The global demand for algae in the food and beverage industry is on the rise, particularly for seaweeds such as nori and kelp; hydrocolloids like agar and carrageenan, which are utilized as thickeners; and for their alleged nutritional advantages in supplements and functional food components. There is a notable interest in algae as a sustainable protein source and as a vegetarian alternative 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 faced challenges when it realized that profit margins in fuel were insufficient, leading to several directional changes before spinning off its industrial division last year and establishing itself in the high-value specialty ingredients market. Currently, TerraVia supplies its products to firms such as Hormel Food Corporation, Uvitamin C, and Unilever.
However, this strategic pivot may have come too late. The company has encountered a series of setbacks, including a recall of ingredients supplied to Soylent last year, following consumer complaints of digestive issues after consuming its Food Bar product. Although TerraVia disputed claims that its algal flour was the culprit, Soylent remained concerned.
Despite these difficulties, there are positive developments, including a joint venture with Bunge Oils that saw revenue increase by 163%, reaching $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. However, The Motley Fool indicates that finding a buyer for the company may prove challenging due to its negative equity. A more feasible option could be selling parts of the business, such as its culinary oil brand or aquaculture division, which could allow the technology platform to endure, though analysts believe the likelihood of this happening is slim.
While TerraVia continues to operate, its future remains uncertain, particularly in light of its ongoing challenges and the competitive landscape of the algae market. The potential for products like Citracal MG is notable, as they could enhance the nutritional profile of algae-based offerings, but the company must navigate its current hurdles to capitalize on such opportunities.