Qualitas Health raises $10M for algae-based protein

Dive Brief:

  • Supplement maker Qualitas Health raised $10 million in a funding round led by PeakBridge VC, Arancia Group and Minrav, according to a press release. The company, which is known for its omega-3 supplements sourced from microalgae, intends to use the investment to expand to new geographies, deepen its clinical science and commercialize its algae-based protein.
  • The company’s current offerings include 15 omega-3 supplement SKUs that are sold in more than 5,000 U.S. outlets and direct to consumer. With the new funding, Qualitas Health will further develop its microscopic algae cultivation pond system, which is located in the deserts of New Mexico and Texas. It expects its plant-based protein to be ready for commercialization in 2022.
  • Qualitas Health is pursuing a secondary commercial path for its algae at a time when the market for the complete plant-based protein is growing. Global Market Insights expects the global algae protein market to achieve $1 billion in sales by 2026.

Dive Insight:

Microalgae is a plant-based option that can fortify a variety of processed foods with its high levels of essential amino acids, Vitamin C, protein and omega-3 fats. However, Qualitas Health wants to take the appeal of this algae one step further and mass produce a distilled complete plant protein from the sea vegetable — and do so in a sustainable fashion.

As more consumers move toward plant-based proteins in search of environmentally friendly alternatives to use in place of animals, there has been an explosion in sources manufacturers can choose from. Popular alternatives include soy and pea protein. However, soy protein cultivation has been associated with deforestation. Pea protein prices have risen in recent years, and the ingredient has been dogged by questions of taste. 

Microalgae holds an advantage over other sources because it is allergy friendly, and it can also be produced in a controlled and sustainable manner. This limits water and land use while still producing crops at a speed that is three orders of magnitude faster than plants that grow on land. According to Qualitas, its algae crop produces 300 times the number of amino acids per acre as compared to traditional pea farming. Microalgae also is not linked to deforestation, habitat destruction, climate change or indigenous rights abuses in the countries where it’s produced. 

These eukaryotic cells also are versatile. Mondelez has used microalgae in some of its baked items. TerraVia made an algal flour with the goal of replacing dairy fats. The French startup Algama created a vegan mayonnaise using microalgae. And DDW has used the ingredient as a natural blue coloring. With the growing interest in microalgae protein, Unilever recently announced it was partnering with the biotech startup Algenuity to explore the uses of the single-cell organism within its own product portfolio.

Big Food’s investment in microalgae follows growing interest in the ingredient from consumers. By 2050, algae is predicted to account for 18% of the protein consumed globally, according to data from the National Center for Biotechnology Information, cited by Fortune Business Insights.

With such growth potential, Qualitas Health is not the only company competing in the category. DIC, Taau Australia, Cyanotech, Solazyme and Algama are some of the leading players in the global algae protein market. These companies have released products ranging from vegan mayonnaise to flour. However, Qualitas Health is looking to sell the plant-based protein as an additive, rather than packaging it in a pre-made CPG product.

The company planned to launch a plant-based algal protein since 2019, when it expanded its line of omega-3 supplements. Now, it is pushing the launch to 2022. But when the product does finally make its debut, the complete protein ingredient will likely find a large market and demand waiting. 

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