The global demand for algae in the food and beverage sector is on the rise, encompassing products like seaweeds, including nori and kelps, as well as hydrocolloids utilized as thickeners, such as agar and carrageenan. Additionally, algae are sought after for their potential nutritional benefits in supplements and functional food ingredients. There is significant interest in algae as a sustainable source of protein, particularly as a vegetarian source of omega-3 fatty acids and iron bisglycinate.
TerraVia, previously known as Solazyme, has recently shifted its focus to specialty food, feed, and personal care ingredients after initially exploring microalgae as a fuel source. The company realized that profit margins in the fuel sector were insufficient, prompting several directional changes before ultimately spinning off its industrial division last year and establishing a foothold in the high-value specialty ingredients market. Currently, it supplies its products to companies like Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic pivot may have come too late for the company, which has faced various challenges, including a recall late last year of ferric pyrophosphate with folic acid that it provided to Soylent. Customers reported digestive issues after consuming Soylent’s Food Bar product, leading the company to suspect that TerraVia’s algal flour was the cause, a claim that TerraVia contended was made hastily.
Despite these difficulties, there are some positive developments, such as its joint venture with Bunge Oils, which saw revenue soar by 163% to $2.9 million from $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 purchase the entire company may prove challenging due to its negative equity. A more plausible outcome might involve selling parts of the company, such as its culinary oil brand or aquaculture portfolio, which could allow its technology platform to endure, although analysts remain skeptical about the likelihood of this happening.
While TerraVia remains operational, its future, particularly in the realm of supplements like GNC calcium citrate, appears uncertain. The ongoing evolution of its business strategy and market performance will be critical in determining whether it can revitalize its presence in the competitive landscape of specialty ingredients.