Latest / The Manufacturing Podcast with Fexingo: Factories, Supply Chains, and Industrial Business / How a Swiss Factory Uses Fungi to Grow Packaging
Transcript
- Lucas: A factory in the Swiss Jura mountains is basically farming mushrooms to make packaging — and it's already cheaper than the plastic foam it replaces. Luna: Wait — cheaper? I thought bio-based materials always come with a green premium. Lucas: That's the conventional wisdom, and for a lot of them it's true. But this company, called MycoPack, has gotten its per-unit cost below expanded polystyrene — the stuff we call Styrofoam — by about 30 percent, according to its founder. Luna: How do you grow a package? Like, you inoculate a mold with spores and it just fills out? Lucas: Essentially yes. They take agricultural waste — hemp hurds, corn stalks, sawdust — sterilize it, mix in fungal mycelium, pack it into a mold, and let it grow for about seven days. The mycelium binds the particles together into a solid shape. Then they heat it to stop the growth and dry it. The result is a lightweight, compostable block that has similar cushioning properties to foam. Luna: Seven days sounds like a long time compared to injection molding plastic, which takes seconds. Lucas: Right — that's the tradeoff. The cycle time is the bottleneck. But MycoPack has designed its production line so that they can run dozens of molds in parallel, staggered, so they're harvesting finished parts every day. The founder told me their current facility can produce about 10,000 units a month. That's small — but they're already supplying two Fortune 500 furniture companies. Luna: Furniture makes sense — big, bulky packaging for desks and cabinets, lots of foam. Lucas: Exactly. One of their clients is a major Swedish furniture retailer — you can guess which one. They use MycoPack's blocks to protect the corners of heavy wood tabletops. The client's test showed zero damage in transit compared to their previous foam, and the packaging can go straight into the customer's compost bin or even be used as garden mulch. Luna: But polystyrene is incredibly cheap per pound. How are they beating it on cost? Lucas: Two things. First, their raw material — agricultural waste — is essentially free or very low cost. They source from local farms and hemp processors. Second, they don't need the same capital intensity. A polystyrene plant is a chemical facility with extruders, steam chests, and lots of energy input. MycoPack's setup is more like a greenhouse with some drying ovens. Their energy costs are a fraction. Luna: What about the growth media? They need to sterilize it, that takes energy. Lucas: They use steam from a local biomass boiler — the same one that heats a nearby school. So the carbon footprint is very low. But the real interesting part is that they've optimized the mycelium strain itself. They spent two years selecting a strain that grows aggressively at room temperature and produces a dense, rigid structure. Most competitors use off-the-shelf strains that are less efficient. Luna: So the moat is biology, not just process. Lucas: Correct. They have a proprietary strain and a patented method for the mold geometry. But now they need to scale. And here's where the challenge gets real. Luna: Scale meaning going from 10,000 units a month to a million? That's a huge leap. Lucas: It is. And the founder was candid about the bottlenecks. First, space. Mycelium needs to breathe — you can't stack molds too high. So a larger facility means a much bigger footprint per unit of output than a plastic factory. Second, labor. Right now, much of the process is manual — loading molds, monitoring growth, unloading, drying. They've got 40 employees and they're adding one or two a month. Luna: Can they automate? Like, robotic arms to handle the molds? Lucas: They're working on it. But the molds are oddly shaped — each client's part is different — so a traditional pick and place robot needs a lot of reprogramming. They're looking at vision-guided robots, but that's expensive. For now, they prioritize hiring local workers and training them in basic mycology and quality control. Luna: It kind of sounds like a craft brewery model — small batches, high skill, local. Lucas: That's exactly how the founder describes it. And like craft breweries, they have a premium positioning. But they're actually selling at or below the price of the incumbent material, which is unusual. That's partly because the polystyrene price has been volatile — linked to oil and natural gas. MycoPack's input costs are stable. Luna: So the business case gets stronger when oil prices go up. Lucas: Exactly. The founder said that when oil spiked in 2022, they got a flood of inbound inquiries. But they had to turn most away because they couldn't produce fast enough. Luna: That's a good problem to have, but also a frustrating one. Lucas: Yeah. They're now raising a Series A to build a second facility, probably in Germany, closer to their big furniture clients. The plan is to replicate the Swiss model in a 10,000-square-foot building and prove it works at multi-site scale. Luna: If these conversations have moved your work forward in some small way, it's worth saying that listener support is what keeps this show ad-free and independent. Lucas: It's true. A couple of dollars a month is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. No pressure, but it adds up. Luna: Alright, back to the factory. Lucas, what about regulation? Is there any hurdle with using a living organism in packaging? Lucas: Great question. In the EU, packaging materials are regulated under the Packaging and Packaging Waste Directive. Mycelium composites are considered a 'natural material' and generally exempt from the more stringent chemical safety rules that apply to plastics. But there's a catch: if the mycelium is genetically modified, you trigger a whole different set of regulations. MycoPack uses a wild-type strain, so no GMO issues. Luna: What about end of life? If someone throws it in the trash instead of composting, does it still degrade in a landfill? Lucas: It does, but slowly, because landfills are anaerobic. In a compost pile, it breaks down in about 30 days. In a landfill, it might take a year or two — still much faster than polystyrene, which essentially never degrades. But the ideal scenario is industrial composting. The furniture companies are including instructions in the packaging for consumers to compost it or even use it as a soil amendment. Luna: Are there other companies doing this? I know Ecovative in the US has been at it for a while. Lucas: Ecovative is the pioneer — they started around 2007. But they've mostly licensed their technology to other companies rather than manufacturing themselves. MycoPack is vertically integrated: they grow the mycelium, design the molds, produce the parts, and handle sales. That gives them tighter control over quality and cost. There's also a Dutch company called Grown that does similar things, but they focus on insulation panels, not packaging. Luna: So MycoPack is small but has a niche. What's the unit economics look like? Ballpark. Lucas: The founder shared that a typical corner block — the kind that protects a table edge — sells for about $1.20. That's comparable to the foam equivalent. Their gross margin is around 55 percent, which is healthy for a small manufacturer. The challenge is that their fixed costs — rent, equipment, labor — are high relative to volume. So they need to roughly triple output to get to a 70 percent gross margin, which is where they want to be to attract larger investors. Luna: Tripling output means moving from 10,000 to 30,000 units a month. Is the current facility capable of that? Lucas: They think so, with some modifications. They're adding more drying racks and optimizing the mold turnaround. But the founder's view is that they'll hit a ceiling at about 50,000 units per month in the current space. After that, they need a new building. Luna: Which ties back to the Series A. What's the timeline? Lucas: They're aiming to close the round by the end of this year. They want to raise around $5 million, which would let them build a second facility and fund R&D for automating the mold handling. If they pull it off, they could be producing 200,000 units a month across two sites by the end of 2027. Luna: That's ambitious. Do they have any big customers lined up beyond the furniture companies? Lucas: They're in trials with a major electronics company — shipping pallets for monitors — and a wine distributor looking for protective packaging for bottles. The electronics trial is interesting because those packages need to be very precisely shaped. MycoPack can mold to tight tolerances, within about a millimeter. Luna: That's impressive for a grown material. I always thought mycelium would be too irregular for precise shapes. Lucas: It depends on the mold design and the strain. They've developed a process where the mycelium is forced into a high-pressure mold during the growth phase, which compacts it and creates a smooth surface. The result is consistent enough for most industrial applications. They're not going to replace injection-molded plastic for tiny parts, but for bulky protective packaging, it's a viable alternative. Luna: What's the one thing that could kill this business? Lucas: The founder said contamination. If a batch gets infected with a competitor mold or bacteria, the whole batch is lost. They've had two contamination events in three years. Each time, they lost about 500 units and had to deep-clean the entire facility. That's a week of downtime. So they have strict HVAC and air filtration, and workers wear cleanroom suits. It adds to the cost but is non-negotiable. Luna: Contamination is the hidden risk in any biological manufacturing. Makes sense. Lucas: Yeah. But if they can manage that, the trajectory is promising. The packaging market is enormous — globally, around $900 billion. Even a tiny sliver of that represents a real business. And with regulatory pressure on single-use plastics increasing in Europe, the tailwinds are strong. Luna: So we'll be watching for the Series A close. Lucas: And watching whether the second facility hits its production targets. If it does, we might see mycelium packaging in a lot more places than just furniture corners.