Austin Maguire, CEO of the company which is debuting its Solasta astaxanthin ingredient, said despite the high demand for the ingredient and the appearances on the Dr Oz Show and so forth, not many consumers know what astaxanthin is or what it can do.
“I was talking with Scott Steinford (president of the Natural Algae Astaxanthin Association, or NAXA) and he said their information puts the consumer awareness down around 3%. I think there is huge potential. The consumer awareness is so low, you could build that with some targeted marketing,” Maguire told NutraIngredients-USA.
Switch from biofuels
Solix, based in Fort Collins, CO, is the outgrowth of earlier development stage company Solix Biofuels. Like many companies in the algae game, Solix came to nutraceuticals production via trying to derive fuel oils from algae. The company, which originally had a tie-in with Colorado State University, could be said to have been successful in that effort, Maguire said.
“They were using wholly synthetic algae for biofuels production. They did make some biofuels products and they sold them, but like a lot of biofuels companies they were having trouble making the economic equation work,” Maguire said.
The fuel market is relentlessly commoditized; there is really no reason for a customer to choose your fuel over a competitor’s save on price. To date, no algae fuels producer has been able to really compete in that area, and as government funding for biofuels has dwindled as it has become increasingly obvious that the economic equation is unlikely to work out anytime soon, those algae companies that are able to secure funding for the switch are looking to the nutraceutical space.
“The entire industry was an order of magnitude off where the economics needed to be. After the biofuel development, they started looking at how to move up the value chain toward higher value, lower volume ingredients,” he said.
But Solix did get a wealth of experience in algae production from the biofuels venture, Maguire said. The company developed a proprietary growth system it brands as AGS (Algae Growth System), which consists of a large surface area photobioreactor. The system operated in pilot mode for several years in sunny southwestern Colorado. That experience is being brought to bear in bringing the astaxanthin ingredients to market, he said, in particular with the company’s experience with managing quality parameters, something Maguire has had experience with. While he’s a relative newcomer to algae, having been on board since 2013, he’s an old hand at bringing an ingredient to market, having helped build Tate & Lyle’s Splenda sweetener business from the ground up.
“I was brought in to help move the company much faster toward commercialization. My whole background has been in taking new technology and scaling it up. Today we are focused on being a B2B supplier of natural ingredients. We have 10 years of experience in growing algae,” Maguire said.
As Maguire was helping plan the strategy of how to switch to ingredient production, the question came up of whether to growth the astaxanthin-producing algae themselves, or buy the raw material from a partner and concentrate on investment in the extraction process. The company ultimately chose the latter.
“When I got here the intention was to grow the algae in the US. When I started looking at what others in the market were doing, and what investment that would take for domestic production, I decided against it. Even in a high value market like astaxanthin, the low cost manufacturer will always tend to win out,” Maguire said.
It was something of a pill to swallow to shelve the AGS bioreactors for the time being, Maguire said. There are still plans in the future of the company to employ the system for other, as yet unspecified algal ingredients. It came from a hard look at what the market needed, as opposed to what the developers thought was inventive or ground breaking, he said. One thing he emphasized is that while the company used genetic modification techniques for biofuel production, the focus now is on supplying natural ingredients.
“You start with what the consumer wants and you work back up the chain trying to figure out how to get it to them rather to say I’ve got this great technology, now how do I use it?” Maguire said.
For the moment the ingredient is being extracted by a US-based partner using Solix’s proprietary process. But that will change, as the company is close to breaking ground on its own extraction facility in northern Colorado, Maguire said.