New Culture Creation & End of Season 3

Ryan · 0:00

Hello Ryan from the future here. Apologies, we had a slight audio issue with my track, had a slight echo. We've tried to remove it and just nothing's working. Apologies in advance. Thanks, and welcome to the Specialty Matcha Podcast. My name is Ryan.

Zongjun · 0:13

This is Zongjun Li, who also goes by Sam. Hello. Hello. And we're the cofounders of Sanko Matcha Products. Yeah, we launched this podcast to discuss learning journey matcha, share startup stories and interview experts, and today's episode marks the end of Season 3.

Ryan · 0:28

Yeah, I believe that, Ryan. I know over what was it, 75 episodes nearly almost every week. I think we did one or two weeks off, but I can't believe we've kept this going for so long. Yeah, it's been a long time. A lot of people came up to our podcasts, discussed their journey, share their stories, and we also share a lot of our own discoveries throughout the journey.

Zongjun · 0:51

Yeah, we learned a lot in the season and we were reviewing all of the episodes that we had done and we really think we came a long way. We're very happy with the progress that we made in Season 2 and with the guests that we were able to invite to come on the show.

Ryan · 1:04

Originally, we probably never thought would have agreed to come. So that was really exciting and just hearing everyone's reaction both to the community and the work that we are doing at our other company, it's very exciting and validating. Yeah, kind of feed.

Zongjun · 1:17

Them and getting their stories and their reactions in this very interesting time that we are having right now. Matcha shortage, global trend of matcha that is booming. All of these, you know, conflicts between, you know, manufacturers, tea farmers, consumers.

Ryan · 1:34

So much drama, so much drama, so much fun. It's almost like watching a drama TV show. Yes, from our angle a little bit, but well, we are kind of the characters too. So we thought the perfect way to put a capstone on Season 3 is to look backwards and talk about this new culture that's forming within the global Matcha community, which is very different, different than anything that's existed before that has caused this shortage, but it's also going to lead path into the future.

Zongjun · 2:02

So we wanted to do a more like meta analysis from a lot of the interviews that we had done and hearing different perspectives and kind of distilling in that down and synthesizing it. But before we do that, I have a question for you.

Ryan · 2:15

I recently looked up our stats. I'm from our podcast host. And how many unique countries do you think listen to this podcast? Oh, interesting question unique countries. Does it cover all the continent? Yes, yes. Wow, getting popular, Ryan.

Zongjun · 2:30

I'll just give a random guess 20 it's. 8383 one click from 83 different countries. Oh wow, you know the number one country. United States. The US and top three What do you think the next two are was. Probably somewhere in Europe, maybe.

Ryan · 2:47

No, no, no. Yes, yes, sorry. Like France or Germany maybe? OK. And then Australia. You can. Illustrate. So I mean English. English speaking channel makes sense. So that's exciting, That's encouraging. Thank you, guys. Thank you.

Zongjun · 3:01

Thank you for all the love. Thank you very much. We couldn't do this without you. We wouldn't do this without you and we would have given up long ago if we weren't able to find their own community of other very like minded people, which has been very gratifying. Yeah, community is a good word to put it together because it's really the foundation of this new culture that's being created on top of, you know, all of the historical culture and legacies that matcha has been brewing across, you know, different countries from China to, you know, Korea to Japan. And it's really thriving globally right now. Yeah.

Ryan · 3:35

And you know, and these are places probably in the world when you look through this country list, if you wind back the clock 5 or 10 years, no one really probably knew what Matcha was or cared about it or had any deep sense of preferences.

Ryan · 3:49

But like, it is like really important to reflect in general just how new this culture is of people wanting to drink matcha and have and to drink matcha every day, which is the perfect segue into this topic. So Zongjun, Sam, you were the one who came up with this topic. So can you share a little bit about what your initial thoughts were?

Zongjun · 4:10

Yeah. So, you know, we've been making a lot of analogies between matcha and, you know, coffee and wine. And if you look across, you know, time and history and, you know, different countries, there is a very clear lineage of how different drinking habits, drinking culture evolved from time to time related to their local, you know, culture, their local cultivar, their local terroir, their local interpretation of the very beverage that they appreciate. And we are kind of seeing this happening like on time right now for matcha.

Zongjun · 4:43

Like imagine that there is Internet, there is a coffee podcast, you know, 2 or 3000 years ago when we are observing coffee stepping out from Ethiopia or Yemen to other countries throughout the silk road throughout trading and people starting talking about this, you know, magical black beans. It's happening right now too much and we are seeing it and we are seeing it's very infancy.

Zongjun · 5:10

It's, you know, a couple 100 or like maybe a couple decades later, we look back and examine the topics that talking about right now. Like, like people are literally debating over whether or not we should add milk into matcha.

Zongjun · 5:24

That's like a hot topic, a hot debate. Like people will probably laugh and be like, you know, that's kind of, you know, a childish to argue about. But you know, like this is, you know, reality that we're living in. This is a conflict between this new culture versus the old culture.

Ryan · 5:41

This is a conflict between the new drinking habit versus the old drinking habit. And this is the conflict between you can almost say the new kind of beverage versus the old kind of beverage. Same form but different spirit.

Zongjun · 5:53

It's still matcha, right? But it's taken and completely removed from its original context and found deep cultural resonance in many of other ways. That's that's very true. And you know like right now we are seeing this whole matcha shortage happening right now because it's really shortage of top quality matcha in Japan. A bad matcha is not in shortage, you know like lower quality, more industrial level matcha are you know, being manufactured in Kagoshima in China or even in some countries in Southeast Asia.

Zongjun · 6:28

But we are seeing a it's, it's a slowly happening, surely happening, that happening dynamic shift of, you know, who hosts the narrative to define matcha in this world. It has been Japan historically and has to be largely Japan.

Ryan · 6:46

But, you know, as we are, you know, seeing this manufacturer power being offset to other territories, as we are seeing this appreciation and consumption of matcha being offset to places outside of Japan, we're inevitably going to see a discourse or a narrative shift that is no longer controlled by a very small group of people inside Japan for centuries. In a formerly heavily isolationist culture that was not open to the rest of the world at all, especially during Matcha's infancy as it was becoming a much more rigid ceremony and culture even within Japan. Like it grew up completely isolated from the rest of the world in a society that was

Ryan · 7:32

virtually isolated from the rest of the world and actually started to undergo some major changes when Japan opened up during the Meiji Restoration, through the Industrial revolution, through modern times. There's actually a pretty interesting argument that matcha is this ever changing, continuously changing thing.

Ryan · 7:51

You can trace back the lineages. And it just so happened that the first international audience to become exposed to matcha 20 years ago, 30 years ago, was through the context of tea ceremony, largely in part because the Japanese government had such effective policies at literally having it be the item or the focus or the ritual or the embodiment of Japaneseness.

Ryan · 8:14

They had it through policies where it was taught to an entire generation, multiple generations of young girls as part of their formal education. It was the topic of TV shows. It was the cultural exchange element. When shine, excuse me, when Japanese ambassadors will go abroad, right? Like, what are the cultural things they bring with them for these exchanges?

Ryan · 8:36

It's tea or when people go there, and there's a lot of good reasons why it encompasses Japaneseness. But if you separate out the tea ceremony and the culture that has evolved within Japan away from the product of the beverage itself, which actually I think is a very fair thing to do, and it's now being consumed by an entirely new group of people in an entirely new way. And now, like, that sounds very threatening. It sounds very disruptive to the world, to the very traditional world that still exists within Japan. But you know, Sam, you see all these commentaries and we've, we're trying to source matcha

Ryan · 9:16

right now. We're like knee deep in sourcing matcha. And I'll be honest, it's extremely difficult for any of the matcha founders out there. Like, you know exactly what I'm talking about. People will not promise volume. People don't know when they're willing to sell it, how much they're willing to sell it.

Ryan · 9:31

More than half of the people you're actually reach out to say they're not open to accepting any new clients, any new customers. And it's an extremely difficult position. And we've also heard stories of a lot of tea farmers not liking all this volatility.

Ryan · 9:46

Not liking this fluctuation is being called the matcha boom within Japan, and they're just putting the brakes on. We've even heard of a factory that has stopped milling matcha until the price volatility drops. So you have people not contributing to the supply, which probably makes the volatility worse.

Ryan · 10:05

And you have these weird set of independent actors and agents, right? Farmers can do whatever they want. That farmer can do whatever he or she wants. But when you have all of these people in concert wanting to pump the brakes on during this matcha boom, it is actually making the situation a lot worse for people trying to source it and to have it like a product that people want to drink. And you hear these farmers saying, I can't wait until this boom is over.

Zongjun · 10:30

But is that a good thing? Yeah. What about this new culture that has existed within Matcha? Yeah, I think the core problem here is that these farmers or these two groups of people, like the consumers and the people that are, you know, working on matcha, making matcha and, you know, calling this whole matcha trend as a boom and wanted to put a brake on this whole, you know, rolling train.

Zongjun · 10:58

They don't necessarily talk to each other. I think that's the problem. They don't understand each other. They don't talk to each other. They don't actually care about each other. Like matcha drinkers wants to drink more matcha, but these farmers wants to take a break. They are tired, which is very understandably, you know, true picking matcha process is tedious. It's hard.

Zongjun · 11:19

And these farmers are they're getting old. They're very old. They are very old. And there's very little people, you know, wanted to take over their business. They're like, like if I put myself into their shoes, like I want to retire soon.

Zongjun · 11:33

And actually the Japanese government, I've been doing some research, I think it's 2014, I came across this reference material is a promotional material, a promotion strategic plan for promoting Uji Matcha and Uji tea in general let's put out in 2014. And if you look at the tone of that document, one like they're very aware farmers are aging out, don't have a secession plan.

Zongjun · 11:55

They're worried about the exact problem was their solution back then. They're worried about there not being enough demand and they they got way more than they wanted. And actually it's pretty interesting. They, I think if you're under 45 years old, that's what's considered basically considered a young farmer, by Japanese standards.

Zongjun · 12:13

I wouldn't classify that group as like a young farmers. So they get around a 10,000 U.S. dollar equivalent tax credit for the first five years. That's how badly they want new people entering this industry. And now they're suffering from their own success. Well, I guess that program wasn't successful enough, and they were talking about keeping the landscape pristine, setting up viewing platforms so that people take photos. They wanted people to come and have this be like a very unique cultural landscape escape and cultural legacy to build up international demand.

Ryan · 12:47

And now it has happened and the industry isn't able to keep up with it, which we totally understand. 20 years later though, imagine like this happened 10 years later, I mean imagine this boom happened like at that time I'd probably be happy, but this? Sentiment, that of waiting for this boom to go away, I think is not the right sentiment.

Ryan · 13:07

Yeah, it's not. Like it's it's new culture. Creation is what's actually happening and what are the ways in which that new culture can be killed. It's matcha getting too expensive, which is happening, which is going to cause a bunch of people to not form the habit of drinking matcha on a regular basis.

Ryan · 13:28

And that is what's going to have them fall off the trend. And the people who are left are only the people who are able to afford to drink it, right. Like you're, you're, you're churning through all of this really interesting new culture formation around people wanting to form a this relationship with this beverage and something. And this is part of the broader reflections of season 3. Erin from Matcha youth.

Ryan · 13:54

She's based in Australia, said one of one of the most profound things that has been resonating and echoing in my mind ever since we did that recording. She does a lot of markets and then has a lot of consumer interaction, these gigantic markets of different products where you have a lot of chance to give people samples and talk to consumers.

Ryan · 14:12

And she said the number of people just in the past few years who are young teenagers, mostly girls, but not exclusively come up dragging their parents saying like mom, dad, try this, I love this. I want this to be part of my life. And they're completely skipping over coffee. You have a whole generation in many different countries in the United States and Australia and all throughout Europe and all these different countries that are entirely skipping coffee. Think about what it means to go from being a child to entering adulthood.

Ryan · 14:42

There's many things that happen over that phase, and forming a relationship with caffeine is like one of the first steps to becoming an adult. And if you're skipping coffee and forming that with matcha, we have an entire generation of new consumers that want a different source of caffeine because it makes them feel better. Maybe they're caffeine insensitive. Maybe they like the color.

Ryan · 15:04

Why do we pass so much judgement on the fact that people find matcha beautiful? You know, no matter how you appreciate it through, no matter what sense or what the taste, the smell, the color, the history, no matter how you're appreciating it, Why are we passing so much judgment and viewing these people as tasteless?

Zongjun · 15:25

Like, this is a good thing. This is what Matcha needs. If you look at the number of tea ceremony practitioners, I think it's in the like the last 15 years, they went from 2 million to 1,000,000 in Japan. Like the tea ceremony community in Japan is literally dying and there is no hope of replacing these people. There's not enough people interested in matcha or in tea ceremony.

Zongjun · 15:47

It is a structural decline and will eventually probably stagnate out at a very low number. It is not enough people to support and prop up this industry in any rich or interesting ways into the future. The future of Matcha traditional methods, innovative methods like the whole campus relies on bringing new consumers into the fold.

Zongjun · 16:12

And if the industry isn't able to keep up, you're just gonna be left with the richest, which is like, not a good or interesting future. Yeah, there are many layers of this whole new culture creation movement and the supply of matcha, indeed, this is like the foundation of this movement, right? Like without matcha to drink, like there will be no culture associating with matcha.

Zongjun · 16:37

And if, like you say, Ryan gets too expensive, so people become less, you know, exploratory, like there's no culture to be formed right there. Like there's no to be discovered. There's no new cultivars to be tried. That's that that's really, you know, concerning in the sense that, you know, like a lot of these, you know, producers in Japan are, are holding off their capability to continue this. I think the core problem really is that these farmers are not really part of this cultural creation process yet. They've never been part of the part of cultural formation. It's really important.

Zongjun · 17:19

I think now that we are talking about it, we need to start to find ways to connect with these farmers and loop them in like this is a thing, this is a trend, this is a culture that's happening globally. And make them feel that they're a part of this global community. Make them feel that they're part of this something, that this is something bigger than Japan.

Ryan · 17:40

This is something bigger than Uji, bigger than, you know, their local village, their local Township. This is, you know, like something that you know they can, they can feel proud of like telling their kids or like we can feel proud of telling our kids that, you know, this whole communities across the world are working together to create something delicious. Actually, and you see success cases of that. I mean, look at Obubu tea farms, look at the cultural exchange that goes on at Obubu in Wazuka, which has a wonderful internship program which brings in people from all different countries from all over the

Ryan · 18:15

world to come learn and process and pick tea for months on end. Like they're really become part of the community in Wazuka. And then they go off onto their life and they think about the wonderful ambassadors. And they recently did an event during Paris Fashion Week that I came to where when one of the founders of Obubu Tea Farms, Matsu-san, presented and did a collaboration with a brand called Gentle Artifacts, and they were doing tea ceremonies in Paris.

Zongjun · 18:40

But he also brought, like, his whole family. They were like, it's exactly what you said. Like people can see and feel people interacting with the tea in these new and unique places where this culture is being formed and where it like, it's in some Fashion Week.

Zongjun · 18:56

Like really cool crossover between tea ceremony and fashion and photography. In a place like France, this is exactly what needs to happen. And like, this is not a scalable thing for most tea farmers. Historically, tea farmers are suppliers. They're ingredient suppliers until about 20 years ago. They're like corn farmers in the United States. Corn farmers are commodity ingredient suppliers. They someone buys it.

Zongjun · 19:24

We have no clue who grows the corn or the wheat or the barley or anything, right? It's very different than really rich specialty movements, cheese, for example. Like there's a lot of independent cheese makers for wine or coffee after the 3rd wave, for example, where you know, you have a much better sense of where your food came from and a culture can start to grow around that, right?

Zongjun · 19:49

Like now you have a bunch of like all of these communities all over the world, from Thailand to Indonesia to the Philippines to Australia to all over the US and Europe and the Middle East and South America in Africa. Love Matcha? You're missing the, uh, the other 70 countries from continue continue.

Ryan · 20:11

But like, I mean, there's some real appreciation for this, right? Like, like, if you put yourselves in like a radical empathy experiment, maybe there's some high schooler in New York. He or she has no clue where matcha came from.

Ryan · 20:23

But they really like their matcha that they get from Blank St. And it helps them fit in with a group of friends that also happen to really like matcha. They don't think coffee's cool anymore. Why are we passing judgment on on that person, on that kid?

Ryan · 20:38

They're just like these innocent people that like this and they could be matcha consumers for life. These are habits that people bring into them with adulthood, especially if this matcha makes you feel better, You get caffeine. It's a much more pleasant caffeine profile. It's and it's healthy.

Zongjun · 20:56

It's it's kind of crazy. Yeah, yeah, yeah. But you know, at some point or to some extent it's on the it's understandable because like we are literally seeing like this first wave of global like serious matcha drinkers like.

Zongjun · 21:12

So new. Imagine like we are seeing the first group of like global coffee drinkers that are right now talking about different waves of drinking coffee like that. There's obviously going to be different degrees of sophistications in in the ways of how people form the relationship with this beverage or how to interpret it, this beverage.

Zongjun · 21:35

And I think like to some degree, why did like the legacy or the traditional macho community feeling threatening is that a lot of these newer ways of drinking matcha is to some degree deconstructing the seriousness of matcha, which is really the vehicle that carries their, you know, traditional and ceremonial culture. But you know, like as the drinking culture of Matcha evolve, just like, you know, Third Wave coffee or natural wine movement, we are going to see a very sophisticated new macho drinking culture being formed. It's just like so new right now.

Zongjun · 22:11

All of these people are getting their first exposure to this beverage. And once this movement becomes large enough, there is a 100% chance someone is going to do something stupid. That's just the nature of having humanity be interested in a thing.

Ryan · 22:26

Yeah, that one Instagram video where that girl has this gigantic plastic bag that must be like, at least a couple liters large and like, it's sipping around this matcha. Clearly a stunt for Instagram. Probably ended up dumping it.

Ryan · 22:39

That video has gotten so much hate and has been like the poster child of what's wrong with matcha today. Why can't these consumers just appreciate matcha for what it is and what these farmers are doing and all of these things?

Zongjun · 22:53

Like, if you really zoom out, we sound like a bunch of old grandparents, their children, as if we do not understand what their experiences are like, Just how like, you know, grandma and grandpa were probably yelling at their kids in the 60s and 70s about all of this horrible noise, which was like, The Beatles or something. If like or like rock music.

Zongjun · 23:17

Yeah. Like. Well, like it's it's angered, triggered by, you know, not be able to control these people, right? Like these old authorities no longer have controlled over the discourse. Like the matcha has been internationalized. Nowadays they are free.

Zongjun · 23:35

Like it's no longer a top down culture creation like the, you know, major restoration, like the the idea of creating Japanese Ness, right? It's no longer that it's becoming a grassroot movement. Like people are creating their own culture. And there's no a single authority that has the power to tell people what to do anymore.

Ryan · 23:55

Yeah. I mean, look, I think it was in the 70s, there was like, like an actual US Congressional committee looking at whether or not Rock'n'roll was like trying to control the minds of young people. Like you can actually look this up on YouTube.

Ryan · 24:11

And actually, some of the people that they called in to give testimony did a fantastic job trolling these people who are asking them question, who are basically these old, like men, like giving them a hard time, saying that they just make too much of A racket. Yeah.

Ryan · 24:27

Like to some degree it shares a lot of similarities to matcha. So this is a very unpopular opinion and taking this out of context and actually this is a very unpopular perspective. Sam, how would you react to this see of the new Matcha brand?

Ryan · 24:42

And part of their mission is to get people to at least appreciate the history of matcha, where it came from, the culture around it. Why does their consumer need to have that appreciation for this thing, to that buy? Do we put that bar on anything else?

Zongjun · 24:59

We don't put it on coffee or wine or any food or beverage or any other tea for that matter. Every time you have a bubble tea, do you need to appreciate its Taiwanese origins or something like that? Why is that what we're demanding of people? Well, well, well, that there are different, you know, I would say seriousness of within that exists within within these beverage categories like bubble tea, but you know, it has tea in that, you know, that I think that's the only similarities between, you know, a gongfu cha appreciation or a Chinese tea ceremony appreciation.

Zongjun · 25:41

Like you of course, will have, you know, standards and, you know, judgments in the gongfu cha kind of scenarios, but you don't necessarily impose that to to bubble tea. You know, similar things happening in, you know, coffee, right? Like you have all these serious third wave coffee brands and at the same time you have like, I don't know, G7 Nespresso or like instant coffees, right?

Zongjun · 26:09

There are different levels of seriousness even exist even within the same product category. And I think that will also happen in matcha. I think it has already happened in matcha, right? Matcha latte is going to exist into eons in the future as long as people are still making matcha.

Zongjun · 26:26

And that doesn't inhibit the cultural formation of a more sophisticated matcha culture. That's, you know, that cares about single origin, that cares about the cult of art, that cares about the processing of farming techniques.

Zongjun · 26:41

These are, I would say, the part of this new culture creation that has the potential to replace people's, I would say the exploratory demand to understand a beverage in 80%. I think that would, you know, be be be a good substitute for people to, you know, switch back and forth between, you know, the traditional tea ceremony versus the this new matcha drinking culture. And I think that would eventually earn respect to from the traditional as the matcha ceremony practitioners that people on the other side of the matcha drinking spectrum are not just dumping matcha into a one liter big jug and you know, splash it around to do some take

Zongjun · 27:30

out videos. I think this new culture at some point needs to also have standards too. You know, like kids are going to do like stupid stuff. But I think, you know, in the traditional context or in this new matcha movement, it will be, it's not OK to dump like a home source shaded Asahi into a big jug and then, you know, like, and then use it to do some kind of, you know, clickbait material. I think like people still need to have standard. Yeah, Well, I think one of the biggest problems is creating stigma.

Ryan · 28:03

You have all of these people spending all of their energy and effort trying to convince people that, for example, matcha that's grown in China isn't real, it's fake, or that matcha grown in Korea isn't fake. Well, there's a horrible reality for these people. If Chinese quote UN quote matcha disappeared tomorrow, we would be talking about a very different level of shortage. Japan produces 4000 tons of matcha a year, a little bit more.

Ryan · 28:32

I think this year it's just under 5000 tons projected or 4 around 45 or 4.5 metric tons. There's one company, just one company in Guizhou in China called Guizhou. It supposedly produces more matcha than the entire country in Japan. If they were to disappear tomorrow along with every other Chinese producer, how in the world is anyone going to be able to drink matcha?

Ryan · 29:02

Even, like Starbucks matcha, which is everyone's first cup of matcha, like a lot of people's first cup of matcha is not a product that's just from Japan, right? Like, now you've lost your ability to onboard new consumers. You've lost your ability to have it priced in a reasonable way. Right.

Ryan · 29:18

That's not an interesting or dynamic future. That sounds like everything is about to get way, way, way more expensive. Yeah. Like, beyond what anyone could drink. And the majority of this matcha, it's going to a place where no one cares where it came from. No one.

Ryan · 29:35

It doesn't matter to those consumers. They just want something that looks and taste like matcha, and it kind of is. And we spent so much time stigmatizing Chinese matcha, culinary grade matcha, like all of this stuff. And what we've done now is because there's all of this stigma and there's a lot of companies out there that will tell you that Chinese matcha is fake matcha. It's driven everyone to the products that they love, which is like their Marukyu Koyama and their big famous blend houses. All of this Fuji matcha, all of this Yamai matcha. And now there's a shortage of good matcha for people that don't appreciate it because they

Zongjun · 30:16

want to drink of a better thing. And now that they've been educated that it's better, now that's what they want. And like, I don't want to drink fake matcha, do you Sam? Yeah, but you know, to to to a very large extent, I mean, like Chinese matcha do deserve its bad name.

Zongjun · 30:32

Like a lot of them is like really, really bad. We had the experience of drinking a lot of them. But you know, the quality, the ceiling of Chinese matcha is visibly getting higher and higher every day. And it will get higher in the future, right?

Zongjun · 30:47

Like at some point we're going to see, you know, very high quality matcha being farmed outside of Japan. You know, not just China, like Korea or even places in Southeast Asia. It happened to, you know, wine like different, like very high quality, you know, grapes, you know, you name it Cabernet Sauvignon or Gracio, like being farmed in different countries that kind of, you know, infused into the local terroir and develop its own unique flavor.

Zongjun · 31:14

I think that that will eventually happen to matcha as well. And, you know, stigmatizing it or calling everything that comes outside of Japan, you know, fake, I think doesn't necessarily do anything good to, you know, the community. You know we are going to need matcha coming outside of Japan in the future.

Zongjun · 31:33

There's one thing that's very certain is that Japan is not going to be able to keep up and it's going to be a good thing for Japan because someone needs to be able to service the bottom of the market or the top of the market.

Zongjun · 31:45

It all needs help. There's just not enough supply. And someone did a David from Tezumi did a calculation recently that he put out on his newsletter and I think he estimated around 1,000,000 people who can drink one matcha, one serving of matcha every day. That's how much tea Japan matcha Japan creates. And I, I did coincidentally had did the same calculation a few days before that came out.

Zongjun · 32:08

And I came up with a number depending on what assumptions you make. So it's around 1 to 2 million people. That is not enough matcha for the entire when you really zoom out. Yeah, compared to like coffee drinkers or wine drinkers, that's like less than .1, less than 1% probably.

Zongjun · 32:27

I don't think Chinese matcha is threatening to Japanese matcha at all. I think it's highly complementary, right? As the market gets more educated and people start to learn and have developed different preferences, right, The Japanese then can charge more for their product and it's the quality for an average like matcha latte Matcha blend in China gets better and better and better, which it is every single year. Then it allows the Japanese to do with their best at really focusing on creating the best possible product that they can and very interesting.

Zongjun · 33:04

So like for example, Suji San from Zenki Matcha, I'm not to be confused with the Suji San, the the Uji Matcha farmer, rock star Uji Matcha farmer. He said that, you know, in his experience sourcing tea and his experience just being a Japanese person in general, they're much more product focused and consumer focused. Like these types of traditional industries are about creating the best product that they can for their pride, for their family's pride.

Zongjun · 33:29

And it's not the best product is not necessarily what consumers want. So like, that will always have a niche to exist in. But if we lose the momentum of growth within the matcha industry because there's not enough supply that can keep up, right, That you lose this gigantic pool of consumers that could be interested in that in 10 years or 20 years or 50 years.

Zongjun · 33:56

And those people are not going to be in Japan. Like matcha is not cool. So like it's dependent on creating people with deep pockets and deep preferences abroad. And you constantly need to regenerate these people. They need to have interesting things. If there's no dynamism in this industry, it becomes stale, It becomes stagnant.

Zongjun · 34:16

It's the same stuff that just keeps getting more and more and more expensive. I already feel like the the the price increases now are insane. I don't know, even as someone who likes matcha by buying way like significantly less and I'm searching for better and better value.

Zongjun · 34:34

And like it's, you know, it's quite sad and I think we should stop stigmatizing this and I think actually Japanese companies or Japanese people should start making investments in other places to increase the supply. We tried a matcha recently that sells for thirty U.S. dollars a kilo wholesale that if you're a matcha brand and you're trying to source this, that's how much it costs.

Zongjun · 34:55

I tried it in an iced Americano a few days ago and I it's something that we had fresh milled on our machine. Honestly, it was good. I would buy it and drink it and it is better than any a matcha Americano that I could find. 95% of the device is in Paris and it costs pennies like.

Zongjun · 35:13

That's a good sign. It's a really good sign. That's a good sign and it's important, and it's not threatening to Japanese matcha because we need new consumers and they're not just buying one thing. Look at any of these matcha consumers on Instagram, for example. They're constantly buying and tasting new things. Everyone's in a heavily exploratory state. Yeah, this is still very largely a blue ocean market. Like every day there are are new matcha drinkers, you know, start drinking matcha.

Zongjun · 35:41

And right now people should really be focusing on how to get, you know, more supply versus how to divide the pie, you know, for different segments. You know, like I feel like the title of this episode should should be revised into new cultures creation.

Zongjun · 35:57

There's not a single culture being formed right now. You have different people caring about different stuff. It comes back to the topic of what do you care about episode that we did a while ago, right? People care about different things and people have different priorities, like people have different demands. It's not a single culture being created in this new matcha movement.

Zongjun · 36:21

Like you have these matcha beverage drinkers, you have these, you know, single-cultivar matcha drinkers. You have these, you know, very traditional, you know, ceremonial matcha drinkers. Like all of these cultures are coexisting and evolving at the same time and growing at the same time.

Zongjun · 36:38

If you are a, you know like matcha cafe owner that sells 90% matcha latte, go like talk to your Chinese supplier, like tell them that you know you want higher quality matcha, you demand XY and Z from your matcha. Like if you are a single cultivar, new matcha brand, you know, go explore into the countryside of Japan, go find new interesting tawa. Go source more tea from different areas. Go talk to farmers.

Zongjun · 37:06

Get the farmers a stage to talk and share and be proud of their like loop out of the segments, you know, within your community and you know, do what you best at and do what you care about. I think this is what needs to be happen in this, you know, new cultures creation. Yeah, and we're not just saying it. We're we're about to go do it tomorrow. We leave for Korea to check out the matcha scene in South Korea, and then we're headed on to Japan to do more tencha sourcing.

Zongjun · 37:36

It's very fun, but it's also extremely challenging at the moment. And, you know, the Japanese tea industry also needs to change. Like who can buy tea at auction is just, it's crazy. Like basically squeezes out. You have to go to a middleman. You have to be a Japanese almost. Even if you're in Japan, you can't get access to these auctions.

Zongjun · 37:56

So that's a huge structural barrier for like creating value on top of the system. And then also like tea farmers, like I also think need to treat the people that they supply a better. And this is not me being frustrated. By and large, the people that we met are very nice. But I've heard a lot of stories from a lot of matcha founders from all over the world.

Zongjun · 38:19

And I would say it's not an unfair characterization to say that at large compared to other industries. If you are we want to start a matcha brand tomorrow sourcing from anyone in Japan. They are very unreliable suppliers that do not treat their customers very well.

Zongjun · 38:37

They don't give them predictability. There are very large price changes. Like everyone is being so cagey. And, and I'm sure it's for different reasons. I'm sure it's some people, it's greed. I'm sure for some people it's confusion. I'm sure for some people, it's like there's too much going on. We're just hitting pause and waiting to see what happens. Some of it is waiting for other people to move first and then see like after one of these big blend houses increase their price prices and see, OK, how much are they doing. And then we're going to try to fit in. Like there's all of these dynamics going on. But like it is, if you built

Zongjun · 39:15

your business, small business on Macha in the last 10 years, you are not being treated very nicely from an objective standpoint. And there and thankfully there's a lot of mutual respect. So you don't hear these people going out and trash talking their vendors, but it is going on behind the scenes and it is, it makes us double click.

Zongjun · 39:37

Is that the business we want to be in? We've had some serious reflections about whether or not we want to be in the tencha sourcing business you have, it's very capital intensive and it's extremely unpredictable if you can even find someone to sell you a good product, right?

Zongjun · 39:54

Actually, something very interesting has changed even in the past few years. It has moved from let me find a good product to let me find anything like who will sell. Something to me and that at least is reasonably tasty enough and it's, it's not good. It's really hard on all of these small businesses that have played into the global success of educating their markets and have basically created their own failure, collectively at least well.

Zongjun · 40:23

I mean we, we are at a very interesting point of history as you know like all of these trends and demands and the market is evolving and you know we are literally in the sack weight of moving into different directions, possible directions of a match of future, right like we can, the future can literally be thriving or dying depending on the decisions we are making right now. Collectively, as an industry is the worst thing that could happen is that Japan doesn't produce enough. Everyone continues to stigmatize matcha coming from other places, creating lower demand for those products. With that lower demand for

Zongjun · 41:03

Chinese and Korean and other countries matcha, then what happens is that everyone's going to flock to Japanese matcha. Japanese matcha has tons of structural problems and they're not going to keep up with supply. This is certain. Even with all of the efforts that are going on in Japan right now to make tencha factories and convert other fields for tencha production, etcetera, etcetera, it's not going to keep up. It's going to get outrageously expensive. Then people will stop being able to afford it. They will not form the habit of drinking it every day and the only people who are left holding

Zongjun · 41:41

the ball are extremely wealthy who can continue to afford drinking it. We've priced out cost sensitive tea ceremony practitioners. We will have effectively it then every matcha that you take, every good matcha that you take is a bigger bet. If your can of matcha now costs $80 versus $25.00, it better be good.

Zongjun · 42:05

And let's be honest, a lot of those products are not going to live up to people's expectation at that price range, right? The cost equality ratio that's in people's minds right now about how much money they're willing to part with for a certain quality, for a certain flavor.

Zongjun · 42:22

That equation needs to change for a lot of people and for a lot of this mid tier matcha. It's not going to make the cut and then it's going to cause even more churn within this industry. Yeah, and you know, in the age of Internet, people do move fast.

Zongjun · 42:40

You know, if they cannot find the same exact excitement so coolness anymore in a product or in a culture, they are going to move on. And all of these pessimistic people will have been right. It was a passing trend. Yeah, that would be a very sad future, Ryan.

Ryan · 42:56

Very sad future. But it's totally possible. And on the other side of the equation, we can embrace new culture, we can make investments in other places and finding fantastic product in other regions like China, like Korea, like Thailand, places were people are have the total capacity to grow very high quality tea.

Ryan · 43:19

It's just a knowledge barrier. There is fantastic terroir and growing conditions and just general deprocessing knowledge just within China alone. It can really help solve this problem to keep the prices down by increasing supply.

Ryan · 43:36

So there's a future where prices for matcha and supply for matcha can go up and prices can go down and all these interesting things. We can we can explore the different Chinese cultivars that might be very suitable for making tencha and then into matcha when they go through some form of shaded cultivations back to matcha's original roots.

Ryan · 43:56

We can have all of these specialty products that can exist or non specialty products, commodity products, quote, UN quote, good enough matcha, that sweet spot that you know these businesses survive on right now you have cafes that are specialty coffee shops that are doing over 50% of their revenue in matcha because their customers demand it.

Ryan · 44:17

It is a stupid business decision as a Cafe not have matcha. It's like a self fulfilling prophecy and it can have a real doom loop. And we're very, very, very concerned, especially with a lot of this judgement. And we don't want everyone to be right that it's a passing trend for Japan's sake, whether or not you're on like team international consumer or team Japan or team China or whatever, team tea ceremony, team matcha latte, no matter what, like perspective you take on what you care about, right?

Ryan · 44:50

Like it's really important that the price is affordable, that there's a large variety of options, and that there's these rabbit holes to go down that are new pockets of rich and interesting culture. Whether or not it's matcha lattes, whether or not it's the specialty matcha movement, exploring different cultivars and growing techniques, whether or not it's using culinary applications.

Ryan · 45:16

This is all this whole interesting world of communities that are forming in all of these pockets of the world that are just like you cannot understand what's going on until you've been there and you've done that. Yeah, yeah, very true.

Zongjun · 45:30

And all of these cultures cannot be sustainable with overpriced matcha or shortage of matcha. And this is I think the, the, the, the tired and very critical in like cross industry and cross community problem that we need to, we need to hold our hands and solve it together. Whether or not is the, you know, the solution is to loop more people in within Japan to start more cultivations or to expand, you know, the production outside of Japan. I think like we need to start like yelling at each other, criticizing each other of their ways of drinking, or treating matcha versus we should solve the problem together as a whole. A lot of the people too that are

Zongjun · 46:17

like considered industry experts, I think could do a better job at not stigmatizing other things. I can't tell you, I've told this story about this $30 per kilo wholesale price matcha coming from China to a couple of people now. And the first thing that so many people say be careful, be careful, be skeptical of products coming out of China. And they're right, but also they're kind of wrong. If you read through some of the matcha shortage comments and people are like, oh, we need to start growing it in the US, We need to take pressure off the system in Japan. It's time we start doing all this stuff. And it sounds like these are the

Zongjun · 46:56

same people that are also stigmatizing Chinese matcha. What if I told you there was a country that had the largest population of people in the world and have been cultivating tea longer than any other country in the world that happens to be have? Second second largest population now India. Yeah, India took over like 2 years ago. It has.

Zongjun · 47:18

Millennia of tea processing experience and fantastic terroir for tea. Why can't they step in? Yeah, I mean like let's. Decide residue report, reject that batch and then demand something better. Yeah, but the reality. Is like China makes good tea like it's just not matcha but they make a lot of good tea like oolong tea, red tea, hongcha, black tea or pu-erh tea.

Zongjun · 47:43

Like there are a lot of fantastic and also very like expensive or high quality tea the most. Expensive tea ever sold was Chinese. Yeah, like teachers don't know how to make tencha yet, like the largely because people don't really drink matcha in China.

Zongjun · 47:58

I think that thank. Goodness, talk about a matcha short. Yeah, like you know, if you change the drinking culture, tea drinking culture in China into matcha like you are going to have next level demand. But but yeah, like, good teas are being made in China.

Ryan · 48:17

It's just like, not, not, not tension yet. You know, given, given some time, given some, you know, knowledge and the right contacts and the right, you know, technology and techniques like there will be a good tencha coming out from China in the future, that's for sure. 100% And it's much needed. And one thing that's very clear after doing so many interviews from people all over the world, from Australia to the United States to Japan to the Philippines and all of the other countries that are represented not only in our listenership but in the people that we've interviewed, is that it is just getting started.

Ryan · 48:57

This movement is so fresh, it's so new. We're, you know, matcha has the chance to become this thing that you can get anywhere in the world, like coffee and get a good one. Isn't that the world that we want? We want to be able to go anywhere in the world and get a good matcha.

Ryan · 49:16

It tastes good, we would like or that other people would like. And it's healthier. It has a more natural caffeine profile. It also happens to be beautiful and it also happens to have this really interesting and rich culture and history that comes along with it continues to live on through new generation of people speaking Arabic or speaking Tagalog or speaking Thai or speaking Indonesian, right? Like are speaking Chinese or speaking Spanish and Portuguese and French and German, right?

Ryan · 49:48

Like this is unthinkable, but it has the opportunity to grow into this much more expansive thing, and people want it. Yeah, and it's just. The early baby days and we can't like kill this what because it has this chance to become this type of industry. It's already happening.

Zongjun · 50:06

It's already happening. And, you know, like, it's really, really right now just foundational problem is the supply. Like it's really like what all of these cultures can exist into the future. Like the only true questions right now is how do we get the supply right? And how do we roll the quality altogether across different, you know, matcha manufacturer countries? And how do we expand that into other territories? Like, look at wine, look at coffee. Like ever after, you know, coffee gets out of, you know, Africa and Middle East.

Zongjun · 50:42

It's been grown everywhere in the world. Like there are a lot of places in the world that are suitable for growing tea like, and it has already happened, you know, for tea cultivations are the tea cultivations like why not matcha? Why not tencha?

Zongjun · 50:57

Like it's totally possible. And I think that will really be the true globalization one day for matcha is that even the cultivation of tencha lays outside of Japan in all these matcha consuming countries. Yeah. And then you have like the Suji Sons of the World and Farakawa Sons of the World, all of these super famous tea farmers that have all this international recognition already.

Ryan · 51:22

They're going to become the new Romani Conte or the new Chateau Lafitte, right? Like if they're going to be considered the top of the top of the top of the top. And then anyone that holds this type of status is finally going to demand the price that those products deserve, right.

Ryan · 51:39

It does shove it into the, it does move it into the luxury realm. But it is arguably then what those products are worth. And then it's way beyond just the it's all of the intangible cultural value. When you're buying a $2000 bottle of Château Lafite Rothschild, you're not buying the flavor profile, you're buying something much, much, much more complex.

Ryan · 52:05

The history, the cultivation techniques. You can use the same vocabulary that we're using for these multi generational farmers, the source of their oak barrels and where that comes from, and their century old cultivation techniques and their deep cellar and knowledge of blending.

Ryan · 52:25

All of this applies in the exact same way. Maybe a can of Suji San competition. Great Asahi, it will go for $2000, maybe it should go for $2000. But also on the other side, in wine you have places like Argentina and Chile which can produce a phenomenal bottle for $10 as well that tastes good.

Ryan · 52:48

It doesn't come with the same type of rich and interesting history that is revered of these top domains and chateaus for example, but it's something that anyone can enjoy at any price. It's matcha for everyone. Or you can have some places like the Napa Valley which sets the new price ceiling for new world wine. Like like imagine a new Uji exists outside of Japan in the future, which is totally possible. Totally possible, it's just it.

Ryan · 53:19

We need to break out of this very insular mindset and embrace all of this new culture formation. This is such a exciting potential future to be something so much more than a Japanese are strictly a Japanese product. I don't think anyone's debating that that's it's where Matcha was born in the form that we know it.

Ryan · 53:40

It obviously has its origins in China, but it could be a very interesting future. It should be a interesting and a international future. I mean, like China was not a unified state for many, many years. When Matcha was consumed in China and it got trans, you know, ported into Japan, it was already international at the time, like. Let's lost along the way, yeah?

Ryan · 54:04

Yeah, yeah. Let's, you know, revive the internationalism that lives within Mata for generations. So I think that's a perfect place to stop. That's where we stand. Our opinions are always changing. They're strongly. We state them strongly, but they are loosely held as even we learn more context every time we visit Japan or talk to new people. We're always reforming our opinions. And so please don't assume that we're too preachy or dogmatic, but I think that's a great reflection of everything that we've learned and what we've taken away from this past season.

Ryan · 54:37

Season 3, 75 episodes in. Sam. Crazy. Crazy. Well, see you guys in Season 4. We're gonna take one week off and we'll have a fresh new take for season 4. Some of it might involve some music for the intro and potentially a new logo for the Specialty Matcha Podcast in area of changes, small changes Kaizen. Kaizen. Kaizen.

Ryan · 54:59

Bit by bit, Yep. And it will only get better, yeah. We hope. Thank you so much for listening and we'll see you on the next. See you in the future.