How the functional shroom is ready to boom

Every time I pitch this, people think of magic mushrooms,” says Neil Marrakchi, founder of Reformed Coffee.

His functional coffee blend uses mushrooms for their cognitive benefit. But fear not, they’re the entirely legal kind. The organic lion’s mane, chaga and shiitake in the ingredients list simply enhance the benefits of coffee, Marrakchi explains.

“Instead of a peak and crash, the mushrooms we’ve chosen are known to preserve and maintain distribution of caffeine throughout the day,” he says. The result is increased mental clarity without the jitters.

Launched this month, Reformed is one of a wave of drinks brands hitting the market with mushrooms as their hero ingredient. Other entrants include Dirtea, Raise & Replenish and Spacegoods – the latter having secured £2.5m youin funding in February.

@tryspacegoods It’s amazing .. ✨ #fyp ♬ original sound - gdcases

It’s a sign of a market that’s tipped to take off. Adaptogens are plants that help our bodies manage stress, fatigue, anxiety, and other elements of wellbeing. The global adaptogenic mushrooms market was worth $10.9bn (£8.7bn) in 2022 and is expected to net a 10% CAGR in the next 10 years, according to Global Market Insights. Lifesum predicts the global mushroom coffee market specifically will grow at an annual rate of 5.5% from 2024 to 2030.

So where is the UK up to in all this? And what are the factors for and against their success in UK fmcg?

Exclusive YouGov research

For now, the UK market is niche. That’s shown by YouGov data shared exclusively with The Grocer, which found nearly half of UK consumers know absolutely nothing about the functional use of mushrooms.

That’s not surprising, given mushroom lattes and the like are only just starting to make their way onto the market. “Mintel’s Global New Product Database shows hot beverage launches with mushroom and fungi ingredients are increasing very steadily but remain very uncommon, especially in Europe,” says Emma Schofield, Mintel’s associate director of global food science.

As she suggests, though, there’s greater thirst for these drinks elsewhere. For Spacegoods founder Matthew Kelly, that appetite shows how far the market can grow. “Just look at America, which is where this trend started,” he points out.

There, brands like Ryze and Four Sigmatic are reporting eight-figure annual revenues. Mushroom coffee has become such a recognised concept that blends are popping up on the menus of hip New York coffee shops.

Reformed’s Marrakchi can see the same thing happening in the UK. His brand is already looking at establishing B2C partners. “I wouldn’t be surprised if in 10 years we got a mushroom blend in a mainstream coffee shop,” he says.

Adaptogenic mushrooms certainly have plenty of factors in their favour. The common varieties used – cordyceps, lion’s mane, reishi, tremella and chaga – have numerous positive properties.

Crucially, they’re known to boost energy – rated most highly (24%) of any functional claim by respondents to the YouGov survey. Other blends aid sleep, the second most highly rated claim with 20% of the vote. What’s more, they are natural – a factor that resonated with 70% of respondents.

One potential barrier to growth is the scepticism that tends to accompany such functional claims. Here, though, mushrooms have the advantage of being a well-established ingredient – even if not in lattes. Mintel points out medicinal mushrooms “have long been used as health ingredients in traditional medicine systems, especially in the Asia Pacific region”.

It’s a point also made by Raise & Replenish. Adaptogenic mushrooms “seem to be ‘new’, but they’ve been around for a long time”, points out co-founder Kaya Jones. She’s keen to highlight existing research that shows “their potential to boost immunity, support cognitive function, improve mood, aid in various health conditions and much more”.

“As more research emerges, this will help substantiate the functional claims and increase consumer awareness and trust,” Jones adds.

Personal stories behind launches

The personal stories behind many of these brands add an extra layer of authenticity. In the case of Raise & Replenish, Jones and fellow co-founder Sarah Emblow were looking for an antidote to their busy lifestyles.

“The idea was born from our desire to find an energy-boosting, jitter-free alternative to coffee, to help power our minds and bodies while balancing life as busy working women and mums,” says Emblow.

“It began by creating concoctions using superfoods and supplements that already existed in our cupboards, but we couldn’t find anything on the market that offered all the nutritional benefits of every type of supplement in one blend,” she says. “Once we realised this, we decided to create our own collection of supplements in the form of caffeine-free latte blends.”

In a similar vein, Dirtea founders Andrew and Simon Salter were “tirelessly working as young entrepreneurs” when they hit on their idea.

“We were over-exerting ourselves and starting to feel fatigued, and as a result, we were both quite stressed,” they say.

Then they met a functional medicine practitioner, “who opened our eyes to the fascinating realm of functional mushrooms”. The following months were spent “researching and experimenting” with the fungi to come up with the Dirtea blend.

Spacegoods also originated from personal experience. “I’m definitely not a scientist or nutritionist. I was just a guy who was drinking way too much coffee,” laughs Kelly. “I had a business that had failed and I was depressed. Then I discovered adaptogenic ingredients. I used to unscrew lion’s mane tablets, pour the contents out and drink it with cocoa powder. It was basically coffee without the anxiety.”

Coffee or mushroom blend?

Kelly touches on a crucial point. Many of the blends on the market pitch themselves as a coffee-style drink. But not all actually contain coffee.

In the case of Spacegoods, Kelly was adamant the formula should contain coffee. In his mind, this makes his product an easy swap for the morning latte or espresso.

“Anyone who drinks coffee is a potential customer,” he says. “I think of it as ‘coffee plus’. It has coffee in it, so we’re not saying caffeine is the enemy.”

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As part of his positioning, he wanted to avoid focusing too heavily on mushrooms and the science, and simply hammer home the benefits over your standard caffeine hit. “Most people don’t care about where lion’s mane comes from, they want to feel better, and if that’s with mushrooms, that’s great,” says Kelly. “I want to focus on the feeling it gives you, which is reducing brain fog and anxiety.”

Reformed is also selling itself as a coffee first and a mushroom drink second. In fact, mushrooms are only one of its functional ingredients, which include collagen and 21 vitamins and minerals.

“It’s becoming increasingly popular to cut down on caffeine consumption”

Kaya Jones, Raise & Replenish co-founder

Like Spacegoods, Marrakchi wanted to create a simple swap for an existing routine. “Four billion cups of coffee are drunk every day in the world,” he points out. “We wanted to keep the ritual everyone loves while adding as much nutrition as we could.”

It certainly seems a sensible way to launch a niche concept to a wider market. Other brands, however, have eschewed caffeine and marketed mushrooms as the clear hero ingredient.

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Take Raise & Replenish, which is marketed on its all-natural, health-led credentials. Its ‘I Woke Up Like This’ blend is designed to offer energy without the coffee, courtesy of ingredients such as beetroot, cordyceps, MCT oil, lemon juice powder and vitamin C.

“It’s becoming increasingly popular to cut down on caffeine consumption,” says Jones. She wanted to play to the health and wellness crowd with a product that “feels great, looks great, tastes great and does great”.

As to Dirtea, it has a foot in both camps. Most of its powders do not contain caffeine – its slogan is ‘Drink Dirtea, live clean’ – and mushrooms are very much front and centre of the proposition. But there’s also a coffee variant, which contains 100% arabica, to appeal to caffeine nuts. That mimics the versatile way in which the founders began consuming mushrooms. “We added dual-extract mushroom powders to our morning smoothies and coffees or drank them as teas,” they recall.

The trial barrier

Despite their differences, these blends all face one common problem: trial. Kelly admits the toughest job for brands is “ getting people to try the product”.

That’s partly because it’s an unfamiliar concept, which has led to an inevitable wariness. Indeed, only 30% of respondents to the YouGov poll said they would be interested in consuming a beverage containing functional mushrooms.

First, brands must convince consumers of the taste. Many people assume mushroom blends “taste like mud”, says Kelly, when in fact his signature blend is similar to a hot chocolate. Positive reviews of Spacegoods on Trustpilot – it has now amassed nearly 2,500 – are helping to dispel those perceptions.

Reformed is also pushing its taste credentials. Its blend was developed by food scientists in the Netherlands using 100% organic, single-origin coffee from Colombia, and tastes like a “good coffee”, says Marrakchi. For him, that was crucial to success.

“As more research emerges, it will help substantiate functional claims and increase trust”

Kaya Jones, Raise & Replenish co-founder

But even with an appealing taste, there’s another barrier to mass adoption. The functional ingredients in these blends command a significant premium. Spacegoods charges £39 for a 240g bag of its most popular Rainbow Dust blend. Dirtea similarly prices a month’s supply at £39.99. For Raise & Replenish, a 210g jar comes in at £42.

While this price point can work online or in specialist retailers such as Holland & Barrett – which is stocking many of these fledgling brands – Kelly admits listings may be tricky to push in the mults.

For now, though, there’s more than enough growth among the health and wellness crowd. Having racked up £4m in revenue last year, this year Spacegoods is targeting £10m. These mushrooms may not be magic, but they could just conjure up a loyal following.