Comprehensive Tea By-Product Business Guide | Monetizing Stem Tea and Powder Residue While Achieving SDGs
“By-products” including “stem tea,” “powder residue,” and “sieve powder” born during tea manufacturing processes. While these materials seemingly tend toward disposal, they now attract attention as new revenue sources and sustainable business pillars.
This article thoroughly explains tea by-product types and characteristics, domestic and international utilization cases, monetization models, and pricing strategy points. Must-see content for food and beverage industries, cosmetics manufacturers, agricultural stakeholders, and those considering new businesses. Why not learn tea by-product possibilities and apply them to your business?
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What Are “By-Products” Born from Matcha Manufacturing?
Matcha represents premium tea born by carefully grinding tencha with stone mills. However, this process inevitably generates by-products like stems and powder residue. While “by-products” conjure “waste” images, they actually represent precious resources abundantly containing umami and aromatic components. Effective utilization enables wide-ranging applications from food and cosmetics to agricultural materials. Here we explain representative “stem tea,” “powder residue,” and “sieve powder” in detail.
Stem Tea (Kukicha)
Stem tea is made from tea stem portions selected when manufacturing matcha and gyokuro. Compared to leaves, stems contain less astringent catechin components while abundantly containing theanine, featuring outstanding sweetness and umami. Refreshing, verdant fragrance possesses different appeal from rich matcha or sencha.
Particularly “Gyokuro stem tea” using gyokuro stems receives evaluation for elegant sweetness and richness, recently gaining popularity as premium tea. Stem tea generated from matcha manufacturing typically has lower costs than regular sencha with easier stable supply, with increasing cases utilized as commercial-use ingredients and gift-blend tea materials. While by-products, they attract attention as high cost-performance products.
Powder Residue and Sieve Powder
Stone-ground matcha manufacturing inevitably produces particles not becoming fine powder and coarse particles remaining after sieving. Called “powder residue” and “sieve powder,” they’re distinguished from first-grade matcha due to inconsistent particle size and color, yet retain flavor and nutritional value.
Powder residue represents particularly high-demand ingredients for confectionery and baking industries. Using in cookies, madeleines, matcha latte bases, or ice cream enables firmly expressing matcha flavor while suppressing costs. Recently, cases selling sieve powder blended as “rich matcha” or “matcha salt” are increasing, attracting attention as materials balancing food loss reduction with added value creation.
Why By-Products Become Business
Tea by-products tend toward “waste” perceptions but actually represent “untapped resources” simultaneously generating profits and social value. Utilization connects to cost reduction, securing new revenue sources, and sustainable brand building.
Cost Reduction + New Revenue Sources
By-product utilization’s greatest merit is balancing disposal loss reduction with monetization. For instance, matcha powder residue and sieve powder incur disposal costs when discarded, but selling to confectionery and baking industries creates new sales.
- Raw Material Cost Reduction: Obtainable cheaper than regular matcha, enabling manufacturers to also suppress procurement costs
- Stable Supply Possible: Tea manufacturing plants generate by-products year-round, suitable for long-term contracts
- Benefits for Small-Scale Operators: Easy small-start, reducing prototype development cost burdens
Thus, converting disposal costs to profits enables tea manufacturing plants and manufacturers to build win-win relationships.
Sustainable Branding
By-product utilization receives high evaluation from SDGs and ESG investment perspectives. Modern consumers increasingly emphasize not only “what to buy” but also “what background products possess.”
- Contributing to Food Loss Reduction: Reducing disposal, lowering environmental burdens
- Participating in Circular Society: Returning by-products to ingredients, realizing resource circulation
- Brand Story Strengthening: Appealing environment-conscious postures
Actually, Ito En annually re-resources approximately 50,000 tons of tea residue, upcycling to paper, resins, and building materials. Furthermore, collaborating with leather brand “genten,” they developed tea residue-tanned leather products. Products born from “by-product × by-product” combine antibacterial/deodorizing effects with environmental considerations, receiving high consumer support.
Utilization Cases | From Confectionery and Beverages to Cosmetics
Tea by-product utilization already extends beyond food and beverage industries into cosmetics and agricultural sectors. Even viewing domestic and international cases, by-products represent not mere by-products but sustainable materials deployable for multiple uses.
Confectionery and Baking Industries
Matcha powder residue and sieve powder see wide utilization as ingredients for cookies, macarons, langue de chat, financiers, and other baked goods. Post-baking, color and particle size variations become unnoticeable, with appeal of expressing matcha-like flavor and vivid color while suppressing costs.
Such recipes apply not only to confectionery manufacturers but also bakery and café limited menu development.
Beverage and Food Ingredients
Sieve powder proves optimal for PET bottle green tea, matcha lattes, and matcha ice cream plus other mass-production products. Procurable at lower costs than regular matcha, beverage and food manufacturers enable stable supply and cost control.
Recently, movements blending matcha by-products into craft beer and smoothies emerged. “Sayama GREEN” jointly developed by Sayama tea businesses and Asahi Group attracts attention as sustainable beer blending keba-cha (tea leaf fragments).
Cosmetics and Health Foods
Tea residue and sieve powder see utilization as ingredients for scrub-containing face wash, bath additives, and body care products. Catechin antioxidant and antibacterial effects enable appeals, proving popular in beauty industries.
Furthermore, cases of drying powder residue into fine powder, utilizing as supplement and functional food ingredients are increasing. Particularly in overseas markets, easy acceptance by health-conscious consumers as “green tea powder,” with export product possibilities also expanding.
Compost and Feed Utilization
Agricultural sectors see advancing initiatives processing tea residue into pellet forms for fertilizer reuse. “Sus-tea-nable” jointly developed by Ito En, JA Oigawa, and Hotei Foods represents nitrogen fertilizer with tea residue as main ingredient, with full-scale operation beginning at Shizuoka Prefecture contract tea gardens from 2025.
- Reducing chemical fertilizer usage
- Realizing regional resource circulation agriculture
- Contributing to tea garden soil improvement and quality enhancement
Monetization Models and Pricing Approach Considerations
Tea by-products trade at lower prices than regular matcha, yet with added value, they become sufficiently profitable products. Monetization success points lie in pricing and branding.
Cost-Based Price Design
Powder residue and sieve powder often trade at half to one-third prices of premium matcha, with stable revenue securable through kg-unit OEM sales.
Example: OEM Price Image
- Premium matcha
- ¥4,000-6,000 per kg
- Powder residue/sieve powder
- ¥1,500-2,500 per kg
- Stem tea
- Around ¥1,000 per kg (for commercial-use blends)
At these price ranges, confectionery and beverage manufacturers can express matcha characteristics while lowering product costs, connecting to continuous transactions. Producer sides also enable balancing disposal cost reduction with stable sales.
Added Value Strategies Elevating Brand Value
Rather than competing solely on price, providing “stories” and “environmental value” as sets proves important.
Actually, Ito En × genten collaboration products hit environment-conscious demographics and gift demands by highlighting “tea residue × leather” stories. By showing by-products as “premium materials with selection reasons” rather than “cheap non-standard products,” avoidance of price competition becomes possible.
Implementation Steps | Starting By-Product Business
New businesses utilizing tea by-products succeed not through haphazard starts but step-by-step verification and expansion processes. Following these steps minimizes risks while developing market-accepted products.
- ① Secure Stable Ingredient Supply
- First, relationship building with tea manufacturing plants and beverage manufacturers supplying by-products is indispensable. Confirm annual generation volumes, quality variations, and price ranges, concluding contracts enabling long-term stable procurement.
- ② Application Development and Prototyping:
- Next, develop recipes and prototypes leveraging powder residue and stem tea characteristics. Prototype in small lots, confirming taste, color, aroma, and yield. Determine commercialization directions while clarifying target demographics (commercial-use or retail-use).
- ③ OEM and Processing Contractor Selection
- Optimal processors vary by application. For food, select HACCP-certified plants; for cosmetics, ISO or GMP-compliant plants; for feed, facilities meeting Feed Safety Act—contractors satisfying regulations and quality standards.
- ④ Package and Brand Design
- To communicate “not mere non-standard products” to consumers, adopt designs prominently featuring upcycling and sustainability.
Clearly state messages including “by-product utilization” and “food loss reduction ○%” on packaging
Disseminate brand stories via SNS and EC sites
- ⑤ Market Testing with Small-Scale Lots
- Rather than immediately mass-producing, first conduct test sales via EC sites or crowdfunding. Observe consumer reactions, adjusting recipes and pricing.
Following this process enables confirming market fit while suppressing initial investment, raising success probabilities.
Take Your First Step in By-Product Utilization
Tea by-product business represents fields starting small and growing large. First investigate ingredient suppliers and OEM partners, starting from prototyping and market testing.
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Summary | By-Products as New Revenue and Brand Value Sources
Tea by-products are no longer “waste.” They represent future-oriented business opportunities simultaneously resolving multiple challenges including disposal loss reduction, cost reduction, environmental considerations (SDGs), and brand value improvement.
Applications advancing across wide-ranging fields including confectionery, beverages, cosmetics, and agriculture, with potential for pioneering new markets depending on utilization. Utilizing by-products as “upcycled resources” enables differentiated product development and sustainable brand building. Why not now convert “mottainai resources” sleeping in tea industries into profits and value?
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