Food start-ups eye algae as a green protein source
Entrepreneurs and investors are increasingly focusing on algae as an alternative protein source to help feed a global population that the UN forecasts will rise from 7.7bn today to 9.7bn by 2050.
In the EU, the algae biomass sector is valued at €1.69bn and employs 14,000 people in research and development and the supply chain, according to a 2018 European Commission report. “The increased inclusion of algae in western diets could help fill some of the food production needs associated with expected human population growth,” the report notes.
“It is very exciting and extremely valuable,” says Fredrik Adams, a cleantech entrepreneur who has worked on renewable energy and algae projects for almost a decade. His latest company, Firglas, is on the verge of producing algae as a food ingredient on a wholesale level. The business is building two large-scale commercial plants in Spain and the Netherlands and plans to produce “tens of tonnes of dry matter” later this year. It will grow algae in closed photobioreactor systems containing water and salt, allowing year-round production.
Production is fast and environmentally friendly, Mr Adams says, because algae photosynthesise, releasing oxygen into the atmosphere. The challenge is to reduce the cost so the ingredient appeals to food manufacturers and consumers.
“This type of production has been used for decades for pharma and cosmetic uses,” he adds, noting that L’Oréal is the leading global patent holder for algae. “What we’d like to do is . . . step up in scale and achieve a lower unit price and take that to food markets.”
Kent-based algae producer AlgaeCytes is looking to follow suit, also planning to build a closed-system plant. “Our aim by 2020 is to produce 200 tonnes of algae-based protein [a year],” says Naz Bashir, chief executive (pictured above).
Northern European entrepreneurs are leading the way with expertise in algae. Last year Corbion, an Amsterdam-based ingredients supplier, announced plans to roll out its algae cooking oil to more than 2,000 Walmart stores in the US.
Entrepreneurs recognise that persuading consumers to try algae may be difficult and take time. The development of mycoprotein derived from fungus began in Petri dishes in the 1960s, yet Quorn, the now-popular meat substitute brand, first sold the ingredient to UK customers more than 25 years later.
Quorn’s 1995 advertising campaign featured the footballer Ryan Giggs and Mr Adams says such celebrity endorsement may help propel algae to the mass market. “Part of this will be dictated by fashion, all sort of whims,” he says. “I’m expecting consumers will go through learning and education, just like they did for sushi.”
The ingredient comes out of production as a “sludge” but is commonly used in dried powder form. “That has to be mixed into other food to make things like fishcakes or algae burgers . . . so you get a meat-like substance,” says Mr Adams.
Companies hope that algae’s nutritional benefits will be a strong selling point. Currently, algae oil and supplements can be bought online and from health food stores. The omega 3 fatty acid in algae oil is attractive for vegans since it is often otherwise found in oily fish. Entrepreneurs want to broaden the use of the ingredient from supplements to staple foods.
“Because the world’s population is on a very dramatic increase, we do need to have a sustainable means of producing these omega 3 oils,” says Mr Bashir.
Sustainability is becoming a greater concern for consumers; in 2017, delivery service Just Eat reported a 987 per cent rise in demand for vegetarian options in Ireland alone, for example. As more consumers become concerned about environmental impact and increasingly renounce meat, Mr Bashir believes algae will become an important source of protein.
Investors have noted growing demand for alternative proteins. Data from start-up research company Beauhurst shows that the amount of money raised by private UK companies that either produce or use seaweed or algae in food and drinks has risen by almost 2,000 per cent in the past eight years. In 2011, three deals raised a total of £314,200 while in 2018, seven deals raised £6.4m.
In December, Firglas raised £3m through Wealth Club, a London investment platform for experienced investors. Alex Davies, founder of Wealth Club, sees Firglas as an attractive opportunity because “people need to be fed”.
Besides use in consumer food, algae could have a significant role in fish farming. The global fish feed market is expected to reach $214bn by 2024, according to market research company Global Market Insights. Mr Davies describes the market as “dying for other sources of fish feed”, presenting an opportunity to feed fish with algae.
Despite investment in algae production increasing, he admits that it is “currently very difficult to produce it at scale and on commercially viable terms”. Investors in the 24 companies listed on Beauhurst have yet to see a return.
To make algae a sustainable and attractive alternative protein source, says Mr Adams, “scaling up and driving down the unit cost of production is fundamental”.