It occurs at a time when the industry is facing considerable tariff uncertainty, supply chain instability and regulatory insecurity.
Accessing extracts is increasingly difficult, due to import tariffs, international port seizures and rising concerns around labeling, contamination and carrier use in extracts imported from Asia. The Trump administration has exacted 145% tariffs on mushrooms extracts coming from China, the world’s largest supplier.
However, demand for extracts remains strong. The U.S. mushroom extract market is expected to grow at a CAGR of 10.5% from 2024 to 2030, according to Grand View Research.
“As the leading U.S. grower of functional mushrooms, it became clear that we had a responsibility to step in,” said Shaun Richmond, senior vice president of sales at M2 Ingredients. “Our customers—many of them longtime partners and some brand new to M2—told us they needed a reliable domestic extract solution.”
Mycology expertise
M2 Ingredients, which has served the mushroom industry for 15 years, said it has full traceability over the entire cultivation and harvesting process. It occurs in a 155,000-square-foot facility recently opened in Vista, California. The company taps the expertise of five mycologists, including its co-founder Steve Farrar, who has over 40 years of experience in the field.
As for the extract product, it is a strategic complement and not a shift away from whole mushrooms, said Dr. Sandra Carter, co-founder of M2 Ingredients. The company’s whole mushroom ingredients include both fruiting body and mycelium.
“In fact, we’re doubling down on innovation with upcoming technologies that make whole mushroom powders behave like extracts in formulation—giving product developers even more flexibility without sacrificing the integrity of the mushroom,” she added.
M2 Ingredients’ mushrooms are monitored across several grow rooms under different growing conditions, such as light, humidity and temperature tailored to the mushroom species. The company also has different product innovation lines and pipelines occurring simultaneously.
Growing, harvesting and packaging take place in the one facility. The company’s proprietary cultivation technology does not use any solvents, carriers or gums, which it said not only improves solubility but enhances color and performance.
‘Explosive’ growth
According to information provided by M2 Ingredients, SPINS data shows functional mushroom coffee sales have tripled over the past three years, and product sets continue to expand at major retailers such as Whole Foods, Target and Costco. The brick-and-mortar mushroom coffee segment alone is projected to have a 45% compound annual growth rate (CAGR).
“Independent of any political factors or tariffs, we’ve seen explosive growth across the functional mushroom market, driven by strong customer interest and rising demand for clean, efficacious ingredients,” Richmond said. “Mushrooms are everywhere, and consumer curiosity is peaking. So, we’ve seen that happening for a number of years and have been attempting to plan for it, apart from anything that you’re seeing tariff-related right now.”
He added that the company remains competitive regarding cost when compared to both domestic and international competitors. True to its ‘Made in USA’ claims, the only part of the finished product not produced within the country is an organic growing substrate that is imported from Canada.
