by Gigi Wood
IOWA CITY – A cooking oil maker has sputtered to a halt.
Asoyia, named the Corridor’s Fastest Growing Company in 2008 and placed 13th on the same list a year later, is out of business.
The company produced a zero trans fat cooking oil, made from soybeans with only 1 percent of linolenic acid, which stabilized the oil and removed the need for hydrogenation that creates trans fats. The oil was also cholesterol free. Many restaurants in the Corridor used the oil, as well as national companies. Asoyia was used to make Pepperidge Farm Goldfish crackers, for example.
The telephone lines at the Asoyia headquarters in Iowa City are disconnected. Bellana Putz of Lessing-Flynn Advertising in Des Moines handled Asoyia’s media relations.
“Sometime in the month of December, they closed and to my understanding the dollars didn’t match up,” she said.
She said the employees have found other employment. Bob George, Asoyia’s CFO, for example, is now the director of finance at Don Hummer Trucking Corp. in Oxford.
Mr. George said Asoyia closed because the price at which the company could sell the oil did not cover the cost to produce it.
“We had gotten investments and venture capital money came in and they helped sustain that for awhile, but the cost structure was just too heavy and eventually collapsed, based on what we could sell the oil for,” he said. “It was considered kind of a premium product and in a down economy, people just don’t pay premium, regardless of the extra value the oil might have had from a health standpoint, as well as a stability standpoint and use in application and things like that. It had some advantages, it actually, if you did the cost analysis from the standpoint of its uses, it was a better product in the long run, but in down economic times people see a premium price and they just don’t take the time to think about how it will last longer in a fryer.”
Saving the company would have required too much of an investment, he said.
“Based on the numbers, it was going to take a significant amount of additional capital to try to get the cash flow positive and we just didn’t see a buyer on the horizon who was going to be willing to do that, let alone existing ownership,” Mr. George said.
Cargill processed the oil for Asoyia in Cedar Rapids and bought a portion of the oil to satisfy some of Asoyia’s customers.
“We had a loan with Pilot Grove Savings Bank and Pilot Grove was basically in possession, for lack of a better word, and so they were working with Cargill to make that happen, to buy the oil,” he said. “They were going to continue to provide for the large bulk customer they had because Cargill was also selling other oils to them at other facilities, so it was kind of a common customer and they didn’t want them to be upset at Cargill because they knew where the oil was being processed.”
Asoyia started in 2004 in Winfield, a farming community 45 miles south of Iowa City, then moved its headquarters to Iowa City two years ago to be closer to business partners, such as Cargill. It was owned by two venture capital firms and 25 farmers who grew the soybeans, processed the beans and produced cooking oil. About two years ago, Forbes.com ranked Iowa City eighth among its Top 10 Up-and-Coming Tech Cities, specifically naming Asoyia’s presence as a reason for the designation.
In 2008, Asoyia experienced 856 percent growth; in 2009 it had 53 percent growth. Two years ago, the company secured $4 million in venture capital funding and last year was courting farmers to grow the soybeans across Iowa and the Midwest to meet consumer demand.
The company began a search for a new CEO following the departure of Greg Keeley who resigned in April of last year. He said he left the company to allow someone else to come in and navigate Asoyia through its next stage of growth and planned to pursue other opportunities. Peter Siggelko, a member of the board of directors and Dow AgroSciences vice president, was serving as interim CEO.
The company’s last press release was dated July 23 and announced the hiring of an account director for the oil division. It was one of five publicly announced hires by the company during the past 18 months.
Asoyia, named for “a soybean in Iowa,” was formed six years ago after 30 years of testing by Iowa State University researcher Walter Fehr. He began developing the low linolenic soybean during the 1960s and has tweaked it through years of traditional cross breeding.
“I’m really not close enough to it to even know (details about the closure),” Mr. Fehr said. “My role is only to develop varieties for them; I have nothing to do with the business part.”