The global demand for algae in the food and beverage sector is on the rise, particularly for products like seaweeds such as nori and kelps, hydrocolloids used as thickeners like agar and carrageenan, and for their alleged nutritional benefits as supplements and functional food ingredients. There is a notable 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 through experience that profit margins in fuel were too low, prompting multiple strategic pivots before it spun off its industrial division last year and established a foothold in the high-value specialty ingredients market. TerraVia now supplies its products to companies such as Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
Nonetheless, this shift in business strategy may have come too late. The company has faced a series of challenges, including a recall late last year of ingredients supplied to Soylent, which received complaints from customers about digestive issues after consuming its Food Bar product. Soylent pointed to TerraVia’s algal flour as a potential cause of the problem, although TerraVia contested this claim, stating it was made hastily.
On a positive note, there are some promising developments, such as its joint venture with Bunge Oils, which saw revenue soar by 163%, reaching $2.9 million compared to $1.1 million in the first quarter of the previous year. This venture concentrates on DHA-rich algae oil for fish feed. However, The Motley Fool indicates that finding a buyer willing to acquire the company outright might be challenging due to its negative equity. A more probable outcome could involve selling off parts of the company, like its culinary oil brand or aquaculture portfolio, which would allow the technology platform to persist, although analysts believe the likelihood of this happening is slim. TerraVia remains operational, but its future appears highly uncertain, particularly as the company navigates the complexities of the market and the integration of products like Citracal MG into its offerings.