ÄIO wins €1.2M grant to scale fermentation-based flavoured fats for food

Tallinn-based ÄIO, a biotechnology company developing sustainable, non-animal fats and oils through fermentation, has been awarded a €1.2 million grant from Enterprise Estonia to advance its FERM-OIL project. The total project budget is €2.3 million.

Founded in 2022 as a spin-off from TalTech (Tallinn University of Technology), ÄIO produces food-grade fats and oils by using specialised yeast to convert wood and agricultural by-products, such as sugars derived from sawdust. The approach is designed to reduce reliance on animal fats and palm oil through a faster, lower-impact production process.

To date, the company has raised €6.8 million in seed funding and secured around €3 million in grants from Enterprise Estonia, the Environmental Investment Centre, and the EU CBE-JU programme.

While alternative and plant-based proteins have seen rapid progress, the food industry continues to face a shortage of sustainable lipid ingredients that complement these products. Many early-stage lipid alternatives struggle to scale or meet industrial and regulatory requirements. FERM-OIL aims to address this gap by supporting the transition from laboratory development to industrial food production.

As explained by Dr Mary-Liis Kütt, ÄIO’s Chief Innovation Officer and lead of the project, FERM-OIL focuses on one of the most challenging steps in food innovation: moving from lab-scale validation to factory-scale manufacturing.

We already know that our Flavoured Fat performs well 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 industrial lines, generate robust safety data for the novel food dossier, and better understand consumer responses to these new lipid ingredients.

Over the next three years, the project will advance ÄIO’s Flavoured Fat, a lipid-rich yeast biomass designed to deliver umami flavour and functional mouthfeel, from lab and pilot stages to validated industrial production. The work will include optimising the fermentation process, validating second-generation feedstocks sourced from food, forestry, and agricultural side-streams, and transferring production to an industrial contract manufacturing facility. Test batches will be used for downstream processing optimisation, quality and shelf-life studies, and novel food safety assessment.

By the end of the project, ÄIO aims to reach TRL6, demonstrating readiness for industrial-scale production. This will include confirming process requirements at scale and completing the safety work needed to submit a novel food dossier to the European Commission. The project is also expected to support follow-on investment plans for a 4,000-tonne-per-year production facility and potential large-scale licensing agreements.

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 allows us to demonstrate that our process can operate at industrial scale and that novel lipids can become a reliable part of future food systems,

said Nemailla Bonturi, co-founder and CEO of ÄIO.

Within FERM-OIL, ÄIO will also evaluate Flavoured Fat across savoury, bakery, and beverage applications, working with potential customers to assess performance in their processes and gather feedback on taste, texture, and consumer acceptance. The broader aim is to enable local production of key lipid ingredients using manufacturers’ own side-streams, reducing dependence on animal fats and land-intensive tropical oils.