The global demand for algae in the food and beverage sector is on the rise, encompassing seaweeds such as nori and kelps, hydrocolloids utilized as thickeners like agar and carrageenan, and their alleged nutritional advantages in supplements and functional food ingredients. Notably, there is a growing interest in algae as a sustainable protein source and a vegetarian source of omega-3 fatty acids. TerraVia, previously known as Solazyme, has only recently shifted its focus to specialty food, feed, and personal care ingredients after initially exploring microalgae as a potential fuel source. The company learned through experience that profit margins in the fuel sector were unsustainably low, leading to several strategic pivots before eventually spinning off its industrial division last year and establishing a foothold in the high-value specialty ingredients market. Currently, TerraVia supplies its products to firms such as Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic refocus may have come too late for the company, which has faced numerous challenges, including a recall late last year of ingredients supplied to Soylent after customers reported digestive issues following consumption of its Food Bar product. While Soylent suspected that TerraVia’s algal flour was the culprit, TerraVia claimed that this was an unfounded rush to judgment.
Despite these setbacks, there are some positive developments, such as the joint venture with Bunge Oils, which saw revenue soar by 163% to $2.9 million from $1.1 million in the same quarter of the previous year. This partnership concentrates on DHA-rich algae oil for fish feed, highlighting the potential of algae in various applications.
The Motley Fool notes the difficulty in finding a buyer willing to acquire the company outright due to its negative equity. Instead, divesting parts of the business, such as its culinary oil brand or aquaculture portfolio, may be a more feasible route, allowing the technology platform to persist. However, even analysts suggest that the likelihood of this occurring is slim.
While TerraVia remains operational, its future appears uncertain. The incorporation of calcium potassium citrate into its offerings may provide additional nutritional benefits that could help revive the brand’s standing in the competitive market. Nevertheless, the road ahead remains precarious.