Show, don't tell

Ryan · 0:00

Hello and welcome to the Specialty Matcha Podcast. My name is Ryan. This is Zongjun, who also goes by Sam. Hello, hello. And we're the co-founders of Sanko Matcha products. We launched this podcast to discuss our learning journey, matcha, share startup stories and interview experts, and today's episode is titled Show Don't Tell and it's our case or argument against top down position.

Ryan · 0:22

We thought it was really worthwhile looking at the way that different matcha products are positioned. What is their value, value proposition? How is quality conveyed and communicated? What makes it special? What makes it worth paying $20.00 for, 40 or $60.00 for? And so you see all these different types of like product positioning.

Ryan · 0:43

And this episode was actually inspired by a collaboration that we're working on at the moment. So a really good friend of ours is a professor at the University of Wageningen, which is really one of the top food and agricultural universities in the world, one of the top in Europe and considered one of the best in the world.

Ryan · 1:03

And we're collaborating with a bunch of student researchers and we had to put together decks to explain a research project for them. And they're in the food industry. And Zongjun and I used to work in product development and so kind of the intersection of flavor AI and, and working with gigantic food and beverage companies. So, you know, we're very used to talking with food industry people and these are kind of food industry people in training.

Ryan · 1:26

And it was a really interesting thought exercise. How do we explain our research objectives and which I'll explain in a second to a group who an audience that is coming in with a lot of context, but very little context on matcha.

Ryan · 1:41

And we have two different student research groups which are digging through literature and contacting experts. And one is entirely focused on matcha as a fresh ground product. What happens after matcha is ground from a nutritional, color and flavor perspectives.

Ryan · 1:56

And then we sent them in a couple different directions. But we're really interested in what the industry would call sensory or the organoleptic changes that happen to a product after it's milled by how does how does the flavor degrade and what are the mechanisms behind that flavor degradation?

Ryan · 2:11

So that's what one group's focusing on and the other group is focusing on matcha as a specialty product. So all of the intrinsic, it's a investigation into different flavor profile and nutritional profile outcomes by the fact that matcha is an agricultural product.

Ryan · 2:27

So how does anything from the cultivar to the fertilizer use to the way that the tea is processed influence the taste? And describing and contextualizing why that was important to non matcha people was kind of a challenge.

Zongjun · 2:41

Yeah. It was a very interesting deck that you put together Ryan Ahn, and I noticed that you to really forge a very interesting flow to try to inspire a curiosity from people that don't necessarily know like a lot about matcha or care about matcha to begin with. So can you maybe walk our audience through like, how exactly was your thinking at the time? Yeah.

Ryan · 3:05

So the core research, research objective that we gave them that led to the topic of this podcast was that there's remarkably little consumer education about what's driving flavor, aroma and texture differences within matcha.

Ryan · 3:18

But consumers are not able to easily predict their own preferences based on clearly labeled objective attributes about the product. You see like really rich, thriving specialty markets and things like wine or chocolate or coffee. And it's pretty easy for an experienced consumer to draw a straight line from, OK, this is a washed processed coffee from Ethiopia, from Adido.

Ryan · 3:44

And based on all of my experiences, I can have some idea of what that's going to taste like versus if it's a natural processed coffee from Ethiopia, from, let's say, a different region. I have some sense of, OK, you know, one's going to be much more clean and ephemeral, probably acidic. And the other is probably going to be very complex, very fruity and almost these fermented flavors. So we had to explain to them that this concept doesn't really exist in matcha.

Ryan · 4:10

And so we had to go on to explain that there's a real lack of transparency in traditional products. And at the highest echelons of matcha historically are all blended products with poetic names where things like origin, processing, cultivar, harvest season, harvest method, shading method, shading duration, and milling technique are not shared with the consumer. And I wanted to come up with a pretty striking visual to communicate how people are actually making making purchase decisions.

Ryan · 4:39

And on Canva, I found this fantastic graphic of three wine bottles all with blank labels. That's approximately what we are doing. Like imagine tasting all wine blind based and basing your purchasing decisions on price and by brand reputation. Like walking to a wine store, imagine every single label is white.

Ryan · 5:02

Or is this basically nonsense which is like kind of the case for an non Japanese speaking foreigner and it's also kind of the case for a Japanese speaker? Japanese, like, they're basically not that. They're not really getting like any more information than you are.

Ryan · 5:17

Yeah, and it's a crazy world that we live in, considering that's the highest echelons. It's all top down positioning. And what we mean by top down positioning is you need to be told what's good. So like, let's take this analogy a step further. Imagine every bottle of wine now says something like very good wine, top premium, best good wine. Imperial grain, Imperial fantastic wine. It's very confusing when you have all of these labels of top down positioning where consumers don't decide for themselves what's good.

Ryan · 5:49

I mean, they kind of are at the end of the day. But from a market and positioning standpoint, it's steeped in poetic ambiguity. Excuse the teapot. And it's you're, you're really flying blind. It's it's covered in mystery. Marc from Ooika is arranging a trip right now to bring matcha enthusiasts to origin for a week. And I think they're going to Uji and to Yame to visit with traditional producers.

Ryan · 6:15

And he made a really interesting point and it's that traditional marketing and matcha both from these very historical legacy brands and a lot of these newer companies that are entering the scene trying to market matcha to the West, trying to steep it in.

Ryan · 6:29

The mystery and poetic names don't help you, the consumer. You are not learning anything through the consumer assumption of these products because they're hard to remember, they're hard to pronounce, and they're you don't know what's inside. You don't know what you're drinking. And frequently they all share the same name, like the very famous Gokumukashi example that we like to make. And it's the same name from different company, different price tier and they taste drastically different. Like how do you draw any like knowledge from this experience? It would be very hard.

Ryan · 7:02

And The thing is that, you know, the traditional buyers for these tea ceremony practitioners, they didn't necessarily care. They weren't necessarily tea connoisseurs. You talked to most people who study chanoyu, they actually don't know a whole lot about matcha.

Ryan · 7:13

They don't know a whole lot about the matcha that they're buying. So we thought of a really, we, we did 2 comparisons for them. One was a Marukyu Koyamaen really high end blend called Tenju, which we've also talked about on this podcast. We love this product, tastes fantastic. And I went online to their website and tried to get as much information about this product as I possibly could. And it's we've learned that it's a prized winning matcha in the Japanese national tea competition. We don't know like what place or anything else about it when made from hand picked tea leaves.

Ryan · 7:51

OK, so it's Tezumi there. We use those words. Please enjoy the distinctive koicha aroma and flavor recommended for thick tea. Comes with the T's name printed on the product box. And this this cost like 50 or sixty U.S. dollars and that's all we know about it.

Ryan · 8:13

And I actually bought this product in person in Kyoto and tried asking, what is this? Is it a single cultivar? Is it honzu shaded? Do you run the mills slower? Because again, even within when you run a traditional stone mill, you there's a range and some of the highest end products usually mill a little bit slower.

Ryan · 8:32

Nothing. I have no clue. We enjoyed this product, but it didn't help us learn. It didn't help us at. All it was really sad like this is probably one of my favorite matcha in the world, especially first day experience. The tea actually tastes drastically different the next day we drink it Yeah out from the can. But the first day wow this beautiful like spicy olive oil notes that I just have never experienced in other matcha before.

Ryan · 8:59

Yeah, and in effervescence is always sparkling. How am I? Supposed to learn from this product and maybe try to, I don't know, expand my consumer experience landscape and try to find more product like this. Like there's no way for me to to do that.

Ryan · 9:14

And the only way for me probably for the benefit of the brand is that I go back and buy that product. Yeah. But yeah, that's very sad. Yeah, and there's a weird incentive system behind keeping these products very, like, hidden or sheltered from a transparency perspective. You know, if you go to ask a lot of these players, like go to a live stream at Ippodo that's done in English and you can ask where is this tea from?

Ryan · 9:43

Like one of their new seasonal teas, Where is it from? I think Cole was telling us this and Cole from my Matcha addiction and someone had asked that in the Q&A and I said, I'm so sorry. It's proprietary, can't tell you. Confidential.

Ryan · 9:55

It's so sketch in any other like food application that would not be an OK answer. I respect it, I get it, but it's really actually kind of harmful for farmers to think about. They have complete control what goes inside the quality.

Ryan · 10:10

No one's accusing them of cutting corners, but they could and you wouldn't know to what degree it's proprietary is it sounds more like protecting business interests. Like who cares that someone knows what's in this blend?

Ryan · 10:24

Like do you think Ippodo and Horii Shichimeien are going to turn around and try to recreate create it like these like the people who are buying these top top products are like tea ceremony institutions and temples that have long standing relationships with these blend houses.

Ryan · 10:44

Surely the only reason they're they're not buying this because of the taste 100% like you know there there's other factors here. So when you like look backwards at the incentives of keeping the stuff a mystery, it's really weird. And I think ultimately it just gives them a whole lot of flexibility as they source different tencha or if they lose suppliers or gain suppliers.

Ryan · 11:05

But it's taking away from what could be a really interesting component. So we can learn, OK, where did that flavor come from? Or at least try to learn where that flavor came from so that we can buy more and support this industry to find other products like it.

Ryan · 11:20

For all that we know, maybe like they bought some Narino from from 4 ACC man who I think they're the only ones that grow the Narino cultivar because it's registered under their name and I don't think anyone else does. Maybe they buy a little bit of Narino and mix it in at 50% with some Asahi and boom you get that flavor profile. That would be super interesting to know. It's very interesting because you know, you have to wonder why we end up having a traditional matcha being like this. I think the problem is that they are not responsible for daily consumers feedback.

Ryan · 11:53

They're responsible for their big purchaser from the temple or from the big chanoyu schools. They are responsible, responsible for their own brand reputation so that they can win in competitions which are dictated by a very handful of people that have their very unique personal, I don't know criteria or taste.

Ryan · 12:14

So they, it's, it's top down positioning because their own incentive is top down. They are being dictated from someone even higher than them and they are not responsible or care about, you know, consumers like us essentially.

Ryan · 12:28

Yeah, like cultural capital and where that soft power lies. Like people like the iemoto, like interact with the royalty when they come to visit Japan, like the Queen of England, for example, Like they're really held to the highest echelons of soft power and within Japanese society in general.

Ryan · 12:47

So it's the reverence is it's top down. So here's the question, why do all of the new matcha brands go to Amazon if you walk into Whole Foods? And by new I mean like in the last 20 years. Why do they also do top down positioning?

Zongjun · 13:02

That's a good question. Why? Like why is this idea of bottom up positioning or like giving someone the context to appreciate something? Why is that a new topic? Yeah, I don't know like my very, I don't know evil suspicions is that it's convenient.

Zongjun · 13:19

It's a convenient for the business to, you know, I, I don't know disguise their actual ingredient list is convenient for them to, you know, do marketing. They don't need to necessarily spend a lot of time educating consumers. It's convenient because there is this huge historical inertia coming from traditional brands that, you know, it has been like that for the past hundreds of years. And this is the way of doing it.

Ryan · 13:44

This is the way that people used to this kind of status quo. And why do we need to change? Yeah, well, I have a more generous interpretation to I mostly agree with this, but it's also that they're selling to an uneducated market.

Ryan · 14:00

But there's a difference between lack of knowledge, uneducated and stupid, right? So just because you don't have the knowledge does not mean that you are stupid. And for a long time consumers did need to be told what was good. They didn't know matcha was a foreign product to them, right? Having different class tiers, calling something ceremonial grade and giving some basic stats that it's from first harvest or something, it makes sense. But that will only work if you are honest. If you are actually serving something good and tag, give it a tack of that's, you know, a good matcha. But that's not really the case

Ryan · 14:37

for a lot of nowadays, you know, matcha brands out there in the. Market, yeah, everyone claims they're sourcing the best and if everyone's doing the best, then no one is. These things live on a spectrum. But now that it's more mature and that people do know what different types of matcha are, I think people, a lot of new matcha brands don't give consumers more credit. It's like people in the early days of the Internet thought who would want to read long form on the Internet that something like The New Yorker like really long form article goals or essays. People on the Internet, they have short attention spans need to give them something quick.

Ryan · 15:10

No one wants to sit and read and they, to put it, I think someone from Vox, one of the founding team of Vox and early Vox Media journalist said that one of their founding tenants was that they wanted to respect the intellectual capacity of the reader and to give people a little more credit.

Ryan · 15:29

And that even though some of them might not be knowledgeable on a topic, they're not stupid. And you can like explain in long form what's good. And now you have like 5 hour long podcasts where you go really deep and people are very interested in it. Arguably a smaller niche, but way too many of these new magic companies are thinking about positioning from a complete beginner's standpoint where they need to be told what is good. Calling something super ceremonial grade and making distinctions that way or ultra premium ceremonial grade means I have made the judgement for you to tell you that this is good and I'm using these superlative

Ryan · 16:08

words like ultra or the superior etcetera in front of ceremonial grade to tell you that this is better. This is top down position. You are literally treating consumers like they are stupid. Quite different than explaining it's better because of XY and Z. You make your own determination.

Zongjun · 16:27

I mean, this model has worked largely in Japan because of, you know, the the brands that are doing so have hundreds of years of history and credibility and they have the baggage to really maintain their reputations. Not just, you know, for daily consumers, but for people even higher up than them.

Zongjun · 16:48

That's that that that they they are very much constrained or being liable to all of that. But that's not necessarily the case for a lot of the modern days. So matcha brands, they don't necessarily have the baggage. And because of that, people can literally claim whatever they want and it's, you know, really a race to the bottom.

Zongjun · 17:07

By the end of the day, you are trying to gain more margins by claiming even higher, you know, hefty label for your product, but doesn't necessarily you don't need to be responsible for things that you put into the matcha cap.

Zongjun · 17:21

And very convenient. Conveniently, people can borrow the historical legacy of not doing, you know, transparent label. And it's not a expectation in the market to do so. Thus we are having, you know, the matcha market that we're seeing nowadays, which is, you know, really a mixed of, you know, good quality matcha and really bad quality matcha. Yeah, and then they could all labeled the same way. That they are all labeled the same way, so or even with the same price tag, which is really really ridiculous. And by labeled the same way, I mean we're mostly talking about the the use of the term ceremonial grade or different versions of it.

Zongjun · 18:00

It's really a shame because it's unregulated. So when there's enough crap that's the market, it really becomes an unreliable marketing term. So like maybe there was a good opportunity for this in the beginning when it wasn't such a crowded space.

Zongjun · 18:15

But now that anyone can nearly start their own matcha brand overnight, there's tons of companies that would be very happy to white label a product for you. And then you can work with some distribution system, like a lot of infrastructures in place to create e-commerce brands and businesses. It's the barriers to entry are so low now you don't really even need to speak Japanese to source pretty good matcha and to create your own brand or even some of the world's best matcha. We know a lot of people that don't speak Japanese that can source incredible product now and the now that the zone is flooded with really good and

Zongjun · 18:51

really bad stuff and it's really hard to distinguish what is what, this top down positioning for new matcha companies isn't going to work. It's no longer a real leg of credibility to stand on, right? Like these giant blend houses have tremendous credibility of multi generational hundreds of years of existence and like these new players are trying to project credibility under their product because they've been to Japan and they visited the farmers and touched the soil.

Ryan · 19:20

Yeah, yeah. I mean, like if you really do care about the quality of your product, like you should stop doing it. Like this is really not even for your brand's benefit. Like you are not making yourself send sending out from all of these crap being sold in the market, ditching that idea and move to transparent labeling, moving to storifying your brand and your product, moving to not treating your consumer like stupid.

Ryan · 19:44

I think it's really for the benefit of our of people in the matcha industry. Yeah. And the title of this episode is show, don't tell. And it's really a kind of a call to action. If we move away from positioning where we're telling consumers what's good versus showing them what's good, it's a much brighter future. Solid.

Zongjun · 20:06

Yeah, much more solid foundation to stand on because you have knowledgeable and smart consumers who are making good purchasing decision. It will create the self correcting mechanism that the bad matcha companies selling crap at a high price are going to go out of business and the people who are actually sourcing good product are going to do well at a fair. Price Yeah, yeah, yeah.

Zongjun · 20:29

The, the, really the, the key problem here is that matcha is something that eventually you are going to put into your mouth and you can taste it like it's a verifiable fact. And for any claims like you can fool consumer once, but you cannot fool them twice. They have their, you know, they, they, they, they can make make their own decisions by the end of the day. Yeah.

Ryan · 20:51

So Sam, what do you have to say for new brands that want to keep it because of SEO or search engine optimization or because a lot of consumers will walk into a place and ask for ceremonial grade matcha? I had a very interesting experience waiting in line at MTCH.

Zongjun · 21:08

There was this couple. There weren't a couple. I think it was this guy going on a date with a woman at one of the MTCH locations in in Thailand. And this guy obviously kind of wanted to show off that he knew a little bit about matcha. And so the first question he asks when he goes up to the counter is do you guys serve ceremonial grade matcha? I think the person behind the counter working people at MTCH are so ridiculously well trained. You could tell she thought for a moment, is this like a conversation that I want to have?

Zongjun · 21:36

And she was like, no, yes, it's all ceremonial grade. Like it's all this is an idea already in consumers mind. So actually it's more top down kind of almost condescending education reversing this trend. But she had two choices there with that customer interaction. So you could just say yes.

Zongjun · 21:55

And it's actually kind of truthful to the intentionality of what he's asking. They like he the answer is kind of yes, even if they don't want to use that label. And actually I've never seen MTCH use the term ceremonial grade. I assume they take a very similar position to us than that, but I'm I'm not sure.

Zongjun · 22:13

Or she could say. I'm sorry Sir. Actually ceremonial grade is a made-up marketing term. It just is not a pleasant conversation to have. Yeah, because you're basically now calling him misinformed and you need to, he needs to be re educated in some way.

Zongjun · 22:26

So like, what do we do about situations like this? Yeah, it's, it's tricky. It's tricky, but you know, like on one end, the term ceremonial grade is a total made-up term, but on the other hand, you know, it's a totally valid term. Like basically all matcha worth serving in a usucha form is in fact ceremonial grade.

Zongjun · 22:47

They're like you can use it in a tea ceremony. Basically, that's what it's implying. And I don't think that, you know, like it's necessarily to calling out consumer you're saying something wrong, but you know, it doesn't also necessarily hinders you from, you know, telling them more about this matcha.

Zongjun · 23:03

Yeah, this is really not. That's true, conversation blocker. Yes, you can say yes, it is ceremonial grade. In fact, we think it could be even better. This comes from Asahi cultivar. This one was handpicked to Izumo. It has delightful notes of creaminess in umami. You get it as a light brute.

Zongjun · 23:22

Amazing. Whereas like here Sir, here's another option, also something that you know people would call ceremonial grade. It's a yame matcha. It's Okumidori, which is really known for its bright green color. And these roasted nifty toasty notes in a latte format are really going to stand up.

Zongjun · 23:37

You're going to get a lot of chocolate expression and it also has a little bit of bitterness, but we think it really complements that. No, these types of conversation, you're right. Just because you're using ceremonial grade does not mean that you don't have to be non transparent. And these two things can coexist. Although ceremonial grade or any of the other versions of ceremonial grade are, even made-up versions are a form of giving yourself your own grade quality assessment. So it's still quite meaningless.

Zongjun · 24:07

But you're right within the consumer education level, and I actually think the pendulum is going to swing back a little bit. I think being called not using the term ceremonial grade is going to become the new fashion, the new trend and actually a distinction of quality.

Ryan · 24:22

Well, you're implicitly communicating quality by like positioning that like Marc from Ooika does. If you go to his website, what does he have here? 12 different attributes for like every product ranging from cultivar, vintage, shade, style, picking style, duration, harvest time. This is implicit.

Ryan · 24:42

You can look at this and everything about this screams. This is an interesting product with verified provenance and a whole lot of tension to detail. And the vendor is proud of this product, like it's a very subtle form of confidence.

Zongjun · 24:57

I am proud of telling you everything about this product. And you are feel free to, you know, verify those facts and feel free to experience and feel free to make your own decision if you like this product or not. And he knows all that information. Now being like working in the industry, you realize that it's possible that a lot of these matcha brands in the West or let's just say outside of Japan, the reason they might not have this level of details, they just might not know. Yeah, they just really don't know. It was really interesting experience in some of the, you know, old legacy tea house that

Zongjun · 25:29

we wanted to experience in Uji and you know, like the vendors in the shop, like we can tell like the person really just don't know about the information of the question we are asking, like they are not getting trained with those information.

Ryan · 25:45

It's very interesting. It's institutionalized even within their own organization. Yeah, that's interesting. People within the companies, these traditional blend houses don't even have the knowledge to ask the right questions.

Ryan · 25:57

So that knowledge lives upstream and like this does not permeate downwards. So it's very top down. But so is all this Japanese Society of no surprise that it's like that even when you do get some transparent labeling details. We were visiting some people and they were like, yeah, everything shaded 20 days, every 20 days, 20 days, 20 days. And the back of my head, I'm thinking really exactly, everything is exactly 20 days, not 21. Because I said an average statement. Like I really am quite skeptical of some oversimplification and I it, it, it's interesting because all of these specialty components, like how long was

Ryan · 26:37

shaded or cultivar used to be like details that are abstracted so far away from the consumer. And like, I mean, these, a lot of these companies, even if they have anyone to deal with foreigners that like foreign sales department is very new relative to, to the age of these companies.

Zongjun · 26:53

So like there's still quite a bit of of this type of knowledge. It's like even I remember someone saying that some like industry insiders who are in the English speaking world, even like 5-6, seven years ago, they were like, why does anyone want to know what the cultivar is?

Zongjun · 27:10

Who cares? It's interesting, these different perspectives. I admit the you know, the demands of consumer knowledge we'll find eventually cascade down back to Japan. You are seeing, you know, these old Japanese tea houses using new marketing term or, you know, embracing the the fact that a lot of their products are, you know, in fact good with latte. You don't, you wouldn't expect that to happen for in the past, but nowadays you're seeing them more and more. And I think that's really want, I would say, phenomenon that we are seeing nowadays that you know, the foreign demand, the foreign market is pushing their

Ryan · 27:44

own influence back to the homeland of Matcha. Yeah. And putting on these specialty principles and a lot of these newer matcha companies that are created by outsiders, by non Japanese, including US, right. Or from a future positioning standpoint, I think the future lies only with showing, not telling because no one has a credibility like the stand on like the traditional players.

Ryan · 28:07

And it's very undifferentiated now to call yourself super ultra premium or whatever your made-up grade is like every like this, all of them. And I don't want to call anyone out because a lot of people have like very specific ones.

Ryan · 28:20

Although I there was one recently that was extra ridiculous. I think it said someone was messaging me on Instagram about it, a company that has something called SS grade. I spent quite a bit of time on their website trying to figure out like one.

28:34

What does SS stand for and what is it and like? I'm sure it's not a European brand. No, I think I think they need to take a World War 2 history class. I don't think we could get away with calling anything SS. Great. Well in their defense, they probably got the idea from the gaming industry. For some characters you can have like S level, SS level, SSS level is usually the highest and that's my guess.

Ryan · 29:03

Interesting. Well, apparently it was made by a collaboration of like a tea master. And they didn't say even which school. And is this guy an earth sink, a tea practitioner or Mota sink, a one of the more obscure samurai schools didn't say that's already a little bit of a red flag and a multi generational tea farmer. So these two people got together and made-up this new, or I think it's an organic grade that they're giving themselves called SS.

Zongjun · 29:31

There's like tons of stuff out there like that. And like how like it, it's actually creating knowledge structures and attempts at classifications that are giving consumers the wrong mental framework to navigate them, right? That is a very arbitrary, quote UN quote label or like truth for a consumer to navigate.

Zongjun · 29:53

Whereas like other pieces of information like cultivar and artist method can really act as very tangible, very objective waypoints for consumers to navigate the market and to triangulate what they like and what they don't like and to determine value. Really, Yeah, yeah.

Zongjun · 30:12

Cuz like those factors are you know, ground truth, they're verifiable ground truth that is universal, right. It's trans brand. You can you know use that knowledge across all the commercial products in the market. Whereas for these made-up classification system within the brand at its best, you will probably be only working within that threat.

Zongjun · 30:36

And for you to be able to use any, you know, experience or knowledge from, you know, embracing that classification system, you are not going to be able to easily apply to it. Anywhere else you have two intentions behind these different classification systems.

Zongjun · 30:51

So there's intra brand classification and inter brand classification. So most of these people only have one or two matcha products. They call them all ceremonial grade, super ceremonial grade, premium ceremonial grade. Pick your adjective and that's basically all they sell.

Zongjun · 31:09

Is it that? And then maybe they have one like really low level 1, but like otherwise, like the majority of their portfolio and probably the majority of their volume is through quote UN quote ceremonial grade, which is an attempt or super ceremonial grade, which is an attempt to make inter brand distinctions amongst other competitors.

Ryan · 31:26

But there's also intra brand or marketplace levels or hierarchies. But actually I find much more useful. So someone like Ian from Yunomi, if you go into the Yunomi website and look at the match offering, they have like 7 different grades including ceremonial, heritage, imperial. These a bunch of different words, but they have a wonderful little like fact page and like exactly breaks down what they mean at each level.

Ryan · 31:52

So like that they're using that as a label to describe different matcha products within their portfolio of dozens of matchas. Like that is useful seeing heritage on their website. I think, OK, this is probably handpicked and maybe even Kazumi or at the very least you have raised shading beds so they're not directly touching the leaves.

Ryan · 32:11

And I forget the rest of their distinctions. And like imperial grades one lower, but they use a lot more industrial methods and you just keep going down and down and down. And the price is pretty well related across all of these grades.

Zongjun · 32:22

Kind of makes sense. Like once you learn that system and you're within that little ecosystem, it's incredibly useful. But then comparing, you know, one of their ceremonial grades against someone else's, right? Like it's then it's another roll of the dice like because everyone defines ceremonial grade different.

Zongjun · 32:39

So this inter versus intra brand in the utility of these classifications can change because the way people define them often are to differentiate themselves from other brands, not from other products within your portfolio.

Zongjun · 32:51

It's not that many people are selling dozens of Matcha skews. Really by the end of the day, you know the information about each product, it's what it really matters. And really for you, is it really necessarily for you to create a label tier system like you know, using price as a reflection I think would be really good enough and.

Ryan · 33:12

You don't think you could sell high end Napa Valley wine by just calling it premium wine? Yeah, I mean like you know, it's, it's very easy to tell like the tears of your product by the price tag alone. And for all the other information you need is you know what exactly goes into that kind of matcha. Yeah.

Zongjun · 33:31

I mean, with the end of the day, we really want a group of consumers that's a quote UN quote better or good consumer where the connoisseurship market, which and I'll put like that sounds very Foo Foo and elitist. But what what that really is is it's a group of people willing to pay higher prices for a better thing.

Zongjun · 33:48

So that's what this is. It's the specialty market. It's very important that they can predict their own preferences and putting up these false classifications and creating top down positioning and assuming that everyone needs to be told what's good and what's not good is probably not going to be a winning strategy anymore.

Ryan · 34:03

Yeah, kind of makes sense within the context of a very new Fresh Market where there's not a bunch of people in it and there is a lot of crap floating around. Yeah, label on ceremonial grade that probably at one time actually kind of meant something, not by the words itself, by like reflected in the quality of matcha that was actually available.

Ryan · 34:21

That's gone. It doesn't mean anything. It's an anti indicator at this point because it's a self declaration of quality and you have a mixture of vendors that are sourcing very different quality products and taking advantage as they should like show me the incentives and I'll show you the results. Try to get a higher price for a mediocre products. We don't want to see the industry like that in the long run.

Zongjun · 34:46

And we really think that, putting it very crudely, that this type of top down positioning assumes that consumers are stupid. We understand why the large players do it because it's poetic, it's ambiguous, it's serving a different clientele. Historically.

Zongjun · 35:02

It's this wonderful cultural artifact of Japan, like they're not going to change. They could be more transparent, but the the top down positioning is a very Japanese thing. But they have the credibility of hundreds of years and all this cultural capital. But all these new incoming players don't. And as the playbook of a successful new matcha company, we think are people that are creating smart and knowledgeable consumers.

Zongjun · 35:25

And consumers are getting more knowledgeable. And as the industry all grow together and as the market getting more and more mature, people who are still reluctant to make any changes will eventually be, you know, ditched by the consumers. It's really the earlier you embrace this trend and embrace the weight of treating your consumer correctly. I think it's really for our own benefit. Yeah, everyone both in industry, at the vendor level, at the farmer level and at at this level. And when you're giving super transparent information, think about what that does to Japanese farmers now. Like some of them reach like

Ryan · 36:03

superstar status or they've grown huge followings of people. And it's kind of nice for the consumers as well because then they can price triage. If you're getting Asahi cultivar matcha from Sutton Garden from Suji San, for example, right?

Ryan · 36:18

I can think of at least six different vendors that I can check the price of. And then it's going to create incentive for people doing things to raise quality, right? Am I willing to pay $10 extra to have fresh milled Asahi from Suji San? Yes.

Zongjun · 36:36

Yeah. But am I willing to pay $10 more when some other vendor who's sourcing from the exact same person, exact same cultivar? No. So actually it's going to be good for consumers because it should lower price for bad quality products because they can price compare and shop around and like are able to make some sort of value judgment based on the label.

Zongjun · 36:57

And they can also it's going to encourage innovation at the vendor level who can do more value added service such as milling it fresh, giving a fresh guarantee. But maybe they just have fantastic customer support or very key shipping, shipping or education.

Ryan · 37:14

It's going to make a lot more competition. It's going to lead to more dynamism within the space. Yeah. And eventually this superstar status of, you know, a couple of farmers will, you know, eventually being translate to all the other farmers out there.

Zongjun · 37:28

There's so many farmers in Japan that are making fantastic tea. And a lot of them are just, you know, being really tight to maybe one or two, you know, repeat fires from the region. And they have to really sell their tea at a very, very low price and not be able to make enough living.

Ryan · 37:46

And being able to, you know, utilize this and cascade the influence down to those farmers. I think it's a really wonderful future for the Japanese tea industry as a whole. Can create a playbook for others to copy right.

Ryan · 37:59

They're really, it's fantastic for the amount of like agency and recognition that these farmers can get from their work versus selling it wholesale. And it gets put into some like like crazy poetically named blend. Like no one knows they don't even know where their products are going. And The Dirty secret of the tea industry outside of Japan is that there's not that many matcha and tencha suppliers willing to deal with foreigners.

Zongjun · 38:24

So The Dirty secret is that everyone's basically sourcing from a very small set of producers. Everyone's sourcing from the same people more or less. And there is a huge incentive for not giving all of this information where you can figure out where someone's sourcing from because then you can do your own price arbitrage as a consumer. And that's why, no, also, there's a huge incentive not to give this away, but it's really not in favor to anyone except at the vendor level.

Ryan · 38:51

Even with the new transparent brands that are out there, you don't have to spend that much time poking around different people's website to start pattern matching. It's like, oh, interesting, I've seen this thing before.

Zongjun · 39:01

Oh, I've seen this award and it's from the same place. Has this been shaded the same number of days? That's what this other person is selling. And then you can use some price arbitrage as a consumer. So hopefully help bring down the price and closer align it to preferences and matcha quality. Yeah, moving forward, you know, it is easy for you to open a new matcha brand and start sourcing from, you know all these already English speaking vendors or farmers in Japan selling you a pretty high quality matcha.

Zongjun · 39:31

But you know, it's won't be the future moving forward, like moving forward for more value adds, for more interesting matcha market, for better for everyone product out there. There are so many other, you know, tea farmers in different regions making excellent quality matcha.

Ryan · 39:48

We, I guess the call to action is get out from the comfort zone, go venture, go explore and show the world how good the Japanese matcha can be in other regions, not just in Uji. So don't tell. Yeah, so don't tell. And and you know, there's a lot more farmers that can be very directly supported if there is like a less risky bet to make by selling your tea to not a wholesaler, but to random foreigner who shows up on your doorstep wanting to make matcha and start their brand. Yeah.

Zongjun · 40:20

I mean, it is a very new industry for us as a foreigner outside of Japan, but this industry is going to stay and we have our own reputation to Caribou about and to build in the future. It's time to show the Japanese tea farmers that, you know, we care and we are going to come back next year and keep buying new tea and keep, you know, showing the world how good your tea is.

Ryan · 40:42

And showing how much other people are are loving it. Yeah, You know, you're showing up with real data, not just telling farmers, Oh yeah, people love matcha people love your product. You can really show wow, like this consumer review, like really appreciates the specific vegetal note from this okumidori that you made more like really love the Ooika aroma from this Sansu Asahi that you made really show this deep level of appreciation.

Zongjun · 41:08

So across the whole industry could benefit quite a bit from not doing top down positioning, but where you're really showing it. So that's the the single thread of this episode. Show don't tell. We're excited as we're doing our sourcing.

Ryan · 41:20

We're exciting to see all the new matcha companies come onto the scene. We're by no means the first people doing this and any consumers listening, please support these new brands who are taking quite a risk at changing their product positioning from what was in a very established, predictable playbook of steeping it in mystery and poetic ambiguity to really exposing the matcha for what it is and all the objective truths about it and giving context to make your own quality judgement. So it's, it's a future we're very excited about. So sure, if you enjoyed this episode, please consider sharing it's friend and we'll see you on

Zongjun · 41:58

the next one. See you in the next episode. Take care.