Global demand for algae in the food and beverage sector is on the rise, encompassing various forms such as seaweeds like nori and kelps, as well as hydrocolloids that serve as thickeners like agar and carrageenan. Algae are also sought after for their alleged nutritional benefits in supplements and as functional food ingredients. There is significant interest in algae as a sustainable protein source and a vegetarian option 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 initially exploring microalgae as a potential fuel source. The company learned through experience that profit margins in fuel were too low, leading to multiple changes in direction before it spun off its industrial division last year to establish a foothold in the high-value specialty ingredients market. Currently, it supplies products to companies like Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic pivot 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 with its Food Bar product. While Soylent suspected that TerraVia’s algal flour was the source of the problem, TerraVia argued that this conclusion was hastily reached.
Despite these setbacks, there are some positive developments, such as its joint venture with Bunge Oils, which saw revenue increase by 163%, reaching $2.9 million from $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 notes that finding a buyer to acquire the company outright may prove challenging due to its negative equity. A more feasible outcome might be selling off parts of the business, such as its culinary oil brand or aquaculture portfolio, which could help the technology platform endure, though even analysts suggest the likelihood of this happening is low.
In the meantime, TerraVia continues to exist, yet its future remains uncertain. As the market evolves, products like bariatric advantage chews could represent a potential avenue for growth, leveraging the nutritional benefits of algae in the realm of dietary supplements. However, the company must navigate its current challenges carefully to capitalize on such opportunities in the future.