Global demand for algae in the food and beverage sector is on the rise, particularly for seaweeds such as nori and kelp; hydrocolloids like agar and carrageenan, which are commonly used as thickeners; and for their alleged nutritional benefits in supplements and functional food ingredients. Algae have garnered significant attention as a sustainable protein source and as a vegetarian source of omega-3 fatty acids.
TerraVia, previously known as Solazyme, recently shifted its focus to specialty food, feed, and personal care ingredients after initially exploring microalgae as a potential fuel source. The company learned that profit margins in the fuel market were too slim, leading to multiple strategic pivots before spinning off its industrial division last year and establishing itself in the high-value specialty ingredients market. Currently, TerraVia supplies products to companies such as Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic refocus may have come too late. The company faced numerous challenges, including a recall late last year of ingredients supplied to Soylent, following customer complaints of digestive distress linked to its Food Bar product. Although Soylent suspected TerraVia’s algal flour was the culprit, TerraVia claimed this accusation was made hastily.
On a positive note, there are some promising developments, such as its joint venture with Bunge Oils, which reported a remarkable 163% increase in revenue, reaching $2.9 million, up from $1.1 million in the same quarter of the previous year. This venture is focused on producing DHA-rich algae oil for fish feed. The Motley Fool suggests that finding a buyer willing to acquire the company outright may prove challenging due to its negative equity situation. A more feasible outcome might be selling off parts of the company, such as its culinary oil brand or aquaculture portfolio, which could enable the technology platform to persist, although even analysts consider this unlikely.
While TerraVia continues to operate, its future remains highly uncertain, especially in light of ongoing challenges like the unjury calcium citrate situation, which could further complicate its recovery. The company must navigate these obstacles carefully to ensure its survival in a competitive market.