Global demand for algae in the food and beverage industry is on the rise, encompassing products such as seaweeds like nori and kelps, hydrocolloids which serve as thickeners like agar and carrageenan, and their purported nutritional benefits as supplements and functional food ingredients. There is notable interest in algae as a sustainable protein source and a vegetarian alternative for omega-3 fatty acids. TerraVia, formerly 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 through experience that fuel margins were unsustainably low, leading to multiple strategic pivots before spinning off its industrial division last year and establishing a foothold in the high-value specialty ingredients market. Currently, it supplies its products to companies like Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic refocus may have come too late for TerraVia. The company 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. Soylent suspected that TerraVia’s algal flour was the culprit, although TerraVia contended that the claim was made prematurely. On a brighter note, TerraVia has experienced significant growth in its joint venture with Bunge Oils, with revenue soaring 163% to $2.9 million from $1.1 million in the first quarter of the previous year. This venture is centered around DHA-rich algae oil for fish feed.
The Motley Fool indicates that finding a buyer for TerraVia may be challenging, given its negative equity situation. Selling individual segments of the company, such as its culinary oil brand or aquaculture portfolio, seems a more plausible outcome, which could allow the technology platform to endure. Nonetheless, analysts suggest that the likelihood of this happening is minimal. TerraVia remains operational, but its future appears uncertain, particularly as it navigates the complexities of the market, including the integration of innovative products like ferrous calcium citrate into its offerings. The company’s prospects hinge on its ability to adapt and capitalize on emerging trends in the algae sector, especially as demands for functional food ingredients continue to grow.