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Why the North American superfoods and adaptogens sector is poised for growth


Comfort food and liquor have been the go-to stress relievers for countless people since the start of the coronavirus pandemic, and few people are likely to make it through without gaining the aptly nicknamed “COVID-19 lbs.”

But, ironically, it may actually be superfoods such as functional mushrooms and adaptogens that are the long-term beneficiaries of the shelter-in-place orders and social distancing that have confined people primarily to their homes for the past 12 months and counting.

As the pandemic forced many people to take a closer look at their lives and re-asses their health, the result has been a surge in interest in superfoods long purported to provide benefits ranging from boosting people’s immune systems and improving digestion and cognitive health, to helping relieve stress and even providing better quality sleep.

Surge in superfood interest during lockdown as consumers focus on health

Among the most prevalent of these are functional mushrooms — rare species of mushrooms found in obscure locations like dense forests, which are high in nutritional value and antioxidants, and adaptogens — short for adaptogenic herbs – said to help with a myriad of issues from stress to neurological problems.

The recent surge of interest in such superfoods comes on top of what was already a steadily growing shift towards healthier eating prior to the pandemic. According to a recent Market Analysis Report from Grand View Research, the global superfoods market is expected to reach $275.77 billion by 2025, up from $137.0 in 2018.

Analysts believe the growth is sustainable, predicting continued growth of roughly 8% annually. And retailers are seeing the demand first-hand, with Whole Foods citing products that incorporate “functional ingredients” such as mushrooms and adaptogens at the top of its list of annual predictions for the 10 biggest trends in the grocery industry for 2021.

So, it is no surprise that the trend has caught the attention of some of the world’s largest food and beverage companies, with many launching products of their own, investing in or outright acquiring superfood producers.

Big food brands are getting interested in superfood technology

In 2018 PepsiCo purchased nutritional food company Health Warrior; Coca-Cola introduced its first line of kombucha products in 2018, which it followed up with a $20 million equity investment in kombucha producer Health-Ade in 2019; while this April Nestlé introduced nesQino, its new line of superfood drinks and that same month Danone Manifesto Ventures, the venture capital subsidiary of multinational food conglomerate Danone, invested $10 million in Laird Superfood roughly half a year prior to its recent IPO.

“Big food is acquiring Kombucha and chia bars brands right now —food that does something to make you ‘stronger’ or ‘healthier,’ and now you’re continuing to see the budgets going into that space. Those institutions will guarantee a certain bit of growth for the next five years, because they don’t buy a company without a 10-year horizon at the very least,” said Cullen Gilchrist, CEO of Washington D.C.-based food business accelerator Union Kitchen. “For large companies, frequently their ‘innovation’ means taking what they already do and slapping new names on it. Whereas, at the startup level, companies are coming with completely different ideas and products using marengo and chaga mushrooms that they are super excited about,” he said, adding that sales of superfoods and functional mushroom products have been growing even faster online than in stores.

And with venture capitalists having taken a strong interest in the sector as well, it is likely additional superfood producers will follow the lead of companies such as Rritual Superfoods (CSE:RSF/FRA:0RW) and Silo Wellness (CSE:SILO), which both completed IPOs this March.

Rritual Superfoods has just signed a distribution deal with leading US drugstore chain Rrite Aid which will see its products on the shelves of over 1000 stores in 17 states before the end of Q3. This is a big scale launch for Rritual, a specialist in adaptogenics and mushroom-based supplements. As its CEO David Kerbel says: “We are striving to not only lead this emerging category, but to define it. A significant part of achieving that goal is accomplished through gaining the trust and support of consumers through top tier retailers such as Rite Aid.”

While Rritual is focusing on food supplements, there is also growing interest in the health benefits to be derived from psychadelic mushrooms. Growing acceptance of psychedelic drugs for treating depression is increasing market value in this sector as these treatments have repetitively proven their high rates of effectiveness for treatment for nicotine dependence, alcohol dependence, anxiety associated terminal illness and chronic PTSD as compared to other antidepressants. There are already a number of companies working on solutions at the moment that could see wider take up either as medicines or supplements to treatment.

“We’re seeing a lot of increase in the conversation around psychedelics and the investment community is much more interested in the future and the promise that it holds,” said Douglas K. Gordon, chief executive of Springfield, Oregon-based Silo Wellness. “It’s really important that people understand the science behind psychedelics. The stigma is out there, but that’s not really what the benefits are,” he said, noting that psychedelic mushrooms are among the oldest and safest types of traditional remedies and are well known for benefits such as stress release and promoting mindfulness.

To further boost interest in its products, Silo Wellness recently entered into a multi-year licensing agreement with the family of musician Bob Marley and will use the Marley name to market a line of functional and psychedelic mushroom products. Gordon believes that the licensing deal will help foster a better understanding of the benefits of such products through a name people already have trust and familiarity in and that it is likely other companies will take similar approaches.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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