Rebirth of the Japanese black tea market: challenges for entrepreneurial green tea farmers

[Background]

In Japan, tea farms are found in warm areas, whose northern limit is Ibaraki prefecture, where green tea has been produced. However, black tea was also manufactured from the mid-19th century and, at one time, Japan exported more than 5,000 tons of black tea of Japanese origin. With Japan’s economic growth in the second half of the 20th century, Japanese black tea lost its economic competitiveness and finally disappeared. Nonetheless, from the dawn of the 21st century, black tea manufacturing has been revitalized and production has grown. In 2007, the black tea manufactured by Satsuma Eikokukan in Kagoshima prefecture won a gold medal in the Great Taste Awards in the UK.

In general, a new industry and its market are not created by gradual changes in existing markets. Signs of opportunities for new products are very small and must be sought carefully. Here, the manufacture of black tea in Japan is seen as the creation of a new market. We studied the history of black tea in Japan, tea species, technological innovation and other factors. In addition, as a case study, black tea production in Sashima, Ibaraki prefecture, is elaborated.

[Results]

In mid-19th century, the Japanese black tea industry was born from the government’s encouragement to tea producers to engage in black tea manufacturing. Black tea manufacturing suitable for the Japanese climate was sought and production increased. Improvements were made by using varieties of tea plant and in 1951 the quality of Japanese black tea was highly appreciated in the London tea market. The export reached its peak in 1954, contributing to the acquisition of foreign currency. However, due to the subsequent economic growth of Japan, labor shortages and higher wages made the cost of Japanese black tea manufacturing much higher, which led to loss of international competitiveness. On the other hand, black tea imports expanded rapidly from 1964 to 1974, of which 65% was in the form of tea bags. In 1986, black tea was first sold in bottles. Consumption and imports increased sharply and in 1997 black tea imports reached nearly 20,000 tons (Figure 1).

The manufacture of Japanese black tea decreased to almost zero around the end of the 20th century. However, the 1996 tea boom stimulated Japanese black tea manufacturing again; in 2010, 84 tons were manufactured, which further grew to more than 200 tons in 2016. The Japanese black tea is consumed domestically. In 2007, the black tea manufactured by Satsuma Eikokukan in Kagoshima prefecture won a gold medal in the Great Taste Awards in the UK.

Japanese green tea is mainly produced in Shizuoka, Kagoshima and Mie prefectures, and black tea manufacturing overlaps the green tea production (Figure 2). Tea is made from the leaves of the tea plant, Camellia sinensis, of which there are two main varieties, Assam or Indian (C. sinensis var. assamica) and Chinese (C. sinensis var. sinensis). It is considered that Assam tea is suitable for black tea and Chinese tea for green tea. While Assam tea is cultivated in hot and humid areas like Indonesia, Chinese tea is grown in China, Japan and Taiwan for the production of green tea. It is rather difficult to cultivate Assam tea in Japan, but for the past half century, breeding has been improved by mixing Assam and Chinese tea sorts.

In general, tea contains tannin (catechin), caffeine, and theanine (a free amino acid). Tannin is astringent and caffeine has a bitter flavor. Assam tea contains higher levels of both tannin and caffeine, so black tea produced in southern countries has a stronger flavor than Japanese black tea. On the other hand, theanine tastes of umami and sweetness but is chemically fragile under sunlight. The reason why tea fields are located in foggy mountainous areas is that the leaves are not overexposed to sunlight, which enables theanine to remain in tea leaves. In addition, the metabolism of theanine is influenced by temperature, being accelerated as the temperature rises. Therefore, theanine and tannin differ in content depending on when the tea leaves are harvested. Black tea made from leaves picked during the summer contains more tannin; thus, it is possible to make tea with a strongly astringent flavor.

The manufacturing of black tea includes four processes: withering, rolling, fermenting, and drying. Fermentation is a particularly highly skilled process, requiring technical knowledge of humidity, temperature and the process of fermentation. While it only takes 3-4 hrs to produce green tea by machine, black tea manufacturing takes about 20 hrs. The revitalization and dissemination of Japanese black tea occurred thanks to innovations in product manufacturing. Entrepreneurial farmers accomplished improvements in manufacturing technology by innovations in fermentation and by learning about the climate, varieties and fermentation methods in different countries and regions.

A growing market needs a new supply chain. In the Japanese black tea market, tea farmers sell their product directly to retailers and blenders or sell it via the Internet. One of the important characteristics of direct selling, as described below concerning the case study of Sashima, is that the communication channel is open between tea farmers and consumers. Tea farmers can take advantage of feedback from consumers as a driving force for subsequent innovation. Advanced consumers play important roles in quality evaluation.

In the Sashima region of Ibaraki prefecture, about 30 farmers produce green tea and 8 out of 30 farmers also manufacture black tea. They used to produce green tea with a brand name, Sashima tea, but due to shrinkage of the green tea market, a new market had to be explored. Farmers who had been cultivating Assam tea started manufacturing black tea. As described above, humidity and temperature management of the fermentation process are of particular importance and high-level technology is required for black tea manufacturing. Researchers and leading farmers visited tea farms in Sri Lanka and made contacts with universities, which brought about improvements in the manufacturing technology of black tea. They gave important advice to tea farmers including those in Sashima. Tea farmers in Sashima put in place a feedback system from consumers for improvement of product quality. This was a new challenge for tea farmers and had an impact on the creation of a market for Japanese black tea. Furthermore, the technology was disseminated by technology transfer. This way, Sashima black tea was born.

[Discussion]

In the process of market development for Japanese black tea, entrepreneurial tea farmers explored black tea manufacturing along with green tea production. The business opportunities were established via the connections of green tea farmers, retailers and consumers. Innovations in the fermentation process were accomplished by leading farmers and researchers through those connections, which was one of the keys to the success of market exploration for Japanese black tea. Moreover, the fermentation technologies were transferred to other black tea farmers. This transfer of core technologies increased the number of reliable manufacturers. As a result, they were successful in rapidly expanding the Japanese black tea market.

On the other hand, creation of a new market may cause cannibalization of existing businesses and the Japanese black tea market should be no exception. If black tea was sold in the existing green tea market, cannibalization of green tea and black tea might have happened. For that reason, a new unique online channel for Japanese black tea was created. Especially in the Sashima case, it was important that a feedback system was introduced between tea farmers and consumers for improving the product quality (Figure 3). This was a big challenge for tea farmers and had an impact on the creation of a market for Japanese black tea.

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