The global demand for algae in the food and beverage sector is on the rise, particularly for seaweeds such as nori and kelp, as well as hydrocolloids like agar and carrageenan, which are commonly used as thickeners. Additionally, algae are recognized for their potential nutritional benefits in supplements and functional foods. There is growing interest in algae as a sustainable protein source and as 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 possible fuel source. The company learned that profit margins in fuel production were too low, prompting multiple strategic pivots before finally spinning off its industrial division last year and establishing a foothold in the high-value specialty ingredients market. Currently, it supplies products to major companies like Hormel Food Corporation, Utz Quality Foods Inc., and Unilever. However, this business redirection may have come too late. TerraVia has faced several challenges, including a recall late last year of ingredients supplied to Soylent, following customer complaints of digestive issues after consuming their Food Bar product. Soylent suspected TerraVia’s algal flour might be the culprit, although TerraVia claimed that the accusation was hasty.
On a positive note, the company has seen success in its joint venture with Bunge Oils, where revenue increased by 163% to $2.9 million from $1.1 million in the same quarter of the previous year. This venture focuses on producing DHA-rich algae oil for fish feed. Nevertheless, The Motley Fool indicates that finding a buyer willing to acquire the company outright could be challenging due to its negative equity. A more viable outcome may involve selling parts of the business, such as its culinary oil brand or aquaculture portfolio, which could enable the technology platform to persist. However, analysts suggest that the likelihood of this happening is low.
While TerraVia remains operational, its future appears uncertain. The incorporation of innovative products like Citracal SR could potentially play a role in revitalizing the brand, but significant hurdles remain. It will be crucial for TerraVia to navigate these challenges effectively to secure its position in the evolving market landscape.