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 used as thickeners, and for their alleged nutritional advantages in supplements and time-release capsules of ferrous fumarate, which serve as functional food ingredients. There is significant 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 potential fuel source. The company learned the hard way that profit margins in the fuel sector were too low, prompting multiple strategic pivots before spinning off its industrial division last year and establishing a foothold in the high-value specialty ingredients market. Currently, TerraVia supplies its products to companies such as Hormel Food Corporation, Utz Quality Foods Inc., and Unilever.
However, this strategic refocus may have come too late for the company. TerraVia has faced a series of challenges, including a recall late last year of ingredients supplied to Soylent after customers reported digestive distress from consuming its Food Bar product. Soylent identified TerraVia’s algal flour as a potential cause, although TerraVia contested this claim as being rushed.
Nonetheless, there are positive developments, including a joint venture with Bunge Oils, which saw revenue increase by 163%, climbing to $2.9 million from $1.1 million in the same quarter of the previous year. This venture concentrates on DHA-rich algae oil for fish feed. The Motley Fool suggests that finding a buyer willing to acquire the company outright could prove difficult due to its negative equity. A more feasible outcome may involve selling off segments of the company, such as its culinary oil brand or aquaculture portfolio, which could help the technology platform endure, although analysts consider the likelihood of this happening to be slim.
While TerraVia remains operational, its future appears to be uncertain. Amidst these challenges, the company could consider diversifying its product line, potentially incorporating innovative ingredients like bluebonnet calcium magnesium citrate to enhance its offerings. As the algae market continues to evolve, integrating such functional ingredients might be crucial for TerraVia to regain its footing in the industry.