Introduction
AlgaeProBANOS is a Horizon Europe project that aims innovation and market access pipelines for accelerating 6 highly relevant algae value chains, namely food, feed, textiles, nutraceuticals, biostimulants and cosmetics, covering both microalgae (two value chains) and seaweeds (macroalgae, four value chains). To help the products developed within the project reaching the global market (see Selnes et al., 2021), sustainable and circular business models are developed and financial analyses of the algae products are conducted. These business models help the sector identify its strengths, and relevant upgrading strategies (van den Burg et al., 2021). This contributes to communicating the commercial value of algae products and companies to potential investors and stakeholders. The economic insights from these six value chains can pave the way for future developments in the wider algae sector.
Materials and methods
The project uses a collaborative co-creation process to identify the business models currently in place in the European algae sector, using the Business Model Canvas as framework. The companies are actively involved in developing and discussing the business model, with the research team analysing the information provided. Business models will be informed by strategic financial analysis which will quantify the revenue generating potential, capex and operating costs, the margins and operating profit, and payback period and break-even volumes of proposals. Additional insights about developments in the business (e.g. changes in technical processes or partners, trading market and the motivation behind them) are collected throughout the project. The project then zooms out to the wider European algae sector by incorporating lessons learned via a survey and interviews with other companies, which are external to the project.
Results
The first results indicate that, contrary to observations made a few years ago (Selnes et al., 2021), many companies are moving away from cultivating seaweed. Compared to harvested from the wild, cultivated seaweed can currently not compete in costs. For companies in the macroalgae business, the focus is often on the processing of wild harvest. However, another barrier is that European prices cannot compete with Asian prices. This means that growing a business based on wild harvested macroalgae is challenging as well. Instead, companies focus on the end of the value chain and try to increase the value of their products by using seaweed extracts and processing it into high-value products for the nutraceutical and cosmetic market. This switch in the focus of companies aligns with the observation that algae as food gets less attention in the debate. Obstacles like the Novel Food regulation, a lack of certification and standards, concerns about iodine and heavy metal levels, and low consumer acceptance have stagnated the sector. There is a reliance on few and bigger companies now to make a success of new algae products in different value chains.
Discussion & Conclusion
The European algae sector is in development and strong support from the EU and national governments pushes development and innovation. Numerous business venture into the processing and development of products from seaweed, supported by investors. The review of business models however also shows the difficulties that companies experience to develop commercially viable products. Recognizing the potential of the algae sector to contribute to the provision of sustainable natural resources from Europe, it is pivotal to further support development of the sector. Future support is also justified given the positive impacts of seaweed cultivation and use, for nature restoration, climate mitigation and adaptation.
References
Selnes, Trond, Else Giesbers, and Sander WK van den Burg. "Innovation and collaboration: Opportunities for the European seaweed sector in global value chains." Journal of Marine Science and Engineering 9.7 (2021): 693.
van den Burg, Sander, et al. "Prospects for upgrading by the European kelp sector." Journal of Applied Phycology 33.1 (2021): 557-566.