Functional Mushrooms: A Market Overview

Functional mushrooms: A booming market for mycelium

According to analyst Grand View Research, the global functional mushroom market reached US$31.71 billion in 2023 and is expected to grow at a CAGR of 11.2 percent to US$65.83 billion by 2030.

Prior to 2018, functional mushrooms were relatively unheard of, a niche product that few bothered to consider. That year, however, overall functional mushroom sales exploded, with sales of products containing maitake — the most popular functional mushroom that year — increasing by a staggering 811 percent. At the time, experts recognized their potential but also warned that marketing functional mushrooms would require a shift in how consumers viewed the fungi, something best achieved through creative marketing.

"Adaptogens are not good for everything," explained David Winston, a registered member of the American Herbalist's Guild and founder of manufacturing company Herbalist & Alchemist. "Adaptogens are not wonder drugs. They, like anything else, have benefits and limitations. There is some great research on adaptogens…but much of what is written online and in the popular press either misrepresents the research or is pure fantasy with greatly exaggerated claims."

Although functional mushrooms admittedly are still misrepresented in some circles, they have nevertheless experienced meteoric growth over the past several years — no doubt bolstered by the research Winston mentioned.

There are several other key trends that also contributed to this growth.

Consumers in 2018 were growing increasingly aware of their health and increasingly concerned about the detrimental effects of processed food. This awareness was due, in part, to emerging wellness trends that favored natural remedies. As functional mushrooms continued to grow in popularity, celebrity and influencer endorsements became increasingly commonplace.

This phenomenon inevitably drew new businesses to the functional mushroom space, resulting in significant investment and product innovation, further fueling market growth as functional mushrooms found their way into a variety of consumer goods.

Presently, the market outlook for functional mushrooms is highly positive — as evidenced by Grand View's forecasted CAGR. Already trending upward, consumer interest in health and wellness grew exponentially during the pandemic. Alongside the trends that nurtured the functional mushroom market's initial growth, investors can expect to see an uptick in both retail availability and product diversification as consumer demand continues to grow.

All indications point to substantial growth in the functional mushroom market, providing a lucrative opportunity for both investors and businesses operating within this space.

Functional mushrooms: Companies to watch

Multiple companies have already emerged as leading innovators in the functional mushroom space. We've compiled a few of the most notable ones, including several that have expanded into mushroom cultivation.

Four Sigmatic

Four Sigmatic offers an alternative to bean-based coffee with several flavors designed to integrate functional mushrooms into daily routines. The brand is especially appealing to customers who may be new to mushroom-based supplements, as its core products require only that they swap out their morning coffee for something new. Four Sigmatic also offers a range of creamers and supplements, and several "starter kits" containing multiple product categories.

Fungtional Labs

Fungtional Labs sells organic, naturally-grown functional mushrooms in a wide array of supplements and beverages. The brand also takes things a step further. Billing itself as a "one-stop shop for everything mushroom," Fungtional Labs sells easy-to-use growing supplies, including spray kits, spawn bags, bins and fruiting bodies targeting the increasing number of mushroom cultivators in North America.

Om Mushrooms

Om Mushrooms emphasizes organic, sustainably sourced ingredients held to stringent quality standards. Om's key selling point, however, is that its high-quality mushroom products are also backed by rigorous scientific research. This, alongside the company's commitment to transparency and ESG principles, makes it a compelling investment for anyone interested in sustainability.

Real Mushrooms

Many mushroom companies rely on mushroom root, known as mycelium, to make their products. Real Mushrooms instead uses the mushrooms themselves, known as fruiting bodies. This is part of the company's push to prioritize potency and bioavailability. The brand claims its products contain high levels of beneficial compounds as well as authentic, potent mushroom extracts that offer maximum health benefits.

MUD/WTR

Investor takeaway

Functional mushrooms are now more popular than ever, and the market for products that contain them has never looked more promising. With strong performance, a positive market outlook and a large total addressable market, these fantastic fungi represent an excellent addition to any investment portfolio.

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