Thailand's Advanced Matcha Market

Ryan · 0:07

Hello so sawadee kráp and welcome to the Specialty Matcha Podcast. My name is Ryan. This is Zongjun Li who also goes by Sam. Hello, hello and with the co founders of Sanko matcha products. Yeah, we launched this podcast to discuss our learning journey, Matcha, share startup stories and interview experts.

Ryan · 0:22

And we are here in Bangkok, Thailand. We just finished the Thailand Coffee Festival. We were exhibiting there and had a lot of learnings that we're both wanted to digest together. So this is a more conversational episode between Sam and I to really just goes through all the learnings that we had over the last four days because they really should rename the Thailand Specialty Coffee Festival to the Thailand Specialty Matcha Festival.

Zongjun · 0:46

I think about half of that show is tea, yeah, Of which about 90% is matcha. Well. First painful learning. Do not ever ever ever use UPS. Yes, so it seems still not here. It is very painful. This was going to be the first time we were publicly unveiling our matcha mill Sanko Usu One to the world.

Ryan · 1:06

And unfortunately it was supposed to arrive 10 days before the conference started on air freight cargo and got we had four cancelled flights. And in theory it's arriving today, which is Monday, which is the day after the last day of the conference. So it was kind of deflationary for us because we had to present from a poster what we were doing at our with our partners Chaseki at their booth.

Ryan · 1:29

But we took the opportunity to learn as much as we could while we were here and wanted to share those learnings. And there's a shocking amount of interest for our machine, considering we were only showing pictures on posters and on our computer. One thing that's very interesting as we are talking to people approaching us, getting curious about the machine, is that no one asked why are we milling matcha fresh. That's true.

Zongjun · 1:53

Not once. Not even once. Actually, I guess and one person asked me what are the benefits of fresh milled matcha? But I think they just wanted to be spoon fed marketing material that they could give to their customers. Yeah, but for a lot of people really just felt that obvious. Yeah, it's just clicks in their head. Also, a shocking number of people have a shocking amount of knowledge about matcha milling.

Zongjun · 2:16

Let's stop by. I don't know, maybe there's some selection bias based on the people who would walk up to our machine or the poster of our machine. But like people are very well aware of ishi-usu or ball mills, the pros and cons of each, what you're trying to get for what the Micron size should be. We get some really shockingly specific questions about matcha, matcha powder quality in a way that I just don't think would have happened anywhere else in the world. When you talk to people in the specialty coffee industry or even the matcha industry more broadly in other countries, it feels like a very, very

Ryan · 2:49

developed market. So Zongjun, now that we have both given our elevator pitch, I don't know, 100 times each over the last four days, what is what is your pitch when someone walks up and say, hey, like, what is this? What are you guys doing? It's a matcha mill.

Zongjun · 3:03

That's the easiest part of this building this new company that's kind of self-evident. Yep. Yep, You don't need to set up the question. You don't need to address any, you know, concepts very obvious. Tencha goes in from here and then Matcha comes out from here and I'm glad that that I end up bringing component from the machine with me. It's the plate.

Zongjun · 3:24

The hold plate set was with us for the whole time. The Millstone service. Yeah, so, so that was very helpful. Can basically point at it and tell them that OK, so we actually trying to mimic the traditional pattern of the ishi-usu by using ceramics and we have these cooling system that can extract the heat from the grind surface that's being generated from such high compression coming from our compression mechanism to produce very fine powder. So I think, you know, people naturally would, you know, their second question will be like, how fast can you produce matcha? Yeah, straight to business.

Zongjun · 3:59

And using ishi-usu as a comparison both on speed and the powder quality really I think resonates with people. We took inspiration from a traditional ishi-usu design on the grind mechanism, but we are increasing the production speed and also we can match the powder quality.

Zongjun · 4:17

And I think that's that that really, you know, that up people's light in their eyes, especially when they touch the actual matcha that's coming out from the machine. Yeah, We brought some samples that we had milled and just seeing people's faces light up and even from some of our industry friends, which we think are, you know, very skeptical.

Ryan · 4:34

People have really high standards for matcha quality. And, you know, hearing them say the matcha powder quality is good. This was. Seeing their facial. Expression very high compliments of people we really respect. Very encouraging.

Ryan · 4:48

Thank you. Thank you. So one of the things that we get asked a lot about is this more innovation, is it killing tradition? Like, should you know, is this going to be too much in competition with matcha stone milling? And what we keep telling people is that actually from the tea leaf's perspective, if you put yourself in the POV of the tencha turning into matcha, nothing's changed.

Ryan · 5:09

Almost nothing has changed. You're still going down a hopper, you're still going onto a mill stone, you're still being chopped up and into so many fine pieces that it's so small that it's beneath the visual threshold. The heat is still being removed from the system in the same way, so you're not over generating too much heat at the moment.

Ryan · 5:30

There's only one material difference in that the what's doing the grinding mechanism is something that is more precise and less variable than something like natural stone granite, which requires an artisan to be able to to carve in the grooves.

Ryan · 5:45

And we've actually tried carving in grooves with granite with CNC machines and it ships. And part of the reason that it ships is because it comes from nature and from piece to piece. There's some variability. So it requires a lot of human skill to do, which is fantastic art.

Ryan · 5:59

But unfortunately it's probably gated at, I don't know what two or three dozen Japanese stone Masons in the world that have the knowledge to do that. And that's great, beautiful art. Absolutely not scalable and absolutely not scalable at a cost where most people will be able to before.

Ryan · 6:15

And as far as a business is concerned, even people who own traditional Ishi-usu stone mills, the single greatest liability of that piece of equipment is the millstone surface where all those grooves are cut into. And if you don't know what you're doing, which is nearly everyone outside of Japan, it's going to be need to be refinished on a two to three-year basis or maybe even sooner depending on usage and what you put through the machine, right?

Ryan · 6:40

So now you have a life cycle problem, the life cycle of the piece of equipment, like in the same way that we think about, I don't know, the life cycle of a water bottle, right? You have plastic, it goes to some manufacturing, they put in some water, it goes to the convenience store, you buy it, you consume it and you hopefully recycle it to which hopefully it re enters the system. It's a life cycle for any product. Same with iPhones, same with computers and same with matcha mills.

Ryan · 7:06

And the life cycle and repairability cycle of Ishi-usu is designed to only exist in Japan. Because right now, the only way that you can do this is send 50kg of granite back to Japan, get refinished and then ship it back. Or if you're very lucky, you have a good relationship with the stone Mason.

Ryan · 7:23

They'll come to you and do those repairs and then every time you do a repair, you take a thin layer off of that granite. And because it's a gravity based compression system and you can't control the level pressure, it will get thinner and thinner and thinner over time, reducing the weight, which typically means you have to reduce the speed, which means you have to reduce your your throughput. So it's a very long way of saying that by having controllable compression and swappable millstones, it takes away a lot of those risks as a business and but also hands over a lot of control where you're able to see what does this taste like at this speed and pressure

Ryan · 8:04

and temperature. And you're able to actually participate in a pretty large flavor creating step because milling matcha slow and cold tastes very different than milling matcha fast and hot. And then there's an in between.

Ryan · 8:19

And then this optimization needs to be dialed in depending on the tea, whether or not it was roasted like a Yame tea, whether or not it's like a super umami bomb like Asahi cultivar from Uji, right? There's all of this variety and where you can actually really participate in the step, which got a lot of people excited as we were explaining this to people because a lot of people say like how does this compared to a still own MIL? So we like to approach it both from the product and product quality lens, but also like what is realistically scalable? Because buying a 10 to $15,000 machine after you take into account tariffs and shipping,

Zongjun · 8:53

etcetera to send this granite to these countries, it just doesn't make sense for it to scale. So if we want the world to have fresher, better matcha, where matcha businesses are not just repacking someone else's powder, we need a pretty fundamental shift in the equipment ecosystem, which is where we're trying to find ourselves. That was a great pitch, Ryan.

Zongjun · 9:11

You make me almost I want to buy a machine. I'll sell one to you. So along the way, have you gotten any pushback from anyone you talk to? I think people obviously cost is a concern and we're pretty transparent. The retail cost of our machine is 7 thousand U.S. dollars and we're doing a pre-order batch before November 15th. People can buy one for 6500 as a as a pre-order. So cost is a thing and it depends on what their business is.

Zongjun · 9:35

I mean some people are in the business of you know just e-commerce. So it's a kind of a different story. Some people are interested in sort of a mill matcha fresh milled matcha club like subscription service, others are cafe operators.

Zongjun · 9:48

So it really depends on the context of the business, so. And some people are holding a much larger breadth which the current the capacity of the machine might not just make sense for them. At their scale, in the way that they manufacture. Yeah, if you're looking for like a few KG or hundreds of KGS of production a day, this machine is probably too slow. Well, especially if you're centralized operations, but if you're decentralized operations, I think there's a good fit and I think there's going to be an interesting thing. So I'm walking around the floor and there's just so many like just wonderful, fantastic new

Zongjun · 10:22

matcha brands doing some really incredible sourcing work and product descriptions and like extremely creative product names, like really some very cool brands. At the show, there were a total of around 40 different people exhibiting that were selling matcha matcha brands.

Zongjun · 10:39

And I was walking around thinking to myself, you know, the moment that we start making pricing quality distinctions on freshness, a huge problem is the MOQ problem. When you're a small business doing interesting sourcing, especially for some of the higher end specialty matcha products, right, you got to commit to buying a certain amount at a time and especially in the sourcing environment that we're in, right? Like if you have the opportunity to buy, I don't know, 50 KGS versus 20 KGS of something that's really good. There's a really strong incentive to buy 50 KGS if you can afford it based on your cash

Zongjun · 11:14

flow. Because this stuff is just selling out super fast and then you have nothing to sell. And because of that, right, you're now stuck on what is essentially parachutable inventory, which you can cold store and keep in the freezer. And you know, the cold chain will help prolong the shelf life.

Zongjun · 11:29

But if consumers really make the switch to caring about a fresh mill product, right? And we shift the definition of what is quality to be based on a mill date. It's like having a shelf stable inventory based business to having a perishable inventory based business.

Zongjun · 11:49

And these are two really different business models. And my fear is, is that it will I could form some level of consolidation where if you have a lot of supply chain control and have are very good at churning over your inventory, you're going to be naturally set up to succeed in that world.

Zongjun · 12:08

Then if you just don't have that in your business because you're too small or because you're new. So we're hopeful that, you know, this technology is able to help out both parties and that a $7000 price point is good enough for people to be able to mill matcha themselves locally to maybe even distinguish their products from some of the bigger players that do centralized all those operations and have it. So we're hoping on the scale of who that helps, it's the smaller businesses as well as the bigger businesses. I mean, we we're also very pro consumer. We want to see a fresher milled product because the reality is, I think in 10 to 15 years, we're

Zongjun · 12:48

all going to be saying that pre milled matcha is stale. In the same way that the entire coffee industry has shifted their definition of what they consider stale in the last 20 years to basically mean that you need to grind right before you consume because there's a noticeable sensory difference.

Ryan · 13:05

And that is just absolutely true with matcha. You can open a can of matcha, you wait a week and the product has completely changed. So it's it's a bit unfair at the moment, I think to over market matcha freshness because literally no one could compete unless you have that level of infrastructure. I think there's going to be some growing pains as this industry evolves, at least in the framework that we're looking at things with regards to freshness. But I really hope for consumers sake and the products sake that people start making these distinctions. What were some of the things that surprised you or did either like didn't meet your

Ryan · 13:40

expectations or did meet your expectations just being exposed across the four days in the show? Like what was it like observing Thai consumers buy things, the questions that they asked, because also at the booth that we were at, there were a lot of matcha sales going on.

Zongjun · 13:55

It's pretty interesting just watching just how people buy matcha retail. Like you don't get exposed to that in very many environments. Like maybe you're at a cafe and you're sitting and someone happens to be ordering something and asking some questions. But I don't think we've really gotten this level of consumer interaction at this density.

Zongjun · 14:13

Well, I don't speak the language, I honestly do not know like what you know the consumers were talking about most of the time. But it was interesting to see their eye movement across different items. Consumers are very sensible to color, I feel like in this market, and I think the brands here also noticed that too, there's almost oversaturation of different color palettes across different brands, different products and different items or even within one item. It's very different compared to other markets, like for example, Japan.

Zongjun · 14:48

If you approach the Thai consumer with like 2, I guess, authentic of the Japanese image, you definitely will stand out in this market. Yeah, there's a really distinctive level of tightness, like you were either sort of an imported Japanese products and there were a lot of them being resold from the famous Fuji companies and from some other famous companies in Japan. But the local brands really kind of felt local. The color palette was very loud.

Ryan · 15:18

And I agree, it was really distinctive. And actually a lot of it was not to my taste, but by watching a lot of the eye movement because because we don't tie right, like we're constantly looking, OK, someone looking at our poster.

Ryan · 15:30

I had like, so we're really, we're tuned into that ready to answer someone's questions if they were interested in learning more about Matcha Millie. Just it was very interesting seeing that and we had some discussions with some other people to conference about that level of marketing.

Ryan · 15:45

The contrast was especially obvious when you have a bunch of colorful bowls sitting right next to our poster. Our poster was competing with these plastic. Very colorful bowls and the amount of eye movement that went toward an interest in these bowls was almost comedic.

Ryan · 16:01

We were trying to guess, OK, are they looking at our poster or are they interested in this neon pink bowl which is. 9 times out of 10 it was those bowls. Well, it was largely a consumer show. It's it was it was interesting to watch. So Sam, for anyone who's never been to Thailand, who's never experienced the way products are marketed and sold here, if any one of our listeners was to walk around conference, what is the look and feel of the way these matcha products are communicated?

Ryan · 16:28

How are they differentiated? How are they sold by how are they described? Like what? How is this compared to like the way you would see coffee somewhere else or something like that? Or not even somewhere else, but something that is pretty interesting to me and I feel like that it's not necessarily happening anywhere else is a very clear distinction of a brand or a shop selling matcha versus coffee.

Zongjun · 16:54

I saw very few, most not in my impression, any brand selling both matcha and coffee at that show. That's true. It was just matcha or just coffee, and there's no mixing. Yeah, that the boundary was very clear. Even with loose leaf tea, there was very little loose leaf tea mixing.

Zongjun · 17:11

Very unusual. Made just a handful of booths. So, so that that was very interesting. Like people, people do make a very clear distinction of product categories and their aesthetic and their communication leaned 100% into the category.

Zongjun · 17:27

It's a very, very full commitment, which naturally inspire a question that I hope I ask during the conferences. So what do all these coffee people think about Matcha and Matcha's presence in the Thai Coffee Fest? The name is still Coffee Fest. You cannot find the name Matcha anywhere in the in the name or India in the branding of this event. But the green radiance of Matcha is just you cannot ignore that it I would say about 40% of the booths at the Coffee Fest were matcha.

Zongjun · 17:58

Yeah, yeah, Yeah. It's really found an interesting home in this market and close association with coffee and cafes. I didn't mean it. It naturally makes sense for where the business flows. I mean, every cafe needs to respond to the preferences and desires of their own consumers. And I think it's just a reflection of how much consumers love matcha in this market and that coffee shops have no choice.

Zongjun · 18:22

They have to embrace it and now they have to embrace it levels sophistication that really doesn't exist in any other market. The level of knowledge about cultivars that's here, the level of knowledge about origins that's here really genuinely matters to people in in these types of conversations. And the salespeople who sell these matcha actually have to know a lot about the product.

Zongjun · 18:45

And that knowledge has spread and is ubiquitous and has really kind of taken on a life of its own that just doesn't exist really in many other places, especially in Japan. I found myself asking, telling myself oh wow, I need to buy this product or I need to go get another cup of this or that thing because I am never going to find it again.

Zongjun · 19:04

And we're in Japan like two or three times a year and I'm thinking I have no idea where to find some of these products in Japan even we were meeting some tea friends of ours in Tokyo. I said hey, where can I buy some really good Yame tea?

Zongjun · 19:17

And we were like I think near Ginza. I forget where we were, we were somewhere really central and they had no idea. They barely found new like 2 places that had matcha of which it was mostly out of stock and just the big quote unquote Uji brands.

Zongjun · 19:31

It was like they don't know where to find single origin matcha in a random spot in Tokyo there, let alone to find a 45 day shaded zairai from 100 year old trees from Kyoto nabe. Like that's crazy. And and it's expensive too, compared. To very expensive.

Zongjun · 19:53

The income, average income level here in this country. Over 100 you I think close to 130 U.S. dollars for 20 grams. Like very expensive tea in general, let alone for for the category. People are really willing to spend money on this, Sykes, this level of experience, which I found it very fascinating. Yeah, the price sensitivity here is pretty, I don't know, higher, low, whatever it is, people are willing to spend money. The people that have money are willing to spend money in like a lot of money, hundreds and hundreds of U.S. dollars. We saw a lot of these transactions and not all of them were for B2B.

Zongjun · 20:28

Some of them, some people were like legit buying kilos, probably cafe operators or people that have, you know, businesses, but a lot of consumer too, very high prices. So like Peace Oriental Tea House had a huge booth this year and they're the official resellers for Horii Shichimeien and for Marukyu Koyama. And, and the markup, the retail markup between in Japanese, the Japanese price and the Thai price is enormous. Like it's close to it feels like it's close to 300 to 400% marked up from the Japanese retail price and people are still paying for it.

Zongjun · 21:03

Huge lines for those products. You did a pretty interesting research on all the price points and product categories and product names across the whole conference, right? What is the markup difference between retail and wholesale?

Ryan · 21:16

This was really interesting So I got very inspired the last day and I was like what could I use AI for that just wouldn't have been possible two years ago and image processing has gotten so good. So I decided to visit every single matcha stand and I missed 1 and it possible I missed 2 but nearly every single one. I took a photo of every single matcha powder product menu that they had and I think I probably captured about 95%. Maybe I missed one or maybe someone was just, it was just too awkward.

Ryan · 21:47

My price espionage mission. But I was able to capture over 350 products with prices and also capturing the wholesale price. And one of the more interesting findings across all the vendors is, is a pretty universal price markup between the smaller cans, let's say 203040 gram cans and like the per the kilo pricing and it's about 1.6 X is the average. So you can multiply a 30 gram can by 1.6 X or excuse me, you can take the per kilo price and multiply it by 1.6 X. And that's about the markup between the retail and wholesale side of the business.

Ryan · 22:25

Which is not that high, not. That high, shockingly low. I was very surprised. And there's a huge wholesale price range ranging from around $80.00 to I think $900 per kilo was the highest one that I saw. And then there were a lot of really high end matcha products that that just were not unavailable by the kilo. And the most expensive product that I found, no surprise was Marukyu Koyama and Tenju, which was selling for 250 U.S. dollars equivalent.

Zongjun · 22:57

I remember when we paid 80 bucks for that a year and a half ago retail in Japan. Yeah, I heard and then they raised the price to like 150. And then I heard the raise the price again. I don't know if it's happened, but the price, by the time it gets to markets like this, it's, it's crazy. But based on my personal experience that product, it was way better year and a half that.

Ryan · 23:16

Too. Yeah, we've noticed that maybe it was the rush to market, but a lot of the blunt house products quality has definitely changed. I don't know why exactly maybe the there's too much pressure to get it to market before it's been properly aged a six month jukusei process or maybe there's just too much competition to find material in the explosion of single origin single cultivar, single estate, single farmer. Much of brands are cooling volume out of the system and it cannot be poetically named anymore. And now we're actually calling it, I don't know, Huntu Asahi or you know, 45 day shaded Uji

Ryan · 23:51

Hikari from this or that place, which is a good thing to see. And actually, if you really put it into perspective, I think this is just a market maturing. It's still crazy that the best thing in an entire category only costs $250 per can, which and if you do this per gram, right, that's what is a $12 to $13 per gram, which means say 2G usucha is still just 20, 5 bucks per serving, right? Like even compared to something like coffee, the per kilo lots of really special specialty coffee are way north of that. Like very expensive.

Ryan · 24:23

Same thing, wine, same thing and, and a lot of other product categories. So actually I think it's closer to what that product is worth and products are worth what people are willing to pay. And people in Thailand have developed an incredibly complex and sophisticated set of preferences to value something like that, which is the most interesting thing here is that this market can sustain these relatively high prices for products across the board.

Ryan · 24:51

And another way of putting it, people are willing to pay for quality and they understand what quality means. Asahi has a meaning in this market. Handpicked has a meaning here. Honzu has a meaning here. And even more like niche specialty things like zairai have a meaning here and have a market things that people are looking for, which is really exciting. And then also, you know, because people are open about origin. I saw there were a lot of Chinese vendors here. There were a lot of people selling mixed Chinese and a Japanese matcha here.

Ryan · 25:22

And like the story is, it's a great value for the money. Even now. We got some freebie samplers that honestly look like a Japanese product. I actually didn't realize that the product wasn't Japanese until I opened this little 3G sample pack that I mixed together with a spoon and a coffee cup in our in our hotel room to drink for some caffeine during this recording.

Ryan · 25:41

And I looked over, whoa, this is from Zhejiang. I thought I was drinking Yame because it was being advertised as nutty. But even this Zhejiang tea that I'm sipping on now is this sort of slightly watered down usucha mixed together with the spoon honestly is not bad.

Ryan · 25:57

Pretty good actually. I am not. It's not usucha worthy by most people's standards. But if you water it down a bit, you know, mellows the flavor and I'm enjoying it. And, you know, this probably costs 120 bucks wholesale, maybe a little higher, but, you know, it's probably priced very competitive.

Zongjun · 26:14

And it says it's great in applications like frappes, lattes, baked goods, right? They're not, you know, making the best of the best out of the stuff. And the stigma for Chinese Mark Matcha feels a little bit less strong. What about the naming scheme of all of these product Ryan? Like the comparison between poetic names and also more transparent labeling?

Ryan · 26:39

Or a mixture of both. It's both. I think on average it's a mixture of both. When I was walking around, they're very good at tasting notes and I did a really cool study. So I took a photo of every menu and then had AI go through and extract data about all sorts of things, about price, about cultivar, about stated origin, about tasting notes and the Sam.

Ryan · 26:58

Can you guess what the most common tasting note was across all of these products? Most common. Yeah, most frequently occurred nutty, not smoky. Good guess. But the no, not even the top 3. Grassy, umami, umami #1 OK, followed by creamy, nutty, seaweed, floral. And then the next are macadamia that has 15 occurrences. Avocado, pistachio, sweet, smoky, mellow, vanilla, asparagus, rich dark chocolate.

Ryan · 27:28

All of those have more than 10, followed by edamame nut, almond, hazelnuts, smooth peanut butter, excuse me, peanut and then butter. Umami, salty, it's interesting. Chestnut, fruity, white chocolate, roasted. So this gives you a sampling of the type of descriptors that are being put onto these products. But nearly 50 products are described as umami. And by the way, these are just from the photos, like one photo. So I think a lot of cases, a lot of these products have even more description if you were to actually photograph each can at all the angles.

Ryan · 28:01

So this is very much like if you were like, like looking through my eyes, quickly walking by the level of detail that you would see, which is. Probably a very good representation of the average consumer. Is going to expect true? Yeah, yeah.

Zongjun · 28:13

Because they're not really going to ask every every question. Yeah, we're really looking to every products. How about the comparison between Uji and Yame? That was super interesting. So there should be an asterisk next to everything regarding uji.

Ryan · 28:26

Because uji is such a complicated term, some people, and I like to that this is happening, are separating out non uji grown tensha uji macha from uji macha. So there was a whole booth actually just dedicated to Wazuka and some people are talking about Jo Yo or Mina Minashiro. How do you say that?

Ryan · 28:45

Minami Yamashiro. There we go. I think I've missed 11 Salable. They're talking about Jo Yo, talking about Uji Tawara, which was really nice to see. And then also some people talking about the the trademark, other prefectural supply regions like MIE, there were some people selling just Miya tea or Shiga tea or Nara tea.

Ryan · 29:04

So a lot of people labeling as Ujimacha really, it's actually coming from Miya, Shiga, Nara or somewhere else in Kyoto Prefecture, not from Uji itself. And if they call it an Ujimacha blend, then up to 50% could come from Kagoshima or Shizuoka.

Ryan · 29:20

So with that caveat, turns out that there are more products labeled as Yame this year, 2026, than there are Uji, which is actually matches. A lot of the anecdotes we've heard from our industry friends here is that a lot of people are looking for nutty matcha. It seems to be the big descriptor and flavor that people are actively caring about. And even this this Jujiang matcha I'm drinking now is advertised as nutty, a low cost nutty option. Very interesting.

Ryan · 29:51

Although we do, we did learn that similar kind of tea laundering scheme is happening in Yami too. Yeah, apparently the math doesn't math when it comes to the amount of YAMI T sold in the amount that can be realistically produced there. Yami is definitely less stigmatized than Wuji, which I think is part of the reason why people are leaning into the brand.

Ryan · 30:13

Yami right now heavier than Wuji. So Sam, can you guess the median price across what is it across 296 products that are retail price under 100 grams in dollars per gram? Dollars per gram, medium price. And I'm looking at the distribution now.

Zongjun · 30:34

It's a pretty normal distribution. It's got some outliers on both sides. But you know, it really looks like a bell curve, which is interesting, not skewed too much one way or the other, skewed slightly to the right towards more expensive products. $1.00 or 1.2. That would be my best 70 cents, 70 cents, $0.71 a gram USD, Which pretty high actually, Yeah. That's still pretty high, and this is when you consider the average income of Thailand.

Zongjun · 31:02

But there are a pretty significant number of products that are above $1.00 per gram. And you know, I'm sure the wholesale price that you know, these monster brands are buying it for is probably closer between 1 to 300 for a lot of these products. So probably there's at least a 2X markup, not taking into account very expensive things like shipping, tariff, packaging.

Zongjun · 31:24

So at the end of the day, probably it's not a super, super high margin business, but it's this is this. I found that data pretty interesting. And the most expensive one program and it calculated for us was 10 Jew at nearly $12.00 per gram.

Zongjun · 31:37

OK. And what do you think the median is for wholesale matcha that's over in package size formats over 100 grams? 30 cents, yeah. 28 cents. Oh wow. Close. $0.28 that's probably what this market can sustain in terms of cup cost, which is actually still pretty high. If you're dosing 4G, that's $1.00 worth of cup cost in just a matcha, not alone, the milk and the cup and the ice and the rent and everything.

Ryan · 32:06

So kind of makes sense. That's why, you know, drink. Most matcha drinks in Bangkok are priced at least about four U.S. dollars for a decent 1. So Sam, what do you think was the most common cultivar sold? Okumadori. Has rice. Is it?

Zongjun · 32:20

Yeah, it's Okumadori by far, actually. It's interesting, like I did notice a trend of people trying to kind of establish the status of Okumadori being the actual default cultivar for matcha versus Yabukita. Yeah, there are more people talking about Yabukita being not a matcha category based on its invention intention back in the days in Shizuoka. Yeah, it was really not for matcha. It was for for 1st century and for Gilkaro at the time. And it got repurposed to make matcha because of its biological benefits of cultivation.

Zongjun · 33:00

There are more people trying to lean into this idea of Oka Midori being the actual default cultivar from Russia, and I think that's really making a presence in Thailand. And there were a lot of single cultivar products.

Ryan · 33:12

Some others that were on offer were Siami Dori, Suyu Hikaru, Samidori, Yabukita, Asatsuyu Karari 31, Uji Hikari Goko potion, potion potion, Asahi Sayeh Qadi. I don't know what that is and. Then I tried Hoshin the first time here in Bangkok. Have you tried Hoshin?

Zongjun · 33:31

Yeah, I have. I have. I don't have a very strong memory. Of Phoenix Sprint. Oh, that's the. The name, the actual literal name, and there. Was even some xyrai here too, which was nice. That was one of the more interesting things that was here that I found. So of the matcha that was here about that 75% had an origin disclosure where they were stating the prefecture that it was from.

Zongjun · 33:54

So I mean, we're talking about the vast majority of this being what most the, the broadest definition of single origin is being marketed as a single origin product. A single origin has its own rabbit holes on how you define it, but let's just say they're giving you some level of detail about where it's from and saying that something is from Kyoto versus Fukuoka versus Kagoshima. It carries some level of meaning. I don't think there's doing anyone's really doing hand picking and Kagoshima.

Zongjun · 34:21

So like you can do some pattern matching if you know something about the place and you get an idea of the quality of the price. And then regional styles for Fukuoka is a little more famous for the roasty toasty and Kyoto is a huge grab bag. You might be getting something really industrially produced or you might be getting something incredibly expensive for all the right reasons because it's hand picked luxury cultivars, right? So it's a, it gives you a capability of what it's going to be like.

Ryan · 34:48

What's the percentage of brands that talks about information beyond just origin and cultivar? That's a good question. Should we ask the AI? Yeah, let's do it. Let's do it right now. What's the percentage of brands that talked about any detail other than origin and the cultivar or tasting notes such as first harvest, ton of shelves shaded, number of shading days, etcetera.

Ryan · 35:11

It's the beauty of AI. We can query the data set, as you've all know, Harari, the famous author historian puts. It's incredible when you can ask questions to a text or data set. Of course, AI can get things wrong. And a big thing for us that we hate AI slop and we hate it when people just are lazy and they don't double verify. So for the sake of this episode, we're not going to go through every single claim, but we can take this as some level of directional evidence.

Zongjun · 35:38

That's a grain of salt. Yeah, big grain of salt on these until we can dig into this further, It says that 42% of brands print at least one processing detail beyond origin cultivar tasting. OK. Very high percentage. Yeah, very high.

Zongjun · 35:51

So around 50% and I have a suspicion it's slightly higher because this is getting one photograph, 1 angle, one menu. And really when you talk to these people or you look at some different sheets or you turn the can around, you end up getting a lot more detail. Yeah.

Zongjun · 36:07

And then other details include things like harvest or flush number handpicking. 15 products were handpicked that it was able to see. Organic, That makes sense. Stone milled, shading, firing or roast level. People really care about that farmer producer's name?

Zongjun · 36:23

That's interesting, cool and awards. Wow, very transparent. So I noticed there's was very impressionable for one brand that went so granular into single origin that they hand rolled a map of where each of these cultivars getting farmed at which place in the city.

Ryan · 36:40

I think I know what you're talking about and they were talking about the movement of the sun and also not only the map but the topology. So where the hills were and how the level of sun exposure was changing certain cultivar fields. Flavor.

Ryan · 36:56

It's. A very wine concept. Yeah. Of understanding the topography and the geography. Jev from MTCH was talking about that last year with me as well. Really love seeing this level of detail. Yeah, but I really have to get close to the producer. I didn't have to know the producer there. There is no way that that particular vendor did not have an incredible relationship with their farming supplier because otherwise you just can't get that level of detail. And their farmers must really care about that too, because the only way that you know you can hear about it is what the farmers care about and how they

Ryan · 37:31

believe that the tea is expressing itself. They're willing to tell you. And they're willing to tell you. So really developed market. I think it's impossible to ignore what's going on in Thailand if you care about matcha and any way is a specialty product, is an agricultural product, is a cultural product.

Ryan · 37:50

It's really evolving in some pretty fascinating ways here in a way that we're just not seeing anywhere else in the world, which is why we keep coming back to center of gravity. And we keep coming back too, because it's one of the few places that we're able to learn really deeply about the product, especially in English. You can go to Japan in Trying to find someone in Japan that's willing to talk to you is difficult, let alone getting through the language barriers, even more difficult. And what the I'm so grateful for, for the Thai Matcha community is they've done that hard work and then they are so willing to share it with

Ryan · 38:24

everyone. So very grateful for all of the founders and all of the educators here in Thailand that are so open and so willing to share their knowledge and their passion for matcha and dimensionalizing it in just an incredibly new way. And I think it's a great template for what matcha can turn into, where we're honoring the product itself and not just making up all these fufu words.

Zongjun · 38:46

I asked it to also come up with things that would be interesting to other matcha brand founders. And 1 is that the ceremonial carries 0 price premium in this market. It's very few brands use it. I think it was around 20, 5% actively using the term. And when you hear these conversations, sometimes people, consumers will ask is the ceremonial And no one's condescending.

Zongjun · 39:08

I've never heard anyone say that's just a marketing term that doesn't exist. They just say yes. And I think over time it's just going to fade out of use. It's so I, you know, I talk about this a lot with industry friends, like, like, how should we deal with this, the ceremonial thing or even this Uji thing?

Zongjun · 39:25

Like it's so condescending to say, yeah, it's actually not Uji who care about terroir. It's, it's, it's a brand concept almost. But you know, giving people that framework, or as Maren said on on our episode with her, that that web of context takes a lot of time and it has to be very carefully delivered not to be condescending.

Ryan · 39:45

Yeah. But, you know, eventually when the whole population moves past a threshold or a tipping point, it's very natural that the the usage of these words would just, you know, get retired almost from People's Daily. Vocabulary. People just would stop using it or talking about them. And I like how it's the brand's leading in the all of these matcha brands are leading that charge and they're just slowly dropping it.

Ryan · 40:12

They're not writing long blog posts probably about why it's bad, blah, blah, blah, right? They're just dropping it. And then eventually it's just going to be meaningless. And it is meaningless here. And there's always going to be laggards where people, you know, maybe, maybe they just don't care much about matcha. They care about a good cop.

Ryan · 40:29

They're interested enough to come to this show, but they're not keeping up with the news. Like, we can't expect that with, you know, different matcha consumers aren't in the cutting edge of matcha product positioning. We are here, right? Like maybe they learned about it. They got busy and they're just like, they're mental models. Just a little out of date can be a perfectly innocent question. And it's just falling out of usage because everyone's taking the leadership to take it out of usage, which is which is nice to see.

Zongjun · 40:56

Yeah. Also the same thing with Uji here. I think this concept of single origin labeling Uji Matcha, a single origin matcha is not fair because it really is not a single origin product in most people and people know. And of course there's some deception. I went to one of the Japanese booths here and they had a whole range.

Zongjun · 41:16

They said it was all Uji. And I decided to to sort of stress test this a little bit and said is like, is this actually from Uji or is this from other surrounding towns like Wazuka, Ujitawara, Joyo. And she said, Oh yeah, yeah, yeah. Actually, all of all of this is not from Uji except for the Asahi.

Zongjun · 41:32

So they're honest. So they know and they're honest, but I think they're being reductive in the same way that maybe five years ago you say, you know, this is all ceremonial great tea, right? Like people, they know that people, you know, some people are searching for uji.

Zongjun · 41:45

It is uji by the Japanese definition, which is not a but you know, this is again where you can't just take a framework and import it from coffee and project it on the matcha is that single origin is a terrible deep rabbit hole and tea because you have all of this stuff intermixed and for much it's even worse because it's really not that terroir expressive, but knowing where it was grown can tell you a lot of information.

Zongjun · 42:13

Knowing that it was uji grown tencha does tell you something not about the land, but about what people are doing on the land and what people are doing in the region. You can get quite a bit of product information out of it, so you know, it's nice that people were honest there.

Ryan · 42:30

Yeah, but I really like your metaphor of calling Thailand being the center of gravity for matcha. It really is in Thailand, in Bangkok, in Chiang Mai. It's really everyone. Everyone is here. We met a lot of people from India, Japan.

Ryan · 42:46

The Chinese, Indian, Malaysia, American people from European Union, everyone is here and everyone is talking to each other. Everyone is learning the state-of-the-art processing, state-of-the-art technology, equipment, products and everyone is, you know, slowly forming these loop for these community of people, of brands, of insiders. I feel like it's very fascinating to watch, and being part of it is even more fascinating. Totally, totally.

Zongjun · 43:17

It's a small world. It's a very small world. Fake. World. And there's a small world. Wow. That's the other thing that we learned. Just the level of how much everyone knew everyone. Reputation travels fast too, so. At the booth, I end up I think speaking Chinese for 30% of the time.

Zongjun · 43:34

It was. It was crazy. And they know a lot too. Wow, it's incredible. Yeah, both from mainland Chinese, but also Taiwanese and. Singaporean. Singapore and diaspora who live in Thailand. Yeah, yeah, in Chiang Rai, mostly. Interesting.

Zongjun · 43:49

A lot of tea plantation in Chiang Rai. They're making a lot of matcha now. Yeah, we even met some people who do some work in Africa in Kenya and they're saying, yeah, you know, the tea markets getting pretty devastating in Africa or the CTC or Qatar curl like very industrial black tea prices are just plummeting.

Zongjun · 44:07

And it's a very low value crop. And they're working with farmers there who are really struggling and trying to get them to switch to matcha or tencha production because it's such a higher value good, which actually I think does a lot of social good.

Ryan · 44:22

You know, this, this matcha is champagne and can only be grown in Japan. One, from a quality perspective just isn't true. If you have the right cultivars and the right knowledge, the right fertilizer, the right shading structures, the right infrastructure, you know, matcha can great matcha can theoretically be grown on the moon. That alone, you know, outside of the country of Japan. And even this argument doesn't even make any sense if you look at the broader history, like Kagoshima was not a matcha producing region 100 years ago, right? Like it like it.

Ryan · 44:53

So this even out much of the production, much of the volume is super, super, super new. It's it if that culture can spread out and even no one was allowed to do any shaded cultivation outside of Uji until like what, 1860 right?

Ryan · 45:09

So that culture spread and culture can spread outside of lines that have been drawn and made-up on a map. Yeah, I mean, it was an international product to begin with, from China to Japan. It's and also just like looking at how many people from different corners of the world are doing matcha, drinking matcha, even producing matcha nowadays almost makes this whole discussion of like matcha has to come from Japan a little childish.

Ryan · 45:36

Like it's like you are arguing for such a small thing whereas so many people are already involved in making these things a reality elsewhere. And it's really, it's a small community anthropologically. Like you can almost know a lot of people instantly in such a small place, but it's such a big world geographically. Mata is being drowned in so many places. This is a vast, vast world and there's just so many places with so many interesting like the techniques Tawas geographical or physical constraints that people are working around it to create something just delicious or interesting to begin with. And, and I think that's

Ryan · 46:21

something worth celebrating. That's totally right. And one of the things we met with 1233, at least three producers of Matcha in China here who are walking around with an incredibly open mind. And we didn't see or were aware of any Japanese producer walking around with an open mind seeing what's going on in this market, which is the most sophisticated consumer market in the world. I think you met one right?

Zongjun · 46:47

Well, I met 1 indirectly, someone from a very I'll leave the details to we don't want to reveal too much, but I met someone from a very, very, very famous and arguably the most important or one of the most important blend houses.

Zongjun · 47:00

I met a family member of someone part of this dynostic family that was very important. He holds a very, very open minded. Very open minded mentality. I don't think he's directly involved in the business, at least not super direct from from what I was able to understand.

Zongjun · 47:16

But the sad part is, is that the Japanese producer are putting themselves in an environment, largely speaking, there's lots of exceptions with people traveling abroad, but largely speaking, not putting themselves in an environment and with an open mind, understanding what people actually like about this product. And the Chinese are learning very, very, very fast and they're curious.

Zongjun · 47:38

Every time we talk with the Chinese producer, I feel like they just pick our brain for like half an hour. What do people like? What are people willing to pay for? What flavor should we make? What do you think of this? What do you think of that?

Zongjun · 47:48

How should we position ourselves, right? They're they're hungry for it. And a lot of these are in areas that are not doing well economically. They need to do the business. Same story in Kenya, right? If they can, like the CTC black tea sells for one or $2.00 a kilo of finished process tea. It is like dirt, dirt cheap.

Zongjun · 48:08

Probably the tea, the tea that this ends up getting sold at the supermarket, the packaging and the tea bag and the staple that hold it together cost more than the tea itself. But you know, you know, even for the most commodity matcha, right, like stuff that is destined for a birthday cake, right, maybe they can get 10, fifteen, $30 a kilo from shaded material that is good enough for those applications.

Zongjun · 48:34

And that's where it can start. And that's kind of where it started in China 10 years ago. But then it has the opportunity to be able to involve. And we met some Japanese people who were at a tea manufacturing, tea, tea manufacturing equipment business that were in Thailand trying to sell, sell tea manufacturing equipment to repackage matcha to even mill matcha. They were selling ball mills to mill matcha locally. Like very open minded people saying that, yeah, it's we're trying to promote it because these farmers in Kenya just can't get a high enough price for their tea. So, you know, if they can learn

Zongjun · 49:06

some of these techniques, they can create a product that people value and that people want. So I think it's really a shame that the best producers of Matcha in the world are indisputably in Japan aren't going to wear such a strong culture of product appreciation exists because essentially much has gone through three different waves of consumers.

Zongjun · 49:26

You had the samurai nobility in Edo during Meiji. You had this girls school training with the schools and Urasenke, Omotesenke and sort of this bridal training concept where most of the practitioners actually doing the consuming consumers were women. And then this third wave of consumers, which is this global audience and all of these are focused around around the tea ceremony schools, the temples, the elites in Japan. And it's not necessarily focused on who is actually doing the consumption anymore.

Zongjun · 49:59

I would wager that there is more maruku or Horii Shichimeien and tea consumed by non tea ceremony practitioners than there are that there are tea ceremony practitioners. 100%. And like coming to a place like Bangkok, you can really find those people that are spending $250 on a can of matcha.

Ryan · 50:20

What do they like? What do they want? Or people who spend $50 on a can of matcha. They're like Chateau Lafite. Yeah, probably. They're probably completely not price sensitive but but I mean really for everyone else, you know, learning this nutty preference, learning the preference for cultivars or from these different origins or even cold whisked matcha.

Zongjun · 50:40

A lot of people don't even use water to make their matcha drinks. It's 100% no because they don't want any dilution and it's done in a cold brew. Think about that. Even from a extraction theory, everyone's evaluating tension using boiling water in a bowl.

Zongjun · 50:54

Here we are having an entire market that doesn't even use heat and doesn't even use water for a very large portion of the drink sales. Like it's a completely different consumption scenario than what most people are envisioning in the crafting of the product, which I guess is a perfect place to end going full circle. We're especially too much a podcast. We really believe that the final touches of the crafting of the product should happen as close to the consumer as possible. Because none of the the great tea masters, great tea blenders and the, you know, these people in Japan, which are from a demographic perspective, old

Zongjun · 51:29

Japanese men have no clue what a teenager in Thailand wants or someone working in tech and Antwerp wants. Like it's they're just so far away. There's this distance problem between them and the consumer where we can really increase product quality from a perspective of preference. What makes this product higher quality for these people, this consumer group, this country, this demographic? And that can only be done locally. Yeah, totally.

Zongjun · 51:59

And it's very excited that we can also be part of this community too. This is really wonderful and exciting time. And he honestly feels very great that we are building something, not just adding another chip to the big piece, but building a tool that liberates people's imagination and empowers people's imaginations to build something even greater or more interesting.

Ryan · 52:23

Totally, I think it's a great place to stop. Thank you so much for listening. If you enjoyed this, please consider sharing with a friend. And if you ever have time or the opportunity, you should definitely check out the Bangkok Matches scene. Yeah, and we are coming back too. Yeah, see you here.

Zongjun · 52:37

See you next year. Take care, bye bye.