Expanding Mushroom Market is an Opportunity for Processors, Especially in the US

Mushroom processing equipment has been a growth market for ProEx Food, resulting in a large uptick over the last 12 months for inquiries and orders. More and more processors are looking to tap into this $36B competitive global market. The lion’s share of this market in terms of both retail sales and operational investment is in China, other APAC countries and Europe, one our focal markets served. Our sales and engineering teams work with our manufacturing arm in Poland to engineer solutions using that group’s existing, refined mushroom processing equipment while we handle customization and integration for our customers and their specific needs. Since Poland is one of the main growing and processing regions of mushrooms in the EU market, that means we’re working with experienced colleagues and an excellent product catalog.

Oddly, the US market has been a bit quiet, likely waiting for the right partner to help in unfamiliar territory. Processing and packaging operational maturity and capital investment for mushroom processors in the US has lagged dramatically behind other product categories and regions. Mushroom processors in the US have a tendency to rely too heavily on hand sorting and packing across the supply chain, regardless of safety and macro level consumer trends towards mushrooms across almost all retail markets, from consumer direct sales to grocery to restaurants and more. This inflates production costs and restricts sales volume growth. Others seem to be pivoting in style and final product, looking at more processed goods for the also growing meat/protein alternative market.

Opportunity

Regardless, there’s relatively untapped growth, especially in the most common type: button mushrooms (also known as white cup and champignons in other markets). In terms of household purchases in the US, mushroom sales are one of a few meta categories showing consistent YoY growth, with nearly a third of households regularly buying, 68M pounds produced and $291M in sales revenue in Q4 2019 alone. Look further at an actual growth rate of 1.1% and 3.5% over the previous equivalent quarters in 2018 and 2017, respectively, the market potential becomes more clear. That’s more in revenue than both broccoli and cucumbers, and closing in on carrots, over the same period.

Source: Nielsen Total Food View, Total U.S. xAOC, 13 Weeks Ending 12/28/19:, UPC-coded and random-weight/Non-UPC data; Nielsen Homescan 

Let’s switch gears and look ahead. The current annual US market for mushrooms is estimated at $1.14B. Growth estimates for both the US and global market vary depending on where you look, but are commonly estimated to accelerate to a CAGR ranging from 6.3% to 7.9% by 2027. That gives a horizon of a $1.47B to $2.28B market by 2027. That requires investment in capital equipment to ready the supply chain.

https://www.globenewswire.com/news-release/2020/02/13/1984863/0/en/The-global-mushroom-market-accounted-for-US-38-665-0-Mn-in-2018-and-is-expected-to-grow-at-a-CAGR-of-6-3-during-the-forecast-period-2019-2027-to-account-to-US-66-195-0-Mn-by-2027.html

https://www.marketwatch.com/press-release/mushroom-industry-2019-global-market-growth-trends-revenue-key-suppliers-demands-and-detailed-insights-on-upcoming-trends-till-2026-2019-08-06

Yet, as mentioned earlier, a lot of US processors are sticking with what they already do: manual processes, with a continued dependence on growing headcount to output enough product. This makes little sense, is highly inefficient and leaves money on the table. Luckily for you, ProEx Food is the rare US-based company that is investing in equipment and solution R&D and market knowledge for mushrooms in the US, utilizing the strength of our strategic partnerships with our European partners. We know the challenges you are already encountering, the ones that you are not yet aware of, and are already working to address those that have been amplified with the current global COVID-19 pandemic. Partnering with ProEx Food is your simple solution to a complex problem for those daring groups who are ready to strike.

Labor Shortages, on Steroids

Labor remains the number one issue for processors. Let’s face it, standing at a production line, repeating the same tasks and motions over and over is a role that is difficult to fill, train, and retain. Many of you have relied on transient migrant workers to come in and fill positions, either for specific season packs or longer term. You may even have on-site housing and visa programs in place. This is far from easy, and has already been difficult due to recent immigration policies across our customer locations. Now, consider that mushrooms are typically grown in a controlled environment, and have the potential to be cultivated and processed year-round. Are you ready to tackle this in perpetuity?

This is the reality in mushrooms. Especially in the US, the process is manual, relying far too often on fielding a team or personnel to work the line. While there are equipment and automation solutions that exist, many operators have stayed the course with limited, lackluster investment, which is coming back to bite them… hard. Think you’re too busy to tackle now, how are you going to handle production as business ticks further up?

COVID-19

Beyond that, the COVID-19 pandemic has made food processors’ lives and operations miserable. Few are prepared to continue operations, much less deal with a demand spike occurring at the same time sickness is taking a hold of your staff. Sure, we’ve heard that we’re near peak, and that a vaccine is on the way. When? Will it be this year? Will it be next spring? Will there be a relapse this fall and another round of restrictions? Will something similar happen, after all – SARS and MERS weren’t that long ago? No one knows, so get prepared for the unexpected.

You can find more about our automation solutions here

Safety

Keeping your employees and the products they produce safe are also crucial. For your employees, you want to ensure they are able to work without injury, exposure or any sort of sickness. You want to make sure they aren’t breathing in particulates that could impact their well-being, be it mold and spores that are an inherent part of mushroom growing and processing, or viruses that cause other respiratory ailments. For your buyers, you have to ensure them the foods are safe for their employees and end consumers. Equipment has to be wash down capable, and you have to mitigate touchpoint between personnel and the product they interact with. You also simply need to have less people involved with each step in the supply chain.

ProEx Food mushroom equipment is CE compliant, made to adhere to those exacting standards that exceed other markets.

Packaging

We anticipate packaging to become more and more robust, for quite a while. Goods sold to consumers need to stay safe. People need to be confident that they aren’t going to pick up something from another customer that touched and returned a good. Wrapped goods will take off, especially those with biodegrade films applied. We are ready to help you, whether your end product is fresh market, canned, frozen or part of a different isolate to be used in a meat replacement. We have the solutions that will help you – knowing that hand packing is likely to be frowned upon for many reasons for a considerable period of time.

Facilities

Due to the nature of mushrooms, spores and mold, etc, you have to keep your processing facilities separate from your other crops. Luckily for you, we also have strategic partnerships with construction organizations that specialize in food and beverage plants. If you need processing plants, green/grow houses, or anything in-between, we already know who will deliver the most optimal solutions for your facility needs.

Learn More

You’re right – just this short article is a lot to take in when you’re getting ready to either get in to or upgrade your mushroom processing facility. ProEx Food knows the challenges, and both near-term and long-term obstacles that our processor companies need to solution around. Please see our mushroom line and equipment:

or contact us to let us know how we can help.

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