Executives at Netherlands-based Corbion say the company's recent acquisition of TerraVia could eventually lower the cost of algae-based ingredients, according to Baking Business.
Other potentially profitable areas are enzymes in Corbion’s bakery ingredients and antimicrobials in its meat ingredients, Marcel Wybbolts, chief technology officer for Corbion, said earlier this month at a capital markets day in Amsterdam. "We have great competencies there, and we are now also very excited about adding some of the AlgaVia products because some of the algae oils are also known to have antimicrobial effects,” he said.
By acquiring TerraVia, Corbion will be able to "produce large-scale fermentations at low cost," Corbion CEO Tjerk de Ruiter said. He added that it's possible that the costs of algae-based oil may one day become equal to those of palm kernel oil.
When TerraVia filed for Chapter 11 bankruptcy earlier this year, Corbion placed a $20-million "stalking horse" bid — which establishes a low offer — to buy it. The deal was completed in late September with Corbion's cash offer and an assumption of TerraVia's debt.
The purchase was a savvy move for the company, which supplies ingredients like lactic acid and functional blends of enzymes, emulsifiers, vitamins and minerals to virtually every food category. TerraVia's microalgae platform rounds out this already sizeable portfolio, and Corbion can use its scale to innovate with the ingredient — which is growing in popularity — and potentially decrease prices.
The market for all micoalgae products, including food, fuel and feed, was estimated to be worth about $1.38 billion in 2015, according to data from Grand View Research. The global market for the single-celled organism is forecast to reach $44.7 billion by 2023 — growing at a CAGR of more than 5.2% from 2016-2023, according to a report from Credence Research.
With TerraVia under its wing, an increase in microalgae as an ingredient could further strengthen Corbion's position in the space. Microalgae is loaded with protein and fatty acids, value-adds that are increasingly sought after by health-conscious consumers. The ingredient is also highly sustainable.
Financial blogger Kevin Quon recently wrote on Seeking Alpha that he bought Corbion shares because he wanted to keep investing in TerraVia's technology. Corbion leads its field and TerraVia's assets give the company a unique chance to grow in a complimentary way, he wrote. He also felt TerraVia's technology platform is more likely to have "a much greater chance of success under Corbion's direction."