Estonian biotechnology firm ÄIO has secured €1.2 million in public funding from Enterprise Estonia to scale production of its yeast-based Flavoured Fat ingredient through a new three-year project titled FERM-OIL. The total project budget is €2.3 million.
The funding will support the transition of ÄIO’s fermentation-based fat from lab-scale development to industrial manufacturing. The company’s Flavoured Fat, a lipid-rich yeast biomass, is intended as a replacement for animal fats and imported tropical oils in food production. The ingredient is produced by fermenting local food, forestry, and agricultural side-streams.
“One of the hardest parts of food innovation”
Dr Mary-Liis Kütt, Chief Innovation Officer at ÄIO and lead of the FERM-OIL project, stated, “With FERM-OIL, we are tackling one of the hardest parts of food innovation, the jump from lab to factory. We already know that our Flavoured Fat performs beautifully in prototypes, from replacing cocoa powder and brown sugar to adding a silky texture to broths and sauces.
“This project allows us to validate the process on real industrial lines, generate robust safety data for the novel food dossier, and understand how consumers respond to these new lipid ingredients.”
The FERM-OIL project will focus on scaling the fermentation process, validating second-generation feedstocks, and testing the ingredient in industrial settings. The company plans to work with contract manufacturing facilities to run pilot and industrial-scale batches, with downstream analysis including shelf-life, quality, and safety assessments.
By the end of the project, ÄIO aims to achieve Technology Readiness Level 6 (TRL6), which indicates the completion of a system or prototype in a relevant industrial environment. This stage includes preparation for submitting a novel food dossier to the European Commission.
Using fermentation to reduce supply chain risk
Nemailla Bonturi, Co-founder and CEO of ÄIO, explained, “Fermentation gives us a way to turn side-streams into stable, nutritious, functional lipids that are not dependent on climate, seasons, or fragile global supply chains. This grant is a strong signal that Estonia is serious about building a resilient, circular food system. It allows us to prove to the world that our process can work at an industrial scale, not just in the lab.”
Application trials across multiple food categories
FERM-OIL will also explore the performance of Flavoured Fat in bakery, savory, and beverage applications in collaboration with industry partners. These tests will include product formulation trials and sensory evaluation to assess texture, taste, and consumer response.
“Estonia and the wider region have a unique opportunity to lead in circular bioeconomy. With FERM-OIL, we will demonstrate that second-generation feedstocks can be turned into high-value, scalable ingredients. The same facility that today produces commodities can, in the future, also produce next-generation lipids on-site,” noted Professor Petri-Jaan Lahtvee, Co-founder of ÄIO and a professor at Tallinn University of Technology.
ÄIO has previously raised €6.8 million in seed funding and an additional €3 million in grants from various sources, including the EU’s Circular Bio-based Europe Joint Undertaking (CBE-JU) programme and Estonia’s Environmental Investment Centre.
The company expects that data and validation from the FERM-OIL project will support future investment in a 4,000-ton-per-year production facility and licensing agreements for its fermentation technology.
