The global demand for algae in the food and beverage sector is on the rise, encompassing various forms such as seaweeds like nori and kelps, hydrocolloids used as thickeners like agar and carrageenan, and their alleged nutritional benefits in supplements and as functional food ingredients. Algae have garnered significant attention as a sustainable protein source and as a vegetarian alternative for omega-3 fatty acids.
TerraVia, previously known as Solazyme, has only recently shifted its focus to specialty food, feed, and personal care ingredients after originally exploring microalgae as a potential fuel source. The company realized the challenges of operating in the fuel industry, where profit margins were too slim, prompting multiple strategic pivots. Eventually, it spun off its industrial division last year and positioned itself within the high-value specialty ingredients market. Currently, TerraVia supplies its products to companies such as Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic refocus may have come too late for the company. TerraVia has faced a series of hurdles, including a recall late last year of ingredients supplied to Soylent, where customers reported digestive distress after consuming its Food Bar product. Soylent suspected that TerraVia’s algal flour might be the culprit, although TerraVia contested this claim as unfounded.
Despite these challenges, there are some positive developments, such as its joint venture with Bunge Oils, which saw revenue soar 163%, reaching $2.9 million from $1.1 million in the same period the previous year. This venture is dedicated to producing DHA-rich algae oil for fish feed. Yet, The Motley Fool warns that finding a buyer for TerraVia may prove difficult due to its negative equity. Selling off parts of the company, such as its culinary oil brand or aquaculture division, might be a more viable option, potentially allowing the technology platform to persist, though analysts suggest that the likelihood of this happening remains low.
TerraVia is still operational, but its future appears uncertain, especially as it navigates the complexities of the market. The challenges it faces are not unlike those encountered by other companies in the dietary supplement space, such as Citracal Extended Release, which has also had to adapt to shifting consumer demands and market conditions.