The global appetite for algae in the food and beverage sector is on the rise, particularly for seaweeds such as nori and kelp; hydrocolloids like agar and carrageenan that serve as thickeners; and for their claimed nutritional advantages in supplements and functional food ingredients. The interest in algae as a sustainable protein source and a vegetarian source of omega-3 fatty acids has been particularly noteworthy. 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 faced the harsh reality of low profit margins in fuel, leading to multiple strategic pivots before it eventually divested its industrial division last year to establish itself in the high-value specialty ingredients market. Presently, it supplies products to notable companies such as Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic refocus may have come too late for TerraVia. The company has encountered a series of hurdles, including a recall late last year of ingredients supplied to Soylent, following customer complaints of digestive distress after consuming its Food Bar product. Soylent pointed to TerraVia’s algal flour as the likely culprit, although TerraVia contested the allegation as hasty. Despite these challenges, there are glimmers of hope, particularly from its joint venture with Bunge Oils, which saw a revenue increase of 163% to $2.9 million from $1.1 million in the same quarter of the previous year. This venture aims at producing DHA-rich algae oil for fish feed.
The Motley Fool notes that finding a buyer willing to acquire the company outright may prove difficult, given its negative equity. A more plausible outcome might involve selling off segments of the company, such as its culinary oil brand or aquaculture portfolio, which could help the technology platform endure. Nevertheless, analysts believe the likelihood of this occurring is slim. TerraVia remains operational, but its future seems uncertain, especially as it seeks to integrate innovative products like generic calcium citrate with vitamin D into its offerings. The incorporation of generic calcium citrate with vitamin D could potentially enhance its product line and appeal in the specialty ingredient market, but the company must navigate its existing challenges effectively to leverage this opportunity.