What is the "matcha effect"? Gen Z redefines small luxuries in times of crisis
During periods of economic recession, experts have often observed a curious and persistent phenomenon known as the “lipstick index”, the tendency to cut major expenses while indulging in small, accessible pleasures. The idea, attributed to Leonard Lauder, heir to the Estée Lauder fortune, stems from the observation that even in times of crisis, people don’t stop caring for themselves. While they might forgo a trip or an expensive purchase, they continue to buy a lipstick, a perfume, or an accessory that offers immediate gratification. Today, however, Gen Z is rewriting this theory. The small luxury is no longer a lipstick, but a matcha latte: a symbol of a more experiential gratification aligned with the values of a generation seeking wellness in tune with its time.
What is the matcha effect?
According to a recent PwC report that analyzed nearly one million credit and debit card transactions, young consumers are shifting their gratification toward functional, socially relevant, and above all, affordable objects. As Business Insider reports: “Little luxuries like a matcha, a pair of second-hand sneakers, or cosmetics can convey cultural relevance without breaking the bank.”
This new version of the lipstick effect reflects what could be called “affordable affluence”: a balance between the desire for gratification and financial discipline. Gen Z doesn’t just want something that makes them feel good, but also something that represents good value and an opportunity for self-improvement. “For this generation in particular, outcomes related to self-improvement rank very high on their list of interests,” the report explains.
Take matcha, for example: in just a few years, it has evolved from a traditional Japanese tea into a wellness ritual, popularized on TikTok, where users initially praised its antioxidant properties and stress-relieving benefits, turning it into a symbol of youth culture. As Ali Furman of PwC states: “Years ago, it was just sitting on a tea shelf. Now it has evolved into a soothing energy ritual, far more appealing to Gen Z consumers.” Spending a few extra euros on a matcha has become a way to practice self-care while maintaining a cool status.
Gen Z and experiential luxury
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Despite cutbacks in spending, Gen Z hasn’t stopped craving experiences. They’re simply redefining their priorities. The PwC report shows that between January and April 2025, overall spending among young consumers dropped by 13%, with the steepest declines in clothing, accessories, and electronics. For the 2025 holiday season, a 23% reduction is expected compared to the previous year: a sign not only of austerity but also of a redefinition of what is truly worth buying.
In Italy, the trend is similar. According to a survey by Retail Institute Italy and Ipsos Italia for La Repubblica, young people show an increasing need for control and prudence in their consumption habits: “less enthusiastic than before the pandemic and a bit more disillusioned”, yet eager to be surprised and entertained while shopping. Gen Z hasn’t rejected small pleasures, they’ve redefined them. The shift from the “lipstick effect” to the “matcha effect” reveals a more mature approach to spending, with less display and more identity. It’s a sign that past models need to be updated, because a matcha latte can be much more than a drink: it’s self-care, a symbol of balance, and a way to express who you are, even in times of crisis.
