💰The economics of matcha

Here are three facts about matcha that didn’t make it into today’s explainer:

Now that’s tea.

Sometimes, this newsletter deals with the hard-hitting, money-crunching stories that are at the heart of our economy. On other occasions, like today, we’re going to dive into a story that is at the heart of your brunch. Matcha.

Global retailers say Japanese matcha prices have jumped between 30-75% in 2025 alone. That’s worth an explainer.

Matcha is finely powdered green tea from Japan. Unlike regular tea, where you soak the leaves and then throw them away, matcha is consumed as an entire leaf. That's why it's such a vibrant green (and packed with caffeine).

The global matcha market was worth $US4.3 billion in 2023 and is projected to hit US$7.4 billion by 2030. Australian cafes now charge as much as $7 a cup, and U.S. retail sales have surged 86% in just three years.

Japan’s exports of matcha were worth $US1.85 billion in 2024, a 20% increase from 2023 figures. More than half of Japan’s matcha goes to the U.S.

If there’s increased demand for a product, you ramp up supply – that’s economics 101. But with matcha, it’s not that simple: you can’t simply plant more.

Problem one: time. New tea plantations require five years to reach maturation. For matcha companies, this translates to a five-year wait before they can see a return on their investment.

Problem two: labour. Farmers must place the tea plants in shade for 3-4 weeks before harvest to bring out the flavour. After harvesting, leaves are steamed, dried, and de-veined. Here's the kicker: after all that, only 50% of the original leaf weight becomes usable matcha powder.

Matcha farming is a craft steeped (pun intended) in tradition and history, and with a greater portion of young adults in Japan moving away from agricultural regions and towards metropolitan centres, there are fewer carrying on the trade. In fact, the average matcha grower is now over 70-years-old.

Problem three: climate change. Over the past few years, the key matcha farming regions in Japan, such as Kyoto, have endured serious drought. According to media reports, some farmers have lost between 20-30% of their harvest because of extreme heat.

In saying all that, farmers are indeed growing more matcha - a vast number of Japanese farmers who had previously grown another variation of tea are switching to meet the international demand. According to the Japanese Tea Production Association, the country produced 5,336 tons of tencha (unground matcha leaves) in 2024, 2.7x the production of 2014.

Yes; however, many argue that the nuanced traditions and conditions required to grow matcha are unique to Japan. China is actually the world’s largest exporter of matcha to global markets, for example.

André Fasciola, CEO of Matcha.com, said in a recent interview: “What makes Japanese matcha great is 800 years of expertise, the ideal geological environmental growing conditions, and perfection of the equipment and process… There are regions of China that are attempting to produce matcha. However, they lack the expertise, equipment, soil conditions, and the right tea plant cultivars”.

All that to say: your daily cup is probably only going to get more expensive in the next few years.

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This week, Treasurer Jim Chalmers announced major changes to Labor's plan to tax large superannuation balances.

After two years of criticism and internal pressure, the Government has largely overhauled its original proposal. Let's break down what's changed and what it means for you.

Superannuation (or "super") is Australia's retirement savings system. Your employer must contribute 12% of your salary to a super account, which your super fund then invests and grows over time, ready for you to access when you retire. 

Currently, the earnings your super makes (such as interest, dividends, or profits from selling shares) are taxed at 15%. That's much lower than regular income tax rates (which can reach 47%), making super a tax-effective way to save for retirement.

Back in 2023, the Government announced a plan: if your total super balance exceeded $3 million, the tax rate on your super earnings would double from 15% to 30%.

The idea? Super tax breaks cost the government over $55 billion per year. Labor argued that people with $3 million in super don't need as much help from taxpayers, and the money saved could fund other priorities.

There were two key criticisms the Government has faced in the two years since: 

Think of your super fund like a house you own. The value of the house might go up by $500,000 this year, but you don't sell it. You’ve made a gain, but you haven’t realised it (brought it to life, and can actually use that money). Under the Government’s original plan, you'd owe tax on that $500,000 increase, even though you haven't actually received any money. Critics said this was unfair because some people might not have the cash to pay the tax bill without selling assets they wanted to keep.

The $3 million threshold was fixed, meaning it wouldn't increase with inflation. Over time, as super balances naturally grew, more and more people would be caught by the tax. What affects 0.5% of people today might eventually affect 2% or 5% down the track.

This week, Treasurer Jim Chalmers announced some major changes to the policy. 

To have $3 million in super, you'd typically need to have been a high earner for most of your career. It’s estimated that about 0.5% of Australians with super accounts (about 80,000-90,000 people) fall into this basket. 

The new 40% rate on balances above $10 million affects even fewer people — around 8,000 nationwide.

The changes have also been pushed back a year. They'll now begin from 1 July 2026, with the first tax bills in the 2027/28 financial year.

Before then, the Government will need to secure support from the Coalition or Greens to ensure the plan passes through parliament. 

Every year, the Nobel committee hands out prizes in the fields of medicine, literature, peace, chemistry, physics, and economics.

The prize in economics was the last to be handed out this year, going to Joel Mokyr, and Philippe Aghion and Peter Howitt, for their work understanding economic growth.

While discoveries in medicine and achievements in peace are relatively easy to explain to the layperson, developments in physics and economics tend to take a lot of unpacking to understand their impact on your daily life.

Not so for this year’s economics prize. All three economists have worked to understand and explain how our world has been in a state of sustained economic growth, sparked by innovation, and why that’s different to how our society has previously operated.

I recommend having a read of the Nobel committee’s reasons for awarding these economists the prize. You’ll come away with a new understanding of the times we live in, and how economic growth has driven change.