The global appetite for algae in the food and beverage sector is on the rise, encompassing products like seaweeds such as nori and kelp, hydrocolloids utilized as thickeners like agar and carrageenan, and their alleged nutritional advantages in supplements and functional food components. There is a growing interest in algae as a sustainable protein source and a vegetarian origin of omega-3 fatty acids. TerraVia, which was 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 faced the harsh reality of low margins in the fuel sector, prompting several strategic pivots before spinning off its industrial division last year and establishing a foothold in the high-value specialty ingredients market. It presently supplies products to companies such as Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, TerraVia’s strategic realignment may have come too late. The company has faced numerous challenges, including a recall late last year of ingredients supplied to Soylent, following customer complaints of digestive issues after consuming its Food Bar product. Soylent suspected TerraVia’s algal flour to be the culprit, though TerraVia argued that the accusation was premature.
On a more positive note, there are some encouraging developments, such as its joint venture with Bunge Oils, which saw revenue soar by 163% to $2.9 million from $1.1 million in the first quarter of the previous year. This partnership focuses on DHA-rich algae oil for fish feed. Nevertheless, The Motley Fool suggests that finding a buyer willing to acquire the company outright may be challenging due to its negative equity. A more probable scenario could involve selling segments of the business, such as its culinary oil brand or aquaculture portfolio, which could help the technology platform endure—even though analysts believe the likelihood of this occurring is slim. TerraVia remains operational, but its future seems highly uncertain.
In addition, amidst the growing interest in functional food ingredients, calcium citrate and vitamin D supplements containing algae-derived components are becoming increasingly popular. This reflects the ongoing trend where consumers seek out nutritional benefits from algae, including products that enhance calcium and vitamin D intake. As the market for such supplements expands, the potential for algae as a sustainable and nutritional source continues to gain traction, aligning with TerraVia’s goal of establishing itself in the specialty ingredient landscape.