The global demand for algae in the food and beverage sector is on the rise, encompassing various forms such as seaweeds like nori and kelps, hydrocolloids used as thickeners like agar and carrageenan, and their perceived nutritional benefits in supplements and functional food ingredients. Algae have garnered significant attention 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 the hard way that profit margins in the fuel sector were too low, leading to several strategic pivots before it eventually spun off its industrial division last year and established a foothold in the high-value specialty ingredients market. Currently, TerraVia supplies its products to companies such as Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic redirection may have come too late for the company, which has faced numerous challenges, including a recall last year of ingredients supplied to Soylent. This recall was triggered by customer complaints of digestive distress after consuming Soylent’s Food Bar product, with the suspicion falling on TerraVia’s algal flour, although TerraVia argued that the claim was made hastily.
Despite these hurdles, there are some positive developments, such as a joint venture with Bunge Oils that reported a remarkable 163% increase in revenue, reaching $2.9 million compared to $1.1 million in the first quarter of the previous year. This venture specializes in DHA-rich algae oil for fish feed. The Motley Fool notes that finding a buyer willing to acquire the entire company may be challenging due to its negative equity. Selling off segments of the company, such as its culinary oil brand or aquaculture portfolio, may be a more feasible outcome, potentially allowing the technology platform to endure. However, even analysts deem the likelihood of this happening as slim.
While TerraVia remains operational, its future is highly uncertain. With the increasing focus on health and nutrition, including the calcium citrate recommended daily intake in various dietary discussions, the company’s innovative ingredients could provide significant benefits if it can navigate its current challenges.