Identifying Factors for Expanding Japanese Green Tea Exports to the United States: From Changes in Demand Structure in the United States

Abstract

This study econometrically analyzes the factors driving the expansion of Japanese green tea exports to the United States. We estimate the green tea demand structure after classifying green tea imported into the United States into three sources: Japan, China, and the rest of the world. Given that the share of the import value of Japanese green tea changed from a decrease to an increase from 2006 onwards, the analysis period is divided into January 1994 to December 2005 (the first period) and January 2006 to December 2017 (the second period). In addition, based on the estimation results, we evaluate the extent to which influencing factors such as changes in prices and preferences contributed to changing the import value share of Japanese green tea. The main analysis results are as follows. First, Japanese green tea demand is different from that of China and the rest of the world. In addition, the absolute value of the price and expenditure elasticity of demand for Japanese green tea are lower than those for Chinese green tea. Second, Japanese green tea became more popular among Americans in the second period. Third, the decrease in the value share of Japanese green tea imports in the first period was due to the increase in expenditure on green tea in the United States and the low expenditure elasticity of demand for Japanese green tea. The increase in the value share of Japanese green tea imports in the second period was due to the change in preferences.