secondary implication.

Zongjun · 9:43

Absolutely. And not to mention that a lot of these gardens and facilities are either directly or partially owned by Japanese tea farmers or tea producers. They already have a playbook of doing all of these. Speed of them, you know, either create a new brand or finding a new market would I think exceed a lot of people's expectation.

Ryan · 10:05

Yeah, and there's some interesting incentive for them to find in new markets too, because in China, I think Tesla's the only exception, He has to be at least 51% for a state. That's right, Chinese control. That's right. Yeah, you can.

Zongjun · 10:21

Owned up to 49% of the company, except for Tesla. Got a special exception. So even the control of where this material goes. And we've heard of a lot of interesting arrangements, but between prefectural governments who are and you know, a lot of this tea that's being grown in China. You know, we think of Chinese tea as imitation products and when it's being imported to Japan. But the reality is places like Guizhou, which is one of the the larger tencha producing regions in China are really incredibly poor.

Ryan · 10:52

You were you once were telling me that you know, Guizhou is, is not a very wealthy province and there's a lot of poverty there. And despite some famous product like Guizhou Moutai, it's largely a very poor province. The GDP output is ranked as some of the lowest among the whole country.

Zongjun · 11:11

Yeah, so and we were just a Canton Fair and what we're learning as we get more context about Chinese grown matcha and tencha is that it's for poverty alleviation. They're grown in areas that are very rural, that are very agricultural, that already have tea.

Zongjun · 11:27

But a lot of the green tea consumption in China and all tea consumption in China is actually falling. We've even heard of some farmers who literally didn't pick the tea because it wasn't profitable. They're getting like less than $0.20 per kilo wet leaf and which is it wasn't literally wasn't worth the effort picking even by machine. So they just let it grow.

Zongjun · 11:48

Yeah, which is very interesting place. It's not just about Japanese matcha. They are actually one of the largest supplier to quote unquote fake Longjing or fake fortune inside China too. There's a very similar tea laundering situation that's happening in China, similar to Japan.

Zongjun · 12:07

And the whole industry is set up in the way that it's so agile, so versatile, it can literally be converted into a brand new production manner to make a new tea, so to speak. And the government is behind all of these activities.

Zongjun · 12:23

Not only they're behind the cultivation and the production of all of these teas, they're also behind the selling. That's one of the, I would say magic about, you know, socialism or state owned state controlled economy is that the government is not just giving you subsidies.

Zongjun · 12:42

They help you to find markets too. Yes, and there's a lot of state owned food companies like COFCO for example, and they can basically form a guaranteed buyer. It's a very interesting system. It's like one of the few we think of China nowadays.

Zongjun · 12:55

It's a relatively capitalistic society, but this legacy of state owned companies really makes major market forces. Or it's capitalistic in the country level. Country is almost like a single company. So the reason we're talking about this is if you look at the arc of modern tencha production in China and Matcha, they had the world's perfect first buyer. If Japan is your primary export market, you know having we, we were once a service provider for technology for large Japanese food and beverage companies, the famous brands that you see at the convenience stores, etcetera. Back at our last job when we

Zongjun · 13:37

were working on AI sensory tools, Japan was one of our earliest markets and earliest set of clients. And they are by far have the highest standards of anyone we worked with in the entire world. They tell you exactly what's wrong. They give you your the exact specifications and we had to constantly adapt and re adapt the level of service and the type of analytics that we were providing them. And the same is true for all products. So a lot of this tencha supply was probably getting very silently, not even passively, very actively perfected through feedback.

Zongjun · 14:11

And we've actually talked to some Japanese tea producers that work directly with tencha processing facilities in Zhejiang that are constantly giving them feedback on how to increase quality. And they're importing a lot of Japanese tea processing equipment and Japanese cultivars. And this level of feedback, which has been going on for at least a decade, probably close to two decades. I think the earliest one that I'm aware of is IAA setting up its subsidiary in Zhejiang in 2005. But I'm sure that there's are there are others that were even earlier that were having this level of feedback. And the Chinese just have such a

Zongjun · 14:45

big incentive to keep this ball rolling. And if this export market evaporates because of this GI protection, that leaves them with an interesting problem. So they're already now trying to push high quality Chinese, but we've tasted some of it's just really just incredibly high quality, indistinguishable from like quote, UN quote average ceremonial grade matcha in Japan and trying to find new markets lower the much lower prices than what Japan can offer, but their best material still probably going to Japan.

Zongjun · 15:17

Now, if that market evaporates, what a fantastic marketing opportunity to just say, hey, this material was being exported to Japan. It was being blended into quote UN quote, Japanese matcha, and they were allowed to call it because the milling was there. And we've worked with these tea masters. This material is good enough for Japanese tea masters. Here it is as a premium Chinese product at 40 to 50% of the price.

Zongjun · 15:42

It's only 100 KG hundred U.S. dollars per kilogram wholesale, for example, versus 200, which may be the average price approximately wholesale rate for a quote UN quote ceremonial grade matcha in Japan probably ranges from about 1 to $200 a kilogram.

Zongjun · 15:59

So that could be pretty scary for the Japanese tea industry and it might actually cause prices to raise to you cut out that supply and that was quote UN quote being laundered into the system. Classic supply and demand dynamics, along with all the compounding factors.

Zongjun · 16:15

You have farmers aging out, you have fewer succession planning, and you have, you know, just less tea. Less supply means higher prices, especially with this GI. And demands just will naturally flow to the lower price market to lower price supplier. Especially for in the B2B environment, which are the best subscription buyers?

Ryan · 16:37

Most predictable revenue? So the most. Rational ones, too. Yeah, the most rational too. That's that's such a good point, right? When you're a business sourcing tea for your cafe, right, You want a reliable supplier at a good price where it tastes good.

Zongjun · 16:52

And now that matcha is kind of moving into sort of the early specialty phases, they can say, oh, wow, actually, no, this is Chinese matcha, and it's really good. You should try it. And when they have a great experience with that product, this reputation for Chinese matcha, which let's be fair, it's really like Chinese matcha kind of sucked for a long time, right?

Zongjun · 17:12

It was using unshaded material. It was using cultivars that were probably pretty bitter. Who knows how long it's set as a powder and it just didn't taste good and it was super cheap. And there's still a lot of producers in China doing that.

Zongjun · 17:26

But that's just not the reality on the ground anymore. And also the Chinese tea companies are starting to make matcha with their own cultivars, with Fuding tea cultivar, white tea cultivar with Long Jing 43, traditionally from Hangzhou, that's being shaded, and it can taste excellent.

Zongjun · 17:43

We just tasted a bunch of samples. And they could, this really could be the impetus to force China to lean into its own products, its own style. I don't know if they call it matcha. I don't know if they call it just Chinese matcha, but Chinese matcha with Chinese characteristics, not just Chinese matcha with Japanese characteristics.

Zongjun · 18:02

Absolutely. And for consumers, it's just great news. These these matchas coming out from China are using Long Jing 43 or some other local cultivars just taste like something entirely different than all of these matcha we have tried in Japan.

Zongjun · 18:19

A lot of these very unique floral notes, these herbaceous notes, these teeth, more teeth like notes, this very unique bean paste notes. They keep talking about that. It's unheard of in Japan, but bean paste is such a unique and high quality indicator for Long Jing and they are trying to kind of repurpose those taste reference into all of these new Chinese matcha. And I think it's a great thing.

Zongjun · 18:46

It's it's wonderful. It's such a unique and refreshing consumer experience. Yeah, it's a great diversity that, you know, we, the Specialty Matcha Podcast, really advocate for. And there's probably tons of existing Chinese green tea cultivars that might be very suitable for shaded cultivation. They just undiscovered.

Zongjun · 19:05

And so there might be a real renaissance here of just more variety. And let's be honest, I don't know, I feel like maybe we taste too much matcha and it's been in the industry too long. Sometimes I get a little bored. There's only so many Okumidori's and Yabukitas drink and like enjoy rationally just like some of it it the flavor diversity is a little more narrow than like I would say like oolong or even just like Chinese oolongs or Taiwanese oolongs. I feel like there's a lot more flavor diversity, which I think would be a good thing if you really care about, you know, the product.

Ryan · 19:41

So Ryan, would you say that this GI might actually accidentally helping end up helping China? Oh, no doubt. What do you think? I think it's very hard to speculate at the moment, but the the foundations is there like it only takes a few smart enough people with the right contacts to really move the balls forward and I think that you know.

Ryan · 20:03

This GI is very interesting. It's Japanese tea and Nihoncha, and if you take into the consideration of just how complicated the whole tea supply chains within Japan is, this is almost like the best they can do for for for current status quo.

Zongjun · 20:20

Yes, well, that, that's, that's actually a perfect segue into the other half of this article that we wrote on Substack, which if you haven't read or subscribed to our Substack, we we really recommend you do so it's just called Specialty Matcha Podcast Substack. Yeah, please like and subscribe.

Zongjun · 20:34

Within Japan, we are seeing all these complicated regional ecosystem of tea supply chain, like Uji, like Yame, like Kagoshima, they all sort of talk to each other and they talk to all of the vicinity areas in the surrounding regions.

Zongjun · 20:49

And it will be very difficult to GI these, you know, single origins because, you know, a lot of the teas are just not coming from that particular location. But, you know, I think this is a start, a good start that lays the seed of, you know, a region is worth protecting. And I think it's a, it's a, it's a good effort that people are trying to move the ball forward because you need some sort of protection to begin with.

Ryan · 21:19

We need some sort of idea of origin to begin with for people to go into more granular level in the future. Yeah, definitely 1/2 step. I take a slightly different take like reading between the lines or quote reading the tea leaves here is that I don't know I was talking about this.

Ryan · 21:37

My girlfriend who worked used to work in agriculture backgrounds and chocolate, but she spent a lot of time in Japan and used to be fluent in Japanese. We went to agricultural school in Tokyo. And I've been complaining about this whole Uji matcha thing and how verifiable provenance in Japan. It's just incredibly frustrating. And I said Japan just filed for GI for something in tea. What do you think it is?

Ryan · 21:57

And she said I have no idea. I said, oh, it's for Japanese tea and as a European, as a French, as a French woman, she, she laughed and said, that's the best I can do because it's like very unusual to have something so broad.

Ryan · 22:11

You, you don't GI French sparkling wine, you GI Champagne. And there's a reason to GI champagne, right? It's the chalky soil. It's the region, it's the history, right? And if you have the same from noir, you call it Crémant de Loire, right? Like you don't call it Champagne, right? There's a different name for the thing. Yeah, but the for the current status quoed in Japan, I would say it is the best they can do.

Ryan · 22:33

It is the best they can do. It's like Uji for example. You think why don't they do Uji? Uji is the single greatest brand name, right? If you look at the four prefecture trademark zone, it produces about 1500 tons of of of of matcha, which is about a third of all of the matcha made in Japan. So about 1/3 of all the tea in this country can be labeled as quote Uji matcha.

Ryan · 22:56

Problem is, Uji only produces 37 tons of tea from about 35 active tea farming families and that represents like 1 to 2% of the actual thing. And it's just not GI-able, right? Like you can see all of these different stakeholders for Uji Cha contort themselves into a pretzel trying to define what Uji matcha actually is or Uji cha actually is. But you have this trademark and it's new by the way, it's only a 2 decade old framework.

Ryan · 23:24

Before that, it's very unclear if it was just the Wild West or everyone just did you know, their own sourcing thing. There's also a rule that called the blend rule where you can call it Uji Matcha blend. 50% of that material can come from somewhere else, so you could have it theoretically even from China. I found no rule against that.

Ryan · 23:41

Or let's say more likely Kagoshima being mixed into this Uji matcha blend. But then you know they also have the UNESCO bid the whole Yamashiro region encompassing like Wazuka, Kyoto, Ujitawara, Joyo, etcetera. Wazuka, right? And having this be the Uji matcha landscape. But that totally ignores the north part of Kyoto, say like Fukuchiyama, for example, right?

Ryan · 24:05

And then you have some people arguing just for Kyoto as Kyoto tea, Kyoto, whatever. And then you have the people, especially even in Uji that are like, no, we are Uji. This is Uji matcha, this is real Uji matcha. Everything else is just this marketing idea.

Ryan · 24:20

And then you have the people that are very blend centric saying, Oh no, you know, these people, these producers, these blenders have always been sourcing material and from these other prefectures, from these other regions.

Ryan · 24:31

And it's part of the greater history. But if you really dig into that history, which we will in the next part of the series, is that it was a state controlled monopoly during the Edo era. It was literally illegal to do shaded cultivation outside of Uji.

Ryan · 24:43

And maybe that loosened up a little bit as the Edo era was falling. But really it's about a 100 years old tradition. It's not as old as people think of having this tencha method spreading. So like Uji and the idea of Uji is like very obviously defined so broadly for profit, but for people and consumers and countries that truly care about a thing grown in a place in this very particular style with a particular history, it's not GI-able. It's against the spirit.

Ryan · 25:14

Most of these definitions of what people think of as Uji Matcha like this. Like maybe four or five different constituents that argue for different things. It just doesn't map cleanly onto GI. GI literally means geographic indication.

Ryan · 25:27

If if Uji got GI, what would all of the like basically commodity tencha suppliers do in all of these other counties in the Yamashiro region? And maybe Wazuka could have two feet to stand on. People, you know, are beginning to learn about Wazuka. I think Obubu has done such a fantastic job. People all over the world have that have interned at Obubu can go to their home countries and like they talk about their trip. Maybe they work at teahouses.

Ryan · 25:56

Maybe they've opened a business at Wazuka could probably stand on its two legs. But what about Ujitawara? And what about some of these other places that are Joyo? That's a little it's only beginning to you start to see that be as a single origin. So like they've invested so much in this Uji matcha mythology and stories and educational content that it's kind of their golden goose.

Zongjun · 26:17

And if they, I think if they GI Uji, you kill that golden, golden goose and you'll realize that it's kind of just a marketing illusion. Yeah, for the 35 tea farmers that are actually in Uji, it will be a great thing. It will be a fantastic thing. But for everyone else, everybody else, this is almost suicidal commercially.

Zongjun · 26:37

Nishio is the perfect use case. Nishio Matcha tried to GI and like. There is very little consumer awareness for Nishio. The GI was so rigid that it ended up like increasing the price of those products by 3X and there just was no market for it.

Zongjun · 26:55

There was no demand for it. There were no myths, no romance, no business, no tea. No business, no tea. And here comes a very interesting speculation is Ryan, who holds the discourse for Uji, right? Like it's really not those 35 farmers.

Ryan · 27:11

It's the tea house, it's the tea brands, it's the large tea companies. And they are having these farmers on their hand. Like these farmers really do not have that much agency to do anything. And these tea company companies have way too much invested over the course of time into building this Uji system, this Uji brand that doing GI for Uji Town, Uji City would just not make any sense to everybody. Something I was doing on my Uji Matcha research rabbit hole, which actually didn't make it into the piece and maybe I should add it or maybe you can just live here is I was really curious with the ownership

Ryan · 27:49

structure. I just trying to follow the politics and the money of the Uji Cha trademark. So the Uji Cha trademark both in Japan and the US, and I think they have it registered in some other places along to the Kyoto Tea Cooperative Association. I was like, oh, that's interesting. Who are the members of the cooperative associations and what I recognize any of them?

Ryan · 28:09

And when you look through that list, I didn't see any Uji Matcha farmer farming families that I knew. Like I was searching for Suji San, I was searching for the Shimizu family. I was searching for for a Khalase Cha, no one I could find, I think.

Ryan · 28:26

And then I was trying to find, OK, which ones are actually based in Uji? And it's actually the minority. A lot of them are actually not based in Uji itself, but in some Yamashiro region or May some of them weren't even from Yamashiro.

Zongjun · 28:37

So that was really enlightening. The people who have the political power to control that trademark have a huge incentive to make it that broad. Oh yeah, not really just incentive, right? It's only ownership. So almost like would make more sense to rename Kyoto as Uji.

Zongjun · 28:57

Yeah, actually, but there would be a problem solved. And actually before this framework, right? The original framework was to have at least 50% of the material coming from Kyoto Prefecture as part of the rule. And it was originally set as sort of some voluntary guidelines and from some big meeting that they had at Uji City Hall. But there wasn't enough consensus. And part of the reason that there was so much dispute was that there was not an volume being produced in Kyoto. And you can argue all day, these pure people who care about like it's the blend masters, it's his, it's history that are sourcing from these other

Zongjun · 29:34

regions. You know, they, they, it should be left up to the, the tea blend masters. But it's, it's really about money, right? When you say that there's not enough supply to meet the demand for Uji Matcha, that is a business decision.

Zongjun · 29:47

It's not a product driven decision. And so you know, it's and then I mean, you could also argue like if you're intellectually honest with yourself, doesn't even matter. Doesn't even matter that Chinese Tencha is being blended into this tea and being labeled as an Uji matcha blend. Maybe you have 20% from China and 50% from Uji Trademark Prefecture zone and 30% from Kagoshima and it still tastes good.

Ryan · 30:16

Yeah, You could argue that with the right cultivar, the right fertilizer plant, the right, you know, shading methods, you can almost produce this Uji flavor quote, UN quote anywhere else in the world. One more reason why, at least within the case of matcha GI doesn't make very much sense because it's not terroir driven. The geographic indication matters so much less then like champagne from Champagne or Parma ham from Parma, where you could argue like the local microbial flora that is, you know, inoculating all of these hams as they're dry aging actually does produce a unique taste that cannot be replicated elsewhere, right?

Zongjun · 30:58

And then you have San Daniele, you have other regions making prosciutto and they taste different. Although in this case in Japan, I would say that you really need to take human into the equation too. There is a regional style of doing tea and that's I would say would definitely make a difference in the taste profile.

Ryan · 31:17

And it's definitely regional, but the region really spreads and these people moves. These actually if anything is appropriate in matcha is like this idea of quote champagne style. Style. Right. Like you can have Yame style process. Like actually what's interesting is everyone talks about terroir and then they talk about Yame and they talk about how it has all these roasty toastiness.

Zongjun · 31:40

That's not terroir, That's not processing decision. Yeah, these notes that you get in like Hoshino sencha tea, some of them might be coming from the terroir, probably that's actually mostly from the fertilizer. But this, this is a processing decision difference between, let's say, the Uji farmers versus the Yame farmers.

Ryan · 32:00

And we're here in Aichi, right? And apparently they do a little, some producers here do a little more withering, also slightly more roasty, toasty notes. That's a processing decision, not a terror. But maybe you could call it IG style, Toyota style. Or maybe, you know, you could say the same for all of these Nagasaki producers who are using this new machine that pan fries and steams the tea at the same time, which makes it like super nutty, right?

Zongjun · 32:25

Besides terroirs processing, then I think it's fair to say style Uji style matcha grown in China, right? If it meets all the criteria of to replicate those tastes. They're really. Actually more honest to the product. They really should call this AI anthropological indication. Yeah, exactly.

Ryan · 32:42

Much better use of let's hijack the term AI. Speaking of terminology, I think the biggest marketing gift to all of the other regions that this is GI will help, which I think actually China is a huge side beneficiary of the ceremonial grade. The people at the bottom of the market who don't care about origin, right, Because if they did, they'd probably like go deep, right?

Zongjun · 33:05

Like if you're a buyer that's a specialty matcha buyer, but you want to see Suji San for a kawas, A chaoseno say cha, but you know that the product is coming from the people, not who those people are, right? Like you're not being tricked.

Ryan · 33:18

You don't need the GI, and if you do need the GI, then you're really we're being tricked and you were paying the intelligence tax we referred to in the last episode. That's right. But most people care about ceremonial grade. That's like the top of the marketing funnel for matcha. And there is no absolute no reason at all why Chinese producers cannot advertise themselves a ceremonial grade wonderful gift to the rest to the all of these other regions, because that's actually where probably the largest demand is. And then maybe if you know a little more about matcha, you worry about Japanese.

Zongjun · 33:52

And then if you know a little more about matcha, then you start caring about producers or people or, or maybe you get in one of the blend houses like Marukyu and then you get deeper and then you finally get to the level of farmer in terms of where your interest lies. But it's a big, big funnel.

Ryan · 34:07

And as you go down, that funnel gets more and more narrow. I mean, we're hoping the specialty matcha, that bottom of the funnel can explode so that these farmers who are actually doing the work are the ones that are getting mythologized and romanced. They're the ones who actually deserve the credit for why these products taste so good.

Zongjun · 34:24

But the ceremonial grade term, really, wow. I think that's a wonderful. Gift, wonderful gift to everybody. Yeah, this and the other one is matcha. Yeah. Like the term matcha. Like what If you look around all of these GI products, you know, it's really the name of the product that gets GI to not, you know, the region or the name becomes the name of the product, the name of the place becomes the name of the product. Like champagne the matcha.

Ryan · 34:52

I don't think it's GI though. And if you care about like folksonomy, the folk use of language, the way people actually use the words that they use, right? Like, for example, like Champagne in some senses has also transcended the, the wine, the sparkling wine that's grown in champagne. If you watch travel influencers like review a business Class C, like, is it really Champagne that they're being offered at the beginning of their service?

Zongjun · 35:19

Or is it a glass of Prosecco, right, like people have just come to associate that word. Or if you go to a friend's house and they're celebrating something and opening a bottle of cava or bottle Prosecco, right, It's not uncommon to see here's here's some champagne toast with most people just don't know the difference. And if you look at matcha, same thing. It's transcended that big time.

Ryan · 35:42

So it's and you know, the legacy with China like isn't I don't think it's even GI Ball. It's an international product to begin with, and the. History is too complicated, too complicated because you could argue, really, if you zoom out, it's Sinosphere. It's a Sinosphere product.

Zongjun · 35:58

Yeah. So this whole GI really influence the business world, not the consumer world, so to speak. And. Trade in terms of perception, right? Because like, like people really care only about ceremonial grade and the word matcha nowadays largely.

Ryan · 36:17

And for the really professional drinkers, consumers, they go to the origin. So the people in the middle are probably suffer price increases because if you take out some of that supply cushion, you could argue that some of the people who care about Origin the least are about to pay more for a product. Because if you truly care about Origin, you really go to the source and everyone else that just one ceremonial or something for your smoothie or something, you know, they're, they're very loosely engaged in the product.

Zongjun · 36:47

But among like matcha consumers, regular matcha consumers, the ones who care the least are about to pay more. The GI might give it some positioning of some premiumness and premium product, but it's also possible that the the quality will just go down and the price will go up even higher. Because the other thing interesting about China is that these early days of tencha production is for EU compliance and it's for exportable tea because there was no big domestic market.

Ryan · 37:15

And not just matcha, all kinds of tea too. So there's a very large region of tea producing areas that are optimized for exportation. The Japanese, well, traditionally it was a Japanese product. We weren't thinking about exportation.

Zongjun · 37:30

There's a lot of move now to organic and having pesticides residues that can actually be exported, but it's slow. Yeah, takes 5 to 10 years for a lot of these pesticides to fully degrade. And for these GI countries that reciprocate GI with Japan, it's not the US who has lower pesticide residue requirements. It's the EU, which is by far the most complicated region to import Japanese tea into.

Zongjun · 37:56

So we don't know if this is the case. But if it is the case that some of this Chinese supply was for EU importable tencha and matcha and you remove that, you're taking a much larger subsection of that material that's going to make it to those GI countries. So maybe you know it's going to also increase the price of undifferentiated tencha or matcha where you're not talking about the producer into into Europe until the Japanese can get more of their own supply.

Zongjun · 38:30

But this vacuum will be very quickly fulfilled if you're talking about China speed, yeah. And gives it gives China a great opportunity and excuse to do this. So yeah, it I don't know how I feel about this. I think anything that helps with verifiable provenance is a good thing for the whole industry and for specialty matcha.

Ryan · 38:51

I mean, let's be real, a lot of this is just consumer deception like this. But it does have real consequences and secondary implications when you crack down on that tea laundering, it's not a good thing, I think. So I think this is by far a good thing.

Zongjun · 39:06

But it doesn't mean that it doesn't have secondary consequences. And I think it's a universal good thing for specialty matcha because it's going to force China to lean into their own product and find new markets for theirs and advertise it as a Chinese product and that it is indeed high quality. And it's going to force the Japanese tea industry to be a little bit more honest.

Ryan · 39:25

But you know, it also shows you that Japanese tea doesn't like historically, they care about capacity. Like you think about all these blends and flexibility, right? If you're not revealing which cultivars or what actually goes in a blend, it gives you a whole lot of options.

Zongjun · 39:40

And consumers cared about consistency that it tasted the same. No one was really deeply caring about provenance and a legacy of that. When you find new markets in a more cosmopolitan, global contemporary culture where we do care a lot about the food that we put in our bodies, it doesn't matter well over because it's.

Zongjun · 40:00

So hard to have verifiable provenance in Japanese tea. And it's kind of the whole tea market needs to transition from very domestic Consumer Focus to very contemporary global export focus across their whole tea supply chain.

Zongjun · 40:18

And it just, it's exposing these gaps. It's part of the reason why I think Uji matcha will never be GI'd, just all the political controls fighting against it. The whole system is fighting against this concept because no one cared about it. So that's where power concentrated and kind of how the cards fell.

Ryan · 40:36

And now you're left with this Tetris board with very few pieces left to maneuver. And that's already built up so high. And I think this is the best they can do as a Countrywide 1. Yeah. If there's a lot of legacy to baggage inertia when you're trying to push for this, you know, new mentality of viewing and appreciating products. And in that sense, I think China is very uniquely positioned in a way that it's.

Zongjun · 41:03

So it's much easier to do that. When we were in Canton Fair, all of these, you know, what used to be green tea producing regions are now doing matcha and they're being super transparent about their own products, where they come from, where that gets processed, or if they did end up, you know, importing materials from other regions, they will tell you to.

Ryan · 41:23

But this idea of regional product is baked in in the beginning. Yeah, from the very beginning with global export markets in mind. But you know, they're also there's some hope too in the Japanese tea industry. You know, these single estates, it's the single farmers are are revolutionary.

Zongjun · 41:38

Someone in Uji had to decide for the first time that they were going to create a matcha product from Uji itself doesn't get blended. And the moment you have the single estate, single origin, let's say like a Suji san for a Kawasaki Chimizu, right, it makes you wonder what all the other uji matcha is. And you have two very incompatible system 1 E 1 W commingling.

Zongjun · 42:04

And they're basically competing narratives. And as soon as those commingle, the system kind of breaks. You have these like it's, you know, uji matcha. It is not a single origin product, but it also is. But the only way that material that's actually from Shirakawa or from Gokusho can advertise itself because tea is a business, is by saying this is the thing from the place.

Ryan · 42:27

That's the most interesting thing about that material. But you know the farmer, you know the place, you know the verifiable provenance. Well, it's difficult because for them to say so and for them to sell their own tea, they frequently end up getting threatened at their historic historical procure us. It's a one way door.

Zongjun · 42:47

You can't these large tea companies very easily. And farmers in these regions are hesitant because they are afraid that, you know, this demand from, you know, the global market might disappeared because like these legacy tea houses are stability like they have been paying and buying for so many years. And there is a level of of trust between these people. And now you know, you're breaking it because, you know, a new system has occurred.

Ryan · 43:16

Like do you convert to the new system? You know people are waiting. So we'll see what happens. It's something that's moving fast and we're going to keep reporting on it. We have some very rare opportunities to report, quote UN quote, breaking news.

Zongjun · 43:28

Well, guys, happened about last week. I think the solution is, you know, show them the money. Yeah, buy more tea. Yeah, we need to. We need to support all the farmers who took a very brave step into trying to sell their own tea from their own place and with a verified provenance. That's right.

Ryan · 43:46

So it's a future we can get very excited about. Thank you so much for listening. If you enjoyed this, please consider sharing with a friend and we'll see you on the next one. See you in the future.