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Rritual Mushrooms Is Pioneering The Future Of Functional Foods

Nov 20, 2020 • 7:25 AM EST
8 MIN READ  •  By Michael Berger
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Over the last 20 years, the trend toward eating healthy and organic products has become much more prominent and we expect the trend to become more significant.

The trend has played a key role in the growth of the functional food market and we believe that the COVID pandemic has positively impacted how consumers focus on eating healthier. According to a 2019 report from Grandview Research, Functional Foods Market Size, Share & Trends Analysis, the functional food market is $275 billion vertical, and we expect the industry to record strong growth on a going forward basis.

Due to the amount of consumer interest in functional foods, we like to compare the vertical to the cannabidiol (CBD) industry. Although the CBD industry has not lived up to the expectations that are associated with it, the reason for the less-than stellar performance is related to how saturated the CBD market has become.

Functional mushrooms have been a major growth driver for the functional food market, and we are favorable on how the industry has grown in such a short period of time. Although there are a number of well-known functional mushroom brands, there is no clear industry leader, and we are favorable on the opportunity that is provided by this.

The lack of a clear leader in the functional mushroom industry is a major differentiator from the CBD market. In the CBD industry, there are several industry leaders, and this has put pressure on the price of CBD. The pricing wars in the CBD industry have put substantial pressure on companies that are levered to it and several companies have filed for bankruptcy as a result. With no clear leader in the functional foods market, the risk of saturation is lower, and we are favorable on this.

So far this year, we have seen a substantial increase in amount of investor interest in the functional mushroom market. As a result of this finding, we have been analyzing the companies that are levered to this vertical and have been working to find a business that meets certain criteria.

When we analyze a functional mushroom company, some of the most important traits that we look into include: the management team’s expertise and track record, the brands and assets that are owned by the company, the amount of cash on hand, and the potential growth drivers and the visibility that is associated with them.

Rritual Thesis

Rritual is a functional mushroom company that meets our criteria, and we want to provide an in-depth look at the opportunity. The company represents a differentiated opportunity and is working on the development and sale of premium brand of functional mushroom and adaptogenic elixirs. We are excited about the opportunity for the following reasons:

  • The management team is working to execute on a multi-national growth story
  • Through strategic relationships, the company has been able to gain distribution for a brand that should resonate with consumers
  • We are favorable on the human capital that is associated with the operation and find this to be an important aspect of the story
  • Through a series of private placements, Rritual has strengthened its balance sheet and we will monitor how it can execute from here
  • Interest in the functional mushroom market has been increasing and Rritual is positioning itself to be a beneficiary of this trend
  • At current levels, we find the valuation to be compelling and are favorable on the potential catalysts that it has for growth

About Rritual

Rritual is a plant-based consumer wellness brand that is dedicated to creating simple, pure, and effective plant-based health products that are mindfully designed to facilitate the practice of daily self-care. The company is backed by a leading team of scientists, doctors, nutritionists, and experts across the wellness space.

Rritual has entered the market with their flagship collection of certified organic mushroom and adaptogen elixir mix powders, offering products in three key health categories. Over the next year, we expect Rritual to report significant developments as it relates to bringing products to market.

A few weeks ago, Rritual announced a major milestone and ranked second for the Buyers Choice Award at the first ever efficient collaborative retail marketing (ECRM) program dedicated to The Whole Body & Mind Wellness.

The company’s Reishi Relax Elixir was selected for the award from dozens of entries evaluated by retail buyers and based on product packaging and innovation. We found this development to be a testament to the strength of the brand and expect the product line to gain traction with consumers.

An Opportunity to put on your Radar

One of the reasons we are excited about the product line is related to the human capital that is working on it. Rritual’s formulations team is led by Stacey Gillespie, a consumer health expert, and we are favorable on the growth prospects that are associated with the product line. The company will iniatially launch three products that are either an immune booster (Chaga), brain booster (Lion’s Mane), and stress support (Reishi). We are favorable on the diversity of the product line and will monitor how they gain traction when launched.

Another reason we are excited about Rritual is related to the markets that it is focused on. The company plans to launch in areas where the consumers are located. We believe that the strategy is better than one that relies on the customer coming to you. Rritual is targeting the US, Canada, and Japan. These three markets have a high concentration of demand for functional mushroom products and we are favorable on this approach to growth.

On top of the targeted growth strategy, Rritual has an e-commerce growth strategy that is direct-to-consumer. The company is working on forming relationships with companies like Amazon, Costco, Walmart, and CVS. We are favorable on the types of relationships that Rritual is focused on forming and expect this strategy to be a key pillar of growth.

Led by a Management Team with a Proven Track Record

A few months ago, we had the opportunity to speak 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 be able to start to generate revenues to support other growth initiatives of the business.

Another key player on team is David Kerbel who has more than 30 years of senior experience in retail, brokerage, and consumer packaged goods (CPG). Through his experience, he has formed strategic relationships with large big box retailers, and we expect his connections to play an important role in how the business advances. One of his biggest successes is Celsius which he was a founder of. David played a key role in the growth of the brand and we are favorable on the experience that he adds to the team.

A Pre-IPO Company to be Aware of

We believe that Rritual represents a multi-faceted growth opportunity and are favorable on the potential catalysts that it has for growth. When compared to its peers, we find the valuation to be attractive and are favorable on the risk-reward profile. In the near future, Rritual plans to complete a go-public transaction and this is an opportunity that we are excited about.

From the product line to the management team, we believe that Rritual represents an attractive play on the functional mushroom market and are favorable on how it has executed on a differentiated growth strategy. We believe that Rritual is in the early innings of a major growth cycle and will monitor how the story evolves from here.

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.

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Authored By

Michael Berger

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