Mushrooms: The Next Big Thing in Environmentally-Friendly Packaging and Construction?

With all the frightening things that are happening in the world right now, we thought we would focus on something truly magical: Namely, fungi. Last summer, we wrote about the use of psilocybin to treat depression in The Growth of the Psychedelic Industry. While an effective treatment for something that causes so much pain to so many is awfully exciting, it turns out that mushrooms are good for a whole lot more. Aside from aiding mental health, those tasty little pizza toppers are being used to create environmentally safe packaging and construction products, consumer goods, and even cleaning up one of the biggest messes humans have ever made.

Now, we aren’t saying that we'll be getting a shipment of MeUndies inside a portobello mushroom, but rather what can be done with mycelium, which is the root structure of mushrooms. It consists of a network of branching, interconnected fine threads which can be grown into any shape and has no size limit. The Armillaria ostoyae mycelial network in Oregon occupies around 2,400 acres or roughly 1,665 football fields and is the world’s largest known organism.

The amazing thing is that once the mycelium is colonized into a form, it is exceptionally durable, insulating, and even flame-resistant, making it an ideal replacement for one of the bigger environmental criminals, Styrofoam. Even more mind-blowing is that mushrooms also serve as nature’s recycling system with mycelium capable of growing extremely fast, making it functional for industrial applications, and once used, it is a bonus for the area in which it is composted.

All this work by innocuous little fungi adds up to a global mushroom market that grew to $58.8 billion in 2021 and, according to ResearchandMarkets.com, is expected to reach $86.5 billion by 2027, which translates into a CAGR (compound annual growth rate) of 6.5% during 2022-2027.

Packaging and Construction

The pandemic saw a rapid increase in online shopping, which also meant a spike in demand for cardboard boxes. The global cardboard box market reached $190 billion in 2020 and is expected to experience compound annual growth of 5.7% through 2027. Leading manufacturers include the privately-held TetraPak, International Paper Co (IP), and WestRock (WRK). While it is true that cardboard boxes are recyclable, as are many of the protective air-filled plastic bags used to shield items during shipping, we are seeing a growing interest in more biodegradable packaging that can simply be composted at home, eliminating the need to send it to a recycling facility.

One of the market leaders in mycelium pack-tech is Ecovative Design, based in New York, which closed a $60 million round of funding last year. One of the company’s products is Mushroom® Packaging, which is made with just hemp hurd, a byproduct of the fiber hemp industry, and mycelium to form a solid composite form that is light, strong, fire, and water-resistant. The company reports that its packaging can be grown in just seven days and will compost in 45 days when added to the soil.

This exceptionally environmentally-friendly packaging is used by companies like Lush, an artificial preservative-free skincare company, and Seedlip, which offers alcohol-free alternative spirits. We suspect that as companies continue to shift their offerings, there will be a greater emphasis on packaging that responds to the growing demand for products and services that are not only better for your body but also for the environment.

Ecovative has also developed MycoComposite™, which upcycles farming and forestry byproducts using mycelium to create insulation that is naturally flame-retardant and noise-dampening. MycoComposite™ can also be grown to serve as door cores and other construction needs. There are even efforts focused on creating building bricks made of mycelium.

Given the mess of global supply chains, on top of increasingly complex geopolitics, we expect that companies will look to relocate more of their supply chain domestically. Building materials and construction make up about 10% of global carbon dioxide emissions, which is more than global shipping and aviation combined. If cement manufacturing alone were a country, it would be the third-largest emitter of CO2 on the planet. Since mushrooms are relatively easy to feed, can be grown anywhere, and are appealing to increasingly environmentally aware consumers, we expect to see significant growth in mushroom tech solutions in building materials.

Consumer Goods

Fungi are working their way into the fashion world as well. Brands including Adidas (ADDYY), lululemon (LULU), and Kering (PPRUY) have backed Mylo, a bio-based leather alternative that is (according to Mylo) soft and supple. Kering’s joint venture partner Stella McCartney debuted her Frayme Mylo handbag, the first mycelium-based bag ever produced, at her mushroom-themed runway shown for her Summer 2022 collection during the Paris Fashion Week. The show was “Inspired by the power of fungi, the collection wove together uncommon threads of mycology and casual futurism, all in a signature Stella blend that pulsed with optimism.”

In April 2021, Adidas debuted the Stan Smith Mylo, which was the first shoe to ever be produced from Mylo. As Adidas put it in its 2020 annual report, “This is larger than sports, this is for our future.” The athletic apparel giant lululemon has developed a concept yoga mat made from Mylo and a 2-in-1 yoga mat bag and meditation mat made with Mylo. The fungi are infiltrating fashion, both high and mainstream.

The French luxury house Hermès has partnered with MycoWorks to create a leather-alternative version of its Victoria shipper bag. The bag features amber-colored panels made from a product called Sylvania, which is made from sheets of mycelium that are tanned and finished by Hermès tanneries in France. The material looks much like real leather, including the wrinkling and subtle color gradient.

Mushrooms are also popping up all over the beauty world. According to the Editorialist, mushrooms were the biggest beauty trend of 2020. They also star in a seemingly endless list of emerging functional health foods such as DIRTEA’s mushroom powders and Four Sigmatic’s mushroom-based beverage products. There is even work being done with mushroom melanin to protect astronauts from radiation. The discovery of this potential protection came out of one of the greatest environmental tragedies in human history, the 1986 Chernobyl disaster. Scientists discovered a type of mushroom, Cladosporium sphaerospermum, that extracts energy from radiation, thus is feeding on the site’s radiation. Even more incredible, mushrooms were first discovered on the walls of the reactor as early as 1991, just five years after the core meltdown.

Ok, so you may be getting spored of our puns, but that’s the thing about fungus. It tends to grow on you. It is yet another example of disruptive technology that is able to provide comfort, pleasure, and help the planet along the way. That is part of a world worth reimagining.

Disclosures:

lululemon (LULU) is a member of the Tematica Bita Cleaner Living Index and the Tematica Bita Cleaner Living Sustainability Screened Index.

International Paper (IP) and WestRock (WRK) are members of the Foxberry Tematica Research Sustainable Future of Food Index.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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