Why Functional Mushrooms Are Exploding in Demand

Functional mushrooms have moved from niche wellness shelves into the mainstream—appearing across supplements, beverages, coffee alternatives, chocolate bars, and ready-to-drink formats. Once a fringe category, mushrooms are now part of a rapidly expanding global market, projected to reach 4.12 billion by 2030. This is driven by growing consumer interest in products positioned around everyday wellness routines across supplements, beverages, and functional foods.

For small to medium-sized brands and formulators, mushrooms represent a rare intersection of consumer demand, product innovation, and functional versatility.

Below is a look at why functional mushrooms are gaining momentum, how brands are using them today, and what to look for when sourcing mushroom ingredients for formulation.

Category growth at a glance: The global functional mushroom market was valued at more than $30B in 2023 and is projected to continue steady growth over the next decade.

Growth is fueled by consumer demand for products marketed around immune, cognitive, and stress-related wellness themes across supplements, beverages, and food formats.

What's Driving the Rise of Functional Mushrooms?

1. Growing Interest in Everyday Wellness Routines

Consumers are more proactive than ever about supporting everyday wellness routines with themes like focus, balance, and vitality. This shift has fueled strong interest in plant-based, clean-label solutions that feel approachable, familiar, and adaptable across formats. Functional mushrooms fit squarely into this mindset, offering recognizable, natural ingredients.

2. Broad Market Positioning Across Wellness Categories

Functional mushrooms are commonly positioned with a wide range of wellness-focused product categories, including immune-focused, cognitive-positioned, and stress-management-oriented formulations.

Ingredients like lion's mane, reishi, and cordyceps are frequently selected by brands for these positioning strategies, allowing mushrooms to serve as either a hero ingredient or a scalable platform across multiple SKUs.

3. Traditional Use Meets Modern Formulation Interest

Many functional mushrooms have long histories of traditional use in Chinese Medicine and Ayurveda. Today, brands are pairing this historical narrative with contemporary research interest and modern delivery formats.

4. Innovation Beyond Capsules

While supplements remain foundational, functional mushrooms are now being formulated into beverages, foods, and lifestyle products that fit seamlessly into daily routines. From morning mushroom coffee to evening chocolate rituals, innovation in delivery formats has dramatically expanded how (and how often) consumers engage with mushroom-based products.

Emerging Mushroom Ingredients & Functional Pairings

Rather than existing as standalone ingredients, functional mushrooms are increasingly formulated around specific benefits and usage occasions.

Lion's Mane often appears in productivity-focused supplements, mushroom coffees, and beverage blends commonly positioned around focus and cognitive support.

Cordyceps is commonly used in energy-forward products such as pre-workout blends, performance beverages, and daily vitality formulas.

Reishi, Chaga, Turkey Tail, and Shiitake are often used in products positioned around daily wellness, seasonal routines and stress-aware lifestyles, particularly in powders, tinctures, and functional foods designed for daily use.

Complementary Botanicals & Flavor Strategies

To improve taste and reinforce function, brands often pair mushrooms with botanicals and spices such as:

• Cinnamon for warmth, balance, and familiar flavor associations.
• Cardamom for premium lemony undertone flavor and aromatic appeal
• Cacao for bitterness masking and premium appeal.

These combinations help soften earthy notes while strengthening functional storytelling.

Popular Functional Mushroom Product Formats & Formulation Considerations

Nutraceuticals: Capsules, Tinctures & Gummies

Supplements and nutraceutical applications remain a primary entry point for functional mushrooms, offering familiarity and clear dosing. Brands like Super Mush and Birch Boys highlight how mushrooms can be positioned for daily wellness, focus, or stress support in traditional supplement formats.

Opportunities: Familiar delivery, precise dosing, clear functional claims

Challenges: Taste masking (especially gummies), compliant benefit language, transparency around extract type and potency

Beverages: Mushroom Coffee & Drink Mixes

Mushroom beverages are one of the fastest-growing applications. The global mushroom coffee market alone was valued at $2.71B in 2022 and is projected to reach $4.12B by 2030, driven by demand for functional alternatives to traditional caffeine.

Brands like RYZE, Collider, and Dram Apothecary's Mushroom Cola illustrate how mushrooms are being integrated into daily rituals - from coffee replacements to functional sodas.

Opportunities: Lifestyle appeal, habitual consumption, high repeat purchase

Challenges: Solubility, sedimentation, balancing bitterness and earthy notes

Functional Foods: Chocolate, Snacks & Breakfast items

Mushrooms are now appearing in chocolate, snack bars, chips, breakfast treats and other food-related products—helping brands reach consumers beyond traditional supplement users.

Brands like WISE Bar, Popadelics, and Alice mushroom chocolates demonstrate how mushrooms can be delivered without sacrificing taste.

Opportunities: Broader reach beyond supplement users, premium positioning

Challenges: Heat stability, flavor integration, maintaining functional integrity

Emerging Applications for Mushrooms: Skincare & Cosmetics

Functional mushrooms are also beginning to appear in skincare and cosmetic formulations, particularly for their compositional attributes and consumer-perceived functional positioning. Tremella and cordyceps are ingredients increasingly evaluated for use in skincare products focused on hydration appearance and skin feel. For example, products like Youth To the People's SuperShroom Adaptogen Cleanser, available at stores like Sephora, show that mushroom-based skincare is already reaching mainstream consumers, demonstrating both market traction and consumer acceptance for these functional ingredients.

Opportunities: Introduces mushrooms to a broader, lifestyle-focused audience; aligns with premium and functional benefits.

Challenges: Stability and formulation in water or oil-based products

Quality & Sourcing: What to Look for in Mushroom Ingredients

Not all mushroom ingredients are created equal. For brands that prioritize ingredient quality, transparency, and documentation, sourcing matters.

Fruit Body + Mycelium: A Complementary Approach

The mushroom fruit body offers well-known benefits, while mycelium provides additional, complementary compounds. When used together, they create a more complete, full-spectrum ingredient profile.

Monterey Bay Herb Co offers both organic and non-organic mushroom powders, giving formulators flexibility to balance cost, certification requirements, and ingredient composition and consistency.

Quality Assurance You Can Stand Behind

• SQF-certified facility
• Third-party testing through ISO-certified lab partners

Formulator-Friendly Sourcing

• No minimum order quantities (MOQs)
• Comprehensive product specifications and Certificates of Analysis (COAs)
• Fast, accurate documentation turnaround

Key Takeaways for Brands & Formulators

Functional mushrooms are not a passing trend—they're a scalable, adaptable ingredient category with deep roots and modern relevance. For brands serving wellness-focused consumers, mushrooms offer a distinct way to innovate across supplements, beverages, foods, and emerging categories like skincare.

Sourcing high-quality, well-documented mushroom ingredients is essential to delivering products customers can trust.

Monterey Bay Herb Co is proud to support brands, wellness formulators, and apothecaries alike with organic, full-spectrum mushroom ingredients designed for real-world formulation needs.

Interested in sourcing functional mushrooms for your next product? Let's talk.