Sales of medicinal or functional mushrooms like lion’s mane and cordyceps continue to surge as food and beverage manufacturers incorporate them into new products, but recent acquisitions, geopolitical pressures on supply chains and inflation-driven consumer pullback could signal turbulence ahead.
According to Precedence Research, the global medicinal mushroom market reached $10.48 billion last year and is growing at a compound annual growth rate of 12.35% – putting it on track to reach $29.9 billion by 2034.
In the US, the market for mushroom supplements and enhanced functional foods and beverages was worth about $1.1 billion in 2023 and is growing at an 11-13% CAGR, according to data cited by the investment group Peak Bridge.
Despite the segment’s projected double-digit increase, category-specific challenges and broader economic headwinds threaten near- and long-term sales – spurring stakeholders to up their innovation game, as illustrated by companies touting new launches and rebrands at Natural Products Expo West.
What is driving the boom?
While supplements, particularly powders and capsules, dominate the medicinal mushroom market – capturing about 44% to 48%, food and beverage accounts for about 42% of the market, according to Grand View Research.
Functional beverages in particular are well suited for making the ingredients palatable and accessible, with frontrunners in the segment creating coffee and matcha alternatives, instant formats and functional shots.
“Mushrooms have moved from new product discovery and education into what is the best format for me to get mushrooms into my diet? And so you see all sorts of things – powders, pills, tinctures. But with a shot, like we have, it is just really easy to get your mushroom dosage,” said Shroomworks Co-founder Shawn Dunn.
He explained that the company’s Immunity Glow shot includes turkey tail, its Mental Magic includes lion’s mane and its Inner Energy has cordyceps.
He added that most consumers know what functional mushrooms are and their benefits, so Shroomworks and other brands are focused on making products more appealing, convenient and trial-friendly.
This is certainly true for Teeccino, which has long incorporated medicinal mushrooms into its line of Adapt & Protect herbal teas and “herbal coffees,” but which is giving them more prominence and convenience in a new line of Miraculous Mushroom instant blends that it showcased at Expo West.
“This is a new segment for us and also a rebrand, in a way, because we had several products that were mushrooms before, but now we have moved over to the instant formulas, which are great for convenience,” Founder Caroline MacDougall said. “So, now you can steep, stir or brew.”
She added that the company did not cut corners with the new line – rather she said it has a superior mouth feel compared to other instant coffees.
“There are so many mushroom coffees out there. There is a million mushroom coffees. But they are usually using a pretty inferior instant coffee. Ours are made with micro ground herbs along with the mushroom extracts and then some extracts, like chicory, that are immediately dissolvable. So, ours are getting more of a mouth feel than typical non-descript instant coffee,” she said.
She added, “All of our formulas with mushroom and adaptogen combinations are loaded with mushrooms.”
The Miraculous Mushrooms Adapt & Protect instant coffee includes “five mushrooms all grouped together for health and wellness,” including turkey tail, cordyceps, chaga, rishi and lion’s mane, and the Prebiotic Coffee Alternative Cacao+5 has cacao in addition to the five-mushroom blend, she explained.
To help the new instant line standout on shelf, the company debuted brightly colored packaging that MacDougall described as “vibrating.” The front of pack is clean with limited callouts for the key benefits, uses, ingredients and the USDA Organic certified seal.
Like Teeccino, Malama Mushrooms is making it easier for consumers to incorporate medicinal mushrooms into their daily routine with the launch of its new Matcha Coconut Latte Mix which blends ceremonial grade matcha with coconut, MCT oil and lion’s mane, which it sampled at Expo West.
The company’s “bread and butter” is its eight-mushroom mixes that include only the fruiting body of organic mushrooms and its single mushroom powders, but it sees an opportunity in drink mixes, said Co-founder Amanda Lillibridge.
“Ten years ago, when we started doing demos, people were like, ‘Mushroom coffee, what is that? It sounds disgusting!’ And now people seek us out and they can’t wait to try it,” she said. “That tells the story in itself that people understand what it is and are interested.”
As interest grows, so does demand for new options, she said, noting that Malama stands apart by offering clean, simple mixes without sweeteners or fillers.
Do recent acquisitions signal a shakeout?
The success of these and other companies spurred a boom of new entrants in the medicinal mushroom segment that intensified competition for resources and consumers.
Recent deals, including Real Mushrooms’ acquisition of Mushroom Science, Giorgi Mushroom Co.’s purchase of L.F. Lambert Spawn Co., and Mangoceuticals’ move to acquire mushroom-derived health patents, point to a category entering a new phase of consolidation.
The deals suggest companies are moving to secure supply chains, intellectual property and scale in an increasingly crowded market.
This dovetails with ongoing inflation across the board, which is prompting some consumers to pull back on spending generally.
“We are hearing from certain retailers that the whole category is down 30% to 40%,” but that may be a symptom of the times and cost of living increases, said Lillibridge.
“We are in a moment where people have to be really discerning with how they’re spending their money because the cost of living is really high,” she said.
Brands using mushrooms can protect against a potential downturn by clearly communicating the added value of their ingredients, said MacDougall.
For example, she is talking more about mushrooms’ ergothioneine, which is an antioxidant that people can’t make in their bodies but which can aid “cells in distress.”
She predicts that as more people learn about ergothioneine “mushrooms are going to soar way more than they have before.”
Plant-based protein dip drags down mushroom sales, but GLP-1 offers hope
Beyond beverages and shots, mushrooms in food rode the wave of plant-based meat alternatives, but as that category cools, so too are some products featuring the ingredient, said Pan’s Mushroom Jerky CEO Michael Pan.
Still, he and others remain bullish on the long-term outlook, particularly as mushrooms intersect with emerging trends like fiber fortification and GLP-1 support.
“There are some peaks and valleys, but as people become more aware of how amazing they are, they will continue to grow,” he said.
Ultimately, stakeholders say the category’s next phase will be defined by differentiation, whether through format innovation, clinically backed benefits or cleaner formulations, as well as the ability to navigate pricing pressure and consolidation.
Or, as Pan put it: “Mushrooms have been here before us and they’ll be here after us.”
