Dive Brief:
- Algae ingredients company TerraVia has filed for bankruptcy protection under Chapter 11, according to Food Navigator. Ingredients supplier Corbion has already submitted a $20 million “stalking horse” bid — which establishes a low offer — to buy TerraVia out of bankruptcy.
- TerraVia develops algae-based ingredients for use in food, soap, industrial lubricants and carpets. The company originally targeted the alternative energy market, but switched its strategic focus in 2016 to the more promising food, feed and personal care industries.
- TerraVia has operated unprofitably for nearly 15 years. The company reported a net loss of $22.6 million on revenues of $4.5 million in the first quarter of 2017.
Dive Insight:
TerraVia may be a company that's moving too far beyond consumer trends. While the plant-based protein market is taking off with the sale of soy and nut-based products on the rise, consumer acceptance of algae in food products may still be a ways off. It's possible this is the root cause of the performance struggles that landed TerraVia in bankruptcy.
“We’re conscious of the slow acceptance pattern of many consumers,” Joel Warady, chief sales and marketing officer for Enjoy Life Foods, which uses TerraVia's algal powder in some of its products, told Food Dive. He said that while the company has added algae to its brownie mix, it might make consumers a little leery if it were played up on the front of the package. “But algae is an important ingredient, not only for the protein, but because it’s the most sustainable protein available on Earth,” he said.
As the world's population continues to increase, it's becoming more difficult to find the land needed to grow or produce the mainstay products — many of them meat or dairy-based — on which the global population depends. Different forms of algae are some of the most viable alternatives, and could reduce environmental degradation. Algae is already used in baking mixes, ice cream, protein powders, and is increasingly added to more food products everyday.
Still, Enjoy Life’s allergen-friendly food products are fairly niche, appealing to a narrow, yet growing, segment of the consumer population. Slow-to-innovate big food companies, for the most part, aren't yet on board using algae as an ingredient. According to TerraVia, however, the company is “actively engaged in discussions around potential strategic partnerships,” CEO Apu Mody said during the company’s Q1 earnings call earlier this year.
It's unlikely, however, that a big food company will step forward with a bid to acquire TerraVia. An ingredients company like Corbion appears to be a better fit.
Corbion specializes in lactic acid and its derivatives, as well as creating functional blends containing enzymes, emulsifiers, minerals and vitamins. It supplies ingredients to virtually every food category, from baked goods and beverages, to condiments and candy. As stated in Corbion's press release, “The acquisition of TerraVia's microalgae platform would extend Corbion's product portfolio into algae-based fatty acids and proteins, while leveraging Corbion's extensive fermentation and downstream processing capabilities.”