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Is algae milk the next big thing?

At the recent Natural Products Expo West convention in Anaheim, California, renewable oils and bioproducts company, Solazyme, showcased some of its latest food products. The company served samples of algae milk, an alternative milk product free of dairy, soy, lactose, and nuts. The product was made using Solazyme’s whole algal flour and passes positively in the all-important sensory stakes.

There has been little innovation when it comes to new food ingredients for the consumer market. A large part of this problem is the fact that it is very expensive to develop and scale these technologies. As a result, much of the innovation in food to date has primarily been secluded to the large established players in the industry. However, Solazyme is on track to tackle this trend with its suite of algae-based products.

How Solazyme can impact the food industry

In many ways, the company is ambitious. Solazyme has raised nearly a half billion dollars since its inception. When it comes to nutrition, Solazyme stated in its annual report that it expects to compete with large competitors such as Cargill, Monsanto, Syngenta, DSM, and DuPont.

However, despite anticipated competition from these large companies, Solazyme expects that it “may also partner or collaborate with these types of companies”.

Indeed, Solazyme has already begun to do just that. Large food companies such as Archer Daniels Midland Company, Bunge, and Unilever have partnered with Solazyme. As the company ramps up its first large-scale commercial production, the prospect for additional partnerships with food-based companies continues to loom on the horizon.

The company reports it has already begun filling out the more than 160 requested samples for its algal flours.

What makes Solazyme’s algal flours so unique for the food industry is the vast array of functional properties that microalgae can provide.

The global food ingredient market that Solazyme is focused on is approximately 83 million metric tons as of 2011. The company is exploring products which can enhance or replace emulsifiers, fats and oils, polysaccharides, oliosaccharides, and proteins.

Solazyme’s microalgae-based food ingredients can increase the functionality of the food products in its target markets. Likewise, it can also improve upon the nutritional profiles of such food products.

Solazyme’s food ingredients align with several favourable consumer trends in the present. Most notably, this includes the demand for products that are more nutritious yet do not compromise on taste. Additionally, the company can address markets often plagued by food allergies.

Solazyme’s products also contain ingredients which are both natural and sustainable. Functional benefits also include enhanced taste and texture, natural emulsification, and robust industrial processibility.

A look at the dairy alternative industry

Despite these significant advances in food & nutrition, Solazyme remains largely perceived as a petrochemical company. While having a growing hand in the world of nutrition, investors have largely mistaken Solazyme as a mere biofuel company. Yet as a progressive developer of tailored renewable oils, the company’s products have found inherent usefulness in a wide range of applications ranging from chemicals, to cosmetics, and even into foods.

This brings us back to dairy alternatives. One such company that investors might want to refer to when it comes Solazyme’s entry into this market is The WhiteWave Foods Company. WhiteWave is the parent company for Silk Soymilk, Silk Almondmilk, and Silk Coconutmilk.

The company now trades with a $5.17-billion market capitalisation and a price-to-earnings ratio of 52.32 as of March 9. WhiteWave provides plant-based beverage products including soy-, almond-, rice-, and coconut-based products. These are the very markets which Algae Milk is contrasted against.

According to Marketresearch.com in the article found here, retail sales of dairy alternatives made from almonds, rice, and coconut in the US are nearing $1.4-billion. The market is expected to grow to $1.7-billion by 2016.

One of the more astonishing trends is the decline in drinkable soy. WhiteWave claims that across the plant-milk industry, soy now represents a mere 35% of sales whereas almond milk sales has significantly increased to more than 55% of the market.

It is clear that consumers want alternatives, and the introduction of an algae-based milk might prove to be a meaningful market in the future. Algae milk could address a population susceptible to allergies. It can also provide the essential protein, fibre, and omega fatty acids needed for healthy living.

While the company may want to give greater heed to the negative connotation often associated with the term “algae”, those willing to try the product will find it quite pleasant to the taste….

SeekingAlpha.com: Read the full article

Additional reading:

Solazyme: Turning algae into edible oils
Solazyme’s Jonathan Wolfson was named by Forbes as one of the top twelve “Disruptors of Business 2013”. [Our own Mark Shuttleworth is also among them] His algae biotech company has proven that cleaner, …

Protein: growth lies where technology push is matched with consumer pull
… Solazyme-Roquette Nutritionals, a joint venture set up to build a manufacturing plant that can produce thousands of tonnes of food ingredients by fermenting microalgae. Solazyme-Roquette believes microalgae-derived …