Global demand for algae in the food and beverage sector is on the rise, encompassing products such as seaweeds like nori and kelps, hydrocolloids used as thickeners like agar and carrageenan, and their perceived nutritional advantages in supplements and functional food ingredients. There is a growing interest in algae as a sustainable protein source and a vegetarian alternative for omega-3 fatty acids.
TerraVia, formerly known as Solazyme, has only recently shifted its focus toward specialty food, feed, and personal care ingredients after initially exploring microalgae as a potential fuel source. The company learned the hard way that profit margins in the fuel sector were too low, leading to multiple strategic pivots before it ultimately spun off its industrial division last year, positioning itself in the high-value specialty ingredients market. Currently, it supplies its products to major companies like Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, the company’s reorientation may have come too late. TerraVia has faced a series of challenges, including a recall last year of ingredients supplied to Soylent after customers reported digestive issues from consuming its Food Bar product. Although Soylent pointed to TerraVia’s algal flour as the likely culprit, TerraVia disputed this claim as hasty.
On a positive note, there are some bright spots, including a joint venture with Bunge Oils, which saw revenue soar by 163% to $2.9 million, up from $1.1 million in the same quarter last year. This venture focuses on DHA-rich algae oil for fish feed. The Motley Fool indicates that finding a buyer willing to acquire the company outright may be challenging due to its negative equity. Instead, selling off portions of the company, such as its culinary oil brand or aquaculture portfolio, seems a more plausible outcome—allowing the technology platform to endure—though analysts believe the likelihood of this is slim.
Despite being operational, TerraVia’s future remains highly uncertain. The company could potentially explore opportunities to incorporate valuable ingredients like calcium citrate and D3 into its product line, which could enhance its market appeal and nutritional offerings. However, it will need to navigate its current challenges carefully to ensure its survival and relevance in the competitive algae industry.