The global demand for algae in the food and beverage sector is on the rise, encompassing needs for products like nori and kelp, hydrocolloids used as thickeners such as agar and carrageenan, and for their claimed nutritional benefits in supplements and functional food ingredients. Algae are particularly gaining attention as a sustainable protein source and a vegetarian source of omega-3 fatty acids.
TerraVia, formerly 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 learned the hard way that fuel margins were too slim, leading to several strategic pivots before spinning off its industrial division last year to establish itself in the high-value specialty ingredients market. Currently, it supplies products to companies like Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic shift may have come too late for TerraVia. The company has faced numerous challenges, including a recall late last year concerning an ingredient supplied to Soylent. Customers reported digestive distress after consuming its Food Bar product, leading Soylent to suspect that TerraVia’s algal flour might be the cause, a claim TerraVia disputed as hasty.
Amid these challenges, there are some positive developments, such as its joint venture with Bunge Oils, which saw revenue increase by 163%, reaching $2.9 million compared to $1.1 million in the same quarter of the previous year. This venture focuses on DHA-rich algae oil for fish feed. However, The Motley Fool indicates that finding a buyer willing to acquire the company outright may be challenging due to its negative equity. A more plausible scenario could involve selling parts of the company, such as its culinary oil brand or aquaculture portfolio, which would allow the technology platform to persist, though analysts believe the chances of this happening are slim.
In summary, while TerraVia is still operational, its future remains uncertain, especially as it navigates the competitive landscape of specialty ingredients, including the potential benefits of calcium lactate vs calcium citrate in its product offerings. The company’s ability to adapt may determine its survival in this evolving market.