Nestlé explores matcha push as coffee volatility reshapes 2026 strategy

Nestlé's coffee division is preparing to enter the matcha market, a strategic shift driven by coffee-bean price swings and the need to attract younger drinkers.

Nestlé's coffee division is exploring a push into matcha products, the company told the Wall Street Journal, as coffee-bean price volatility and shifting consumer preferences drive the world's largest food maker to diversify its beverage portfolio beyond traditional coffee.

The move comes as coffee prices have experienced sharp swings in recent years, creating margin pressure for roasters and packaged-goods companies. Nestlé, which owns brands including Nescafé, Nespresso and Starbucks licensed products, is the world's largest coffee buyer. The company's coffee division generated about 26 billion Swiss francs ($29 billion) in revenue in 2025, accounting for roughly a quarter of Nestlé's total group sales of 94.5 billion francs, according to company filings. Coffee remains the single most important raw material for Nestlé, and any sustained price increase directly affects the division's profitability.

Matcha has become one of the fastest-growing segments in the global tea market, with demand concentrated in North America, Europe and parts of Asia. Younger consumers — particularly those aged 18 to 34 — have driven much of that growth, drawn by matcha's association with wellness and natural energy. The category's expansion has attracted interest from major food and beverage companies looking to tap into the trend, with matcha appearing in products ranging from lattes to snack bars and ice cream.

For Nestlé, the matcha push represents a hedge against coffee's commodity cycle. The company's internal growth — a key metric watched by investors — has been under pressure, with the company needing to show volume recovery in its upcoming Q2 2026 results, according to Seeking Alpha. Nestlé trades at about 18.6 times forward earnings, a discount to the broader consumer staples sector, reflecting investor caution about the company's growth trajectory as competition from private-label brands intensifies.

The strategy also aligns with Nestlé's broader clean-label push. The company said this week it will remove artificial food colourings from all products worldwide by the end of 2026, following a similar move in the U.S. "Consumers don't appreciate artificial ingredients," Stefan Palzer, Nestlé's technology chief, told Reuters. "They want simpler recipes." Matcha's natural green color and perceived health benefits fit that narrative, potentially allowing Nestlé to market the product as a clean-label alternative to both coffee and artificially colored beverages.

Nestlé faces competition from established matcha brands as well as from coffee chains that have added matcha lattes to their menus. Starbucks, a Nestlé licensing partner through a $7.15 billion deal struck in 2018, already offers matcha-based drinks globally. Nestlé's existing distribution network, spanning more than 180 countries, gives it a structural advantage over smaller competitors, though the company will need to invest in supply chain capabilities for a product that originates primarily from Japan.

The matcha exploration is in early stages, and Nestlé has not disclosed specific product timelines or investment amounts. The company is expected to provide more details during its investor day later this year. If successful, the move could open a new revenue stream for Nestlé's coffee division while reducing its exposure to coffee price cycles — a dual benefit that could support margin expansion over the medium term. For investors, the key question is whether matcha can move beyond a niche category to meaningfully contribute to Nestlé's top line.

This article is for informational purposes only and does not constitute investment advice.