UJI, Japan (Reuters) -Matcha lovers, brace your wallets!

Record temperatures in Japan have curbed matcha green tea production this year, straining supplies and driving prices to all-time highs amid booming global demand for the trendy beverage, farmers and industry officials said.

The Kyoto region, which accounts for about a quarter of Japan's production of tencha - the stemmed leaves dried and ground into matcha - was hit by severe heatwaves last summer during Japan's hottest year on record, which led to weak yields in the recent April-May harvest.

Masahiro Yoshida, a sixth-generation farmer, was only able to harvest 1.5 tons of tencha this year, down a quarter from his typical harvest of two tons.

"Last year's summer was so hot that it damaged the bushes, so we couldn't pluck as many tea leaves," he told Reuters from his storefront in Uji, south of Kyoto.

Global demand for matcha has surged in recent years, driven by millennials and Gen Z buyers seeking healthier choices, with hip cafes globally offering matcha lattes, smoothies, and desserts.

The finely ground tea is prized as an antioxidant and for higher caffeine content than other green teas.

Viral social media traction last autumn turbocharged demand, prompting some wholesalers such as Singapore-based Tealife to occasionally impose purchase limits.

Yuki Ishii, Tealife's founder, said matcha demand from its customers grew ten-fold last year and is still rising, even as the amount available from Japan is declining.

"I'm basically always out of stock," he said.

Japan produced 5,336 tons of tencha in 2024, according to the Japanese Tea Production Association, a nearly 2.7-fold increase from ten years earlier, as more farmers switched to the crop.

However, the association said it expects lower matcha output this year.

"I think many were hoping for a higher yield harvest this year to reduce some of the shortages ... but it doesn't seem like this is going to be the case," said Marc Falzon, who buys tea from Uji farmers for his New Jersey-based milling firm, Ooika Co.

Japan's green tea exports, including matcha, rose 25% by value to 36.4 billion yen ($252 million) in 2024, driven largely by growing demand for powdered teas such as matcha, according to data from the Ministry of Agriculture, Forestry and Fisheries. By volume, Japan's green tea exports rose 16%.

Tencha prices have climbed to record highs, with a May auction in Kyoto fetching 8,235 yen per kg, a 170% increase from a year earlier and well above the previous record of 4,862 yen set in 2016, according to the Global Japanese Tea Association.

Japanese producers are trying to increase matcha output, but that won't solve the current shortage as the new fields they are planting need five years before they can be harvested, said Falzon.

"I suspect we'll see even more dramatic price increases."

($1 = 144.2000 yen)