Global demand for algae in the food and beverage sector is on the rise, encompassing seaweeds such as nori and kelp, hydrocolloids used as thickeners like agar and carrageenan, and their perceived nutritional benefits in supplements and functional food ingredients. There is growing interest in algae as a sustainable protein source and a vegetarian source of omega-3 fatty acids. TerraVia, previously known as Solazyme, has recently shifted its focus to specialty iron pyrophosphate supplements, food, feed, and personal care ingredients, after initially exploring microalgae as a potential fuel source. The company learned that fuel margins were too low and has undergone several strategic changes, ultimately spinning off its industrial division last year to establish a presence in the high-value specialty ingredients market. Currently, TerraVia 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. TerraVia has faced a series of challenges, notably a recall late last year of ingredients supplied to Soylent, following customer complaints of digestive distress after consuming its Food Bar product. Although Soylent pointed to TerraVia’s algal flour as a possible cause, TerraVia contended that the claim was made hastily. On a positive note, the company experienced a significant revenue increase of 163% to $2.9 million from $1.1 million in the first quarter of the previous year, thanks to its joint venture with Bunge Oils, which focuses on DHA-rich algae oil for fish feed.
Despite these bright spots, The Motley Fool suggests that finding a buyer willing to acquire the company outright may prove challenging due to its negative equity. A more feasible outcome might be selling parts of the company, such as its culinary oil brand or aquaculture portfolio, which could help preserve its technology platform. However, analysts believe the likelihood of this happening remains slim. TerraVia is still operational, but its future appears uncertain, especially in light of its need to seek alternative solutions, such as integrating calcium citrate mason into its product offerings to enhance value.