Although 2020 has been a challenging year for the global economy, there have been a few bright spots in the market. One of those is the functional and psychedelic mushroom market and this is a vertical that we are closely following.
Consumers across the globe have shown a preference for organic health foods and this has benefited companies levered to this vertical. According to a report by Research and Markets, the global edible mushrooms market is expected to grow at a CAGR of 7.95% to US$62 billion by 2023, increasing from US$42 billion in 2018. According to the market intelligence firm Mordor Intelligence, the functional mushroom market is expected to grow from $5.8 million in 2018 by 6.4% per year through 2024.
Last month, we became aware of Rritual, a functional mushroom company focused on improving mental health. The company recently announced several significant additions to its management and advisory team and it has put a major considerable emphasis on bringing on strategic human capital.
Rritual is working to bring the first premium brand of mushroom and adaptogenic elixirs to market and has been executing on this strategy. One of the reasons we are excited about Rritual is due to the types of products it plans to bring to market. The products include an immune booster derived from chaga, a brain booster derived from lion’s mane, and a stress support product that is derived from reishi. The company plans to have a multi-stage product rollout and will target locations where the customers are located.
Rrital represents a multi-faceted growth opportunity and we are favorable on its distribution strategy. From an e-commerce standpoint, Rritual plans to work with some of the world’s largest online retailers and we expect these relationships to help support growth. The company also plans to sell products out of brick and mortar stores and expects to see the product gain traction in both channels.
When it comes to emerging industries, the most important aspect of any business is the management team. When we analyze a management team, we want to see a team that is comprised of people who are experts in their respective fields and who have diverse skill sets.
Last week, we spoke with Dr. Mike Hart who serves as the President of Rritual and left the conversation felling much more excited about the opportunity. Dr. Hart has extensive experience in a variety of high growth industries and recently entered the functional and psychedelic mushroom market.
Prior to joining Rritual, Dr. Hart was working in the cannabis industry and has experience with running clinical trials. We are favorable on the experience that he brings to the Rritual team and expect him to have a significant impact on the growth of the business. By working in the cannabis industry, Dr. Hart has been able to learn from mistakes that he has seen with other early stage, high-growth businesses and we are favorable on the expertise that he brings to the organization.
Going forward, we expect Dr. Hart to play a key role in the success of the business and are favorable on the direction that he plans to bring the business. Through the sale of branded functional mushroom products, Rritual will begin to generate revenues to support other growth initiatives of the business.
If you look at the success of a business like Athletic Greens, we believe that Rritual can follow a similar path. The company’s products are focused on improving mental and physical health and we expect to see it become a part of peoples’ daily ritual. When compared to its peers, Rritual has been able to differentiate itself and we find this to be of the utmost importance.
During the last month, we have seen a substantial increase in the number of companies that are focused on the functional and psychedelic mushroom market. By being able to differentiate itself, the company will be able to build a brand in a rapidly growing vertical. We believe that Rritual has visible growth prospects and is an opportunity that we will be closely following.