From functional to magical, mushrooms are having a moment.

Driven by chronic burnout, the pursuit of wellness, and a psychedelic renaissance, the shroom boom is big business.

Big Shroom

For thousands of years, mushrooms have been dietary and medicinal staples the world over. Now, functional fungi have become a pillar of wellness culture.

• Global mushroom market: $69B by 2024
• Global functional foods market: $275B by 2025
• Global alternative medicine market: $100B in 2021

Intensified by the pandemic, anxiety and burnout are on the rise. Taking matters into their own hands, consumers are searching for answers. Eyeing an opportunity, countless brands are selling mushroom-infused solutions.

In Issue No. 36, The Wellness Lexicon, we detailed the blueprint for turning functional ingredients, like turmeric, collagen, and ashwagandha, into mainstream products:

“…new-age brands are co-opting ingredients rooted in Eastern medicine or homeopathic remedies, then repackaging them as the antidote to modern ailments.”

On cue, from self-care and supplements to everyday food and drink, mood-lifting, stress-relieving, energy-enhancing mushrooms are here to save us from ourselves.

Functional Fungi

Seizing on this trend, Four Sigmatic is to mushrooms what Vital Proteins is to collagen, a breakthrough brand and product platform built around a functional ingredient.

While others, like Moon Juice, use mushrooms in adaptogenic elixirs, Four Sigmatic made fungus the star. From coffee to protein and energy shots to skin cream, they’ve successfully scaled their mushroom-centric model.

Where to next? Chances are Big Food comes calling.

Last year, Nestlé Health Science acquired Vital Proteins. Terms weren’t disclosed, but the collagen brand was expected to reach $250M in annual revenue in 2020.

Another encouraging sign, in April, Unilever acquired supplement maker Onnit. Known for its mushroom-laced nootropic, Alpha BRAIN, the deal signals a growing interest in this trend.

Laird Superfood also leaned in, adding functional mushroom blends to its portfolio. The company, co-founded by famed surfer Laird Hamilton, went public last year and currently has a $300M market cap.

Elsewhere, MUD\WTR, Om Mushroom Superfood, Apothékary, and Rritual offer mushroom mix-ins. Ready-to-drink beverage makers like Rebbl, Taika, Earth & Star, and Barcode added fungi extracts. Even nutrition bar makers, including Mindright, B.T.R. Bar, and IQBAR are tuning into brain- and mood-boosting mushrooms.

The catch? Like other nutritional supplements, functional mushrooms are unregulated by the FDA, so if the health claims sound too good to be true… well, you get it.

Mushroom “Meat”

In the effort to curb meat consumption, mushrooms have emerged as a viable alternative to animal products.

As we pointed out in Issue No. 93, Meat vs. “Meat,” consumers are eating up protein alternatives and investors are doubling down.

• Investors put a record $3.1B into alternative proteins in 2020.
• By 2040, cellular/plant-based meat will be 60% of the meat market.

Beyond plant-based options, fungi could be the future of food. As Food Business News explains:

“The fibrous texture enables a wider variety of types and cuts of meat. The flavor is neutral, eliminating the need for masking agents. It requires only a small amount of land, energy and water to produce, and it packs a nutritional punch that matches meat and rivals plants.”

While popular brands like Beyond Meat and Impossible Foods have been criticized as being unhealthy, fungi meats offer a nutritious, protein-packed alternative to highly processed plant-based options.

Among a growing list of upstarts, Nature’s Fynd has attracted $150M from backers like Jeff Bezos, Richard Branson, and Bill Gates for its fungi-based food platform.

Atlast Food Co. garnered ~$50M to turn mycelium (the fungus mushrooms are made of) into bacon. Of note, while Beyond Meat has 18 ingredients Atlast’s bacon only has six: mycelium, refined coconut oil, cane sugar, salt, smoky flavors, and beet juice.

And Meati Foods has raised ~$60M to make fungi-based steak. According to co-founder Tyler Huggins, two ounces of his company’s “meat” fulfills 50% of daily protein, fiber, and zinc requirements.

Magic Mushrooms

While mushroom coffee is trendy, and fungi meat is interesting, the outlook for psychedelic mushrooms is mind-blowing.

• The global psychedelic drug sector will reach $10.7B by 2027.
• One in five people with mental illness say their needs are unmet.
• The mental health crisis could cost the global economy $16T by 2030.

In Issue No. 84, Psychedelic Wellness, we explored the startups and investors hoping to transform the future of mental healthcare, writing:

“In the 1970s, psychedelics were criminalized, effectively ending research into therapeutic uses. More recently, regulators have eased restrictions on psychedelic research, fast-tracking clinical studies, and legitimizing the space.”

A lot has happened since publishing that piece, and psilocybin, the hallucinogen in mushrooms, is playing a central role.

Combined with psychotherapy, psilocybin can combat treatment-resistant depression, anxiety associated with life-threatening illnesses, addiction, and other disorders.

Last year, Oregon became the first state to legalize psilocybin therapy. Denver, Oakland, CA, and Washington, DC also decriminalized the drug. And several states, including California, are considering similar legislation.

Two psychedelic drug makers, MindMed and COMPASS Pathways, went public. The former has a $1B market cap, while the latter sits around $1.4B. Soon, Peter Thiel-backed ATAI Life Sciences is expected to IPO. The company has raised more than $360M to date.

The downside: Worried that investors and drug makers will prioritize profits over healing, purists are pushing for decriminalization and universal access.

Zooming out: Blurring the line between wellness and healthcare, mushrooms could be gimmicky or game-changing depending on the application. Either way, there are billions to be made as the use cases get sorted out.