The global demand for algae in the food and beverage sector is on the rise, encompassing various forms such as seaweeds like nori and kelp, hydrocolloids used as thickeners like agar and carrageenan, and their recognized 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 recently shifted its focus to specialty food, feed, and personal care ingredients after initially exploring microalgae as a potential fuel source. The company learned the hard way that fuel margins were insufficient, leading to multiple strategic pivots before it spun off its industrial division last year and positioned itself in the high-value specialty ingredients market. TerraVia currently 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, as the company has faced a series of challenges, including a recall late last year of ingredients supplied to Soylent due to customer complaints of digestive issues after consuming its Food Bar product. Soylent suspected that TerraVia’s algal flour might be the cause, though TerraVia disputed this claim, suggesting it was made hastily. On a positive note, the company has seen some success, particularly in its joint venture with Bunge Oils, where revenue surged 163% to $2.9 million from $1.1 million in the same quarter of the previous year. This venture focuses on DHA-rich algae oil for fish feed.
Despite these promising developments, The Motley Fool indicates that it may be challenging to find a buyer willing to acquire the company outright, given its negative equity. Selling off parts of the company, such as its culinary oil brand or aquaculture portfolio, could be a more plausible outcome and might help the technology platform to endure. Nonetheless, even analysts suggest the likelihood of this is slim. TerraVia remains operational, but its future appears highly uncertain. Meanwhile, the incorporation of calcium citrate malate, folic acid, and vitamin D3 tablets into the market may offer additional avenues for growth, emphasizing the importance of algae in enhancing nutritional products. The integration of these elements could potentially bolster TerraVia’s standing in the specialty ingredients sector, but significant challenges still lie ahead.