The Novel Food Shakedown

A few weeks ago, I was listning to a podcast with the founder of Innerbloom, and the story of how they had to pull their coffee off the market.

Not because anyone got sick.

Not because the product was unsafe.

Not because the ingredients were mislabelled.

Because they put lion's mane in a food container instead of a supplement capsule.

Same mushroom.

Same dose.

Same supply chain.

If you walked next door to HealthPost, you could buy lion's mane from SuperFeast or Matakana Superfoods right there on the shelf. Capsules, powder, dual extracted 12:1 concentrate.

Completely legal.

Innerbloom's crime was labelling the can "Coffee" instead of "complementary medicine."

Welcome to novel foods regulation, one of the weirdest corners of consumer product law.

What a novel, novel food actually is

Rule is simple. if a food ingredient wasn't consumed "to a significant degree" in a given jurisdiction before a specific cutoff date, it's novel.

You can't sell it in a food product until the regulator approves it.

In the EU, the cutoff is 15 May 1997. That's the day the first novel foods regulation came in. Didn't matter that Chinese medicine texts from the 10th century Song Dynasty had lion's mane on the page.

White man in Brussels starts the calendar in 1997.

In Australia and NZ, FSANZ runs the same basic framework through Standard 1.5.1. Lion's mane sits on the non approved list.

You cannot legally sell it as a retail food product.

It literally grows wild in native NZ forests.

There's an species called Hericium Novae-Zealandiae, and Mynd is already cultivating it commercially in Raglan. A mushroom that grows here. That Māori have a name for (Pekepeke-Kiore in te reo).

Classified as foreign enough to need regulatory approval before sale.

Who wrote these rules? People who'd never been inside a warehouse.

Something, something, format arbitrage

Here's what got Innerbloom. It wasn't the ingredient.

It was the regulator, ala, red tape.

In Australia and NZ, a single ingredient can fall under two completely different frameworks depending on how you sell it.

Sell it as a food and you're under FSANZ, which bans it as a novel food.

Sell it as a supplement, tincture, or capsule and now you're under the TGA, which lists mushroom based "complementary medicines" as low-risk products that just need listing, not pre market approval.

SuperFeast. Matakana Superfoods. Mynd. All selling lion's mane legally in NZ right now. All using the TGA pathway. All technically selling the same compound Innerbloom just had to pull.

Real cost of a FSANZ novel food application if you wanted to go that route: six figures minimum once you include the base application fee, toxicology, regulatory consultants, and the inevitable requests for more data. Call it $300-500K for a straightforward submission.

Timeline: 18 months minimum.

For a brand doing a few mil in revenue? Not happening.

The lesson is brutal and it's not about safety. It's about packaging. Put lion's mane in a capsule with "supports mental clarity" and "complementary medicine" on the label, you're fine. Put the identical powder in a coffee can, and you're pulled.

Both products end up in a human being's stomach.

Pack a lunch

our friends have it harder though, and the EU novel food process makes it ours look like a drive through.

The average novel food application takes 2.5 years.

937 days from submission to publication.

The scientific evaluation alone averages 629 days.

There are 2.7 additional data requests per application on average, each taking 130 days to respond to. About half the total evaluation time is back-and-forth between EFSA and the applicant.

What do you need to submit?

• A 90-day sub-chronic toxicity study. These alone run €150-250K.
• Minimum two genotoxicity studies.
• Allergenicity evaluation.
• Full exposure modelling at mean and 95th percentile intake.
• Manufacturing process documentation.
• Composition analysis.
• Stability testing.

All-in cost for a proper novel food dossier in the EU? €300-500K is the low end for a straightforward application. Complex ingredients run €700K-1M.

In the EU, lion's mane FRUITING BODY is not novel. It's been eaten. It's legal.

Lion's mane MYCELIUM is novel. Because Europeans weren't eating mycelium powder pre 1997.

Sell the mushroom itself and you're fine. Sell the stringy underground filaments from which the mushroom grows, and you need a €500K dossier and three years of patience.

Cordyceps is even weirder, and no, not the last of us.

The fruiting body AND mycelium of Cordyceps sinensis (the wild Himalayan species) are both legal for supplement use. But Cordyceps militaris (the cultivated commercial species everyone actually uses) is classified as novel. Same genus, different legal status. Despite both having been consumed in East Asia for centuries.

About 87% of EU novel food applications eventually get approved. So the system mostly works in the sense that if you wait 2.5 years and spend €500K, you probably get a yes. The question is whether your business survives the wait.

The Commission knows the system is broken. In mid-2025 they announced a strategy to introduce regulatory sandboxes, experimentation clauses, and derogations specifically to speed up novel food approvals. When your own regulator is admitting the system stifles innovation, you've lost the plot.

functional mushrooms are a US led category

The reason 99% of functional mushroom brands are American isn't because Americans love mushrooms more. It's DSHEA.

The Dietary Supplement Health and Education Act of 1994 created a framework where dietary supplements are presumed safe if they were in the food supply before 15 October 1994, or if the manufacturer can establish safety through a new dietary ingredient notification or GRAS pathway.

Lion's mane sails through this.

Multiple GRAS notices on file with the FDA. GRN 1124 covers lion's mane beta-glucans specifically. Other GRN responses have come back with "no questions" letters from the agency.

Cost breakdown for the US pathways:

• Self-affirmed GRAS: roughly $50-150K with a proper expert panel and dossier
• FDA-notified GRAS: $150-400K with full notification
• NDI notification: cheaper still, because it's a 75-day review instead of 180 days

The result: the global functional mushroom market hit around $25B in 2020 and is growing double digits annually. Four Sigmatic. Om Mushrooms. Host Defense. Real Mushrooms. Rainbo (Canadian, but benefits from the same North American regulatory environment). Every major functional mushroom brand built its market inside DSHEA.

An American lion's mane founder can launch a product in 90 days. An EU founder needs to either buy from a pre-approved supplier, use only the fruiting body, or wait three years. An NZ founder can sell through the TGA pathway but not in a food format without going broke.

Same ingredient. Three different businesses depending on where you're standing.

Who benefits from this mess

Follow the money. Who does novel food regulation actually protect?

It's not consumers. Lion's mane has no documented toxicity at normal consumption levels. There's no public health crisis driving this. No hospitalisations. No deaths. No scandal.

It's big CPG.

A three-year, €500K approval process is a rounding error for Nestle, Unilever, Kraft-Heinz, Danone. They've got regulatory teams on permanent retainer. They've got dossiers pre-prepared for dozens of ingredients. They can file a novel food application and forget about it for 30 months.

For a founder bootstrapping a $2M revenue functional food startup? That's the whole company gone. Twice over.

The moat isn't safety. The moat is capital and patience. And that's not accidental. It's what the regulation rewards.

There's also a colonial flavour to all this that nobody likes to talk about. The 1997 EU cutoff essentially says: if Europeans weren't eating it before 1997, it's novel. Chinese, Japanese, Korean, Thai, Indian food traditions going back centuries? Doesn't count.

Moringa. Tempeh (in some formats). Specific chili varieties. Certain seaweeds. Traditional African grains. A steady stream of foods that were staples for hundreds of millions of people for generations start life in Europe as "novel" until someone coughs up a dossier.

That's not safety science. That's a list built around what one regional food culture was buying at Tesco in the mid-1990s.

Where it mostly works

Fair's fair. Novel food regulation isn't entirely broken. For actually novel ingredients, it's doing roughly what it should.

Cultivated meat. Precision fermentation dairy proteins. Specific insect proteins. Synthetic sweeteners. Engineered enzymes. Oils from new microbial sources. These are products with no human consumption history. Running them through a safety process before they hit supermarket shelves makes sense.

The failure mode is traditional foods from outside Europe getting treated the same as lab-grown novel compounds. Same framework, same cost, same timeline, applied to a mushroom people have been eating for 1,000 years and a protein that was produced for the first time in a bioreactor last Tuesday.

One of those things is not like the other.

So What.

If you're building a functional food or supplement brand, the regulatory playbook is clear.

Launch in the US first. DSHEA is the best framework in developed markets for this category by a wide margin. Get revenue, prove demand, build the brand.

For EU entry, either use ingredients already on the Union list (buy from an approved supplier with the dossier done), use only the fruiting body of mushrooms, or budget properly for a novel food application if your unit economics support it.

For NZ and AU, structure as a TGA-listed complementary medicine. Capsules, tinctures, listed products. Not food. Not a creamer. Not a gummy positioned as a food. The format dictates the framework.

Know the arbitrage. The ingredient doesn't change.

If you're an investor looking at functional food, ask founders which regulatory framework they've structured for. The ones who shrug are the ones pulling product in 18 months. The ones who thought about it before formulation are the ones worth backing.

If you're a policymaker, here's a simple fix, a fast-track pathway for any ingredient with documented consumption history of over 100 years in any country with equivalent food safety standards. Not everything needs a 90-day rat tox study.