The Rise of Functional Mushrooms: A Market Overview

The main driver of growth for functional mushrooms is increasing consumer interest in these products. Mushrooms like Lion’s Mane, Chaga, and Resihi are having a moment in the spotlight, finding their way into supplements, coffee replacements, chocolates, and a variety of other CPG products.

Social media has played a large role in this growth as influencers and health gurus showcase the effects of these mushrooms. Adaptogens went from a little-known term to a marketing buzzword that immediately brings functional mushrooms to mind.

Convenience-seeking, health-minded consumers want a simple product that provides a host of micronutrients and other health benefits, such as a boost in focus and energy — and what could be simpler than replacing your daily cup of coffee or taking a capsule? From athletes and fitness enthusiasts to busy CEOs with kids, the appeal of functional mushroom products is widespread.

In August 2024, Fortune Business Insights estimated the value of the global functional mushrooms market at nearly $29 billion. The firm also projected that by 2032, the market would be worth over $60 billion — a pie big enough for everyone to have a slice of the profits.

Since COVID-19, optimizing health has been on everyone’s mind. Finding simple-to-use products that provide a nutrition and systemic boost has driven innovation of functional mushroom products. Reishi and Chaga mushroom capsules were once relegated to a small section of shelf in the health food aisle at grocery stores, but today you can find dozens of options for capsules, as well as tinctures, chocolates, drink replacements, and herbal/ adaptogen blends. People want health to be easy, and functional mushroom products help make it so.

An increasing variety of functional mushroom products has gone hand in hand with market growth — people love options.

Mushroom capsules are many people’s first foray into this space — you can’t beat the convenience of taking one pill with multiple ground mushrooms with your daily multivitamin. But innovation is only limited by imagination. Business owners need only look at the success of MUD\WTR over the last six years to see how eager people are to try new ways of consuming mushrooms.

In 2010, most people would have turned their nose up at mushroom-based coffee replacement. But today, MUD\WTR is one of the best-known brands in the country for functional mushroom products, attracting a nearly equal balance of men and women across socio-economic levels. The company offers four functional mushroom blends and a line of sweeteners and creamers for their beverages (without mushrooms!).

Despite the popularity of functional mushroom products and consumer desire for potent products, many people still don’t want to “taste” the mushrooms — making flavor a major challenge for any food or beverage functional mushroom company. The deeply earthy flavor of mushrooms is as beloved as it is despised, and increasing market appeal will depend on how good companies can make their product taste.

It’s not all about food. Just as cannabinoid compounds found uses in skincare and topical products, mushrooms have innovative uses that have not yet been created. Functional blends are also capturing a significant sector of the market. Why take a capsule or a tincture with one mushroom when you could have one with four, five, or a blend of mushrooms and other beneficial herbs? Finding ways to optimize the blend of mushroom-based products is as important as making them taste good.

Unlike their psychedelic counterparts, functional mushrooms benefit from widespread legality  — Cordyceps and Shiitake were never criminalized like psilocybin was. But as with any CPG product boasting health benefits, there are still regulations that functional mushroom companies must adhere to.

Product quality and customer safety must be kept at the forefront of any company’s goals. In addition to adhering to Good Manufacturing Practices, companies must understand and abide by package labeling regulations and guidelines for marketing claims. These regulations in the US are mainly set at the federal level by the FDA and the FTC, but can also vary at the state level, particularly as some states decriminalize psychedelic products.

Regulations surrounding functional mushrooms are still evolving, and companies in this space can have a major impact on the future of the industry by getting involved with regulators at local, state, and federal levels to help officials understand what is important for consumer safety.

In any emerging market, it’s not all upward growth. One of the biggest challenges that functional mushrooms companies face is establishing a secure and trustworthy supply chain. Mushrooms grown abroad can be cheaper to source than domestically grown ones, but this creates a complex import and manufacturing process that is subject to fail if international trade is disrupted, as it was in 2020.

Sourcing products domestically may provide a more stable and shorter supply chain, but increase costs. However you decide to move forward, a comprehensive risk management plan addresses every potential issue and helps you create a plan to move forward, should the worst happen.

Increasing consumer demand also means increasing competition. Just as CBD was put in everything from face lotion to pillow cases, expect to see an increase in products boasting functional mushrooms. Your probiotic morning yogurt may get an adaptogenic boost — or your sunscreen.

In a growing market, there is always someone trying to increase profits by cutting corners. The functional mushroom industry is unfortunately ripe for counterfeits and lower quality products making their way onto shelves, without delivering what they’ve promised customers.

All of this can be daunting to navigate, but it should not deter passionate and visionary entrepreneurs from seeing the massive opportunities in this space. With a growth projection of $30 billion over the next eight years, functional mushrooms offer a unique opportunity for creating jobs in your community, enjoying profits, and establishing a company that stands the test of time.

You don’t have to navigate it alone either. An intentionally-built team of people and businesses who understand the risks and benefits of being in the functional mushroom space sets the foundation for lasting success.

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