How ÄIO is Scaling Up Sustainable Fermentation-Based Flavoured Fats for Future Food Applications

AIO, an Estonian biotechnology company developing sustainable, non-animal fats and oils through innovative fermentation processes, led by Nemailla Bonturi, PhD, Petri-Jaan Lahtvee, PhD, Mary-Liis Kütt, PhD, and others, has been awarded a €1.2 million grant from Enterprise Estonia to advance its new project FERM-OIL. The total budget of the project is €2.3 million.

Over three years, the project will scale ÄIO’s Flavoured Fat, a lipid-rich yeast ingredient with umami taste, from lab and pilot stages to validated industrial production, generating the safety and consumer data needed for market entry. It aims to close a key gap in food manufacturing by delivering a scalable, functional, and sustainable lipid solution that complements alternative and plant-based proteins.

“With FERM-OIL, we’re addressing one of the toughest challenges in food innovation: scaling from lab to factory,” said Dr Mary-Liis Kütt, Chief Innovation Officer at ÄIO. “Our Flavoured Fat already performs strongly in prototypes, from cocoa and sugar replacement to improving texture in broths and sauces. This project lets us validate industrial production, generate the safety data needed for novel food approval, and understand real consumer response.”

The project will optimize ÄIO’s fermentation process from lab to pilot scale, validate second-generation feedstocks from food, forestry, and agricultural side-streams, and transition production to an industrial contract manufacturer. Test batches will support downstream processing, quality, and shelf-life studies, and novel food safety assessments, to reach TRL6 and demonstrate industrial readiness.

Founded in 2022, ÄIO uses yeast fermentation to convert low-value local side-streams such as wood, dairy, and food industry residues into high-value, sustainable lipids.

“Fermentation lets us turn side-streams into stable, nutritious lipids independent of climate and fragile supply chains,” said Nemailla Bonturi, Co-founder and CEO of ÄIO. “This grant shows Estonia’s commitment to a resilient, circular food system and enables us to prove our process works at an industrial scale, making novel lipids a viable pillar of future food security.”

The goal is to help food manufacturers produce essential lipids locally from their own side-streams, reducing reliance on animal fats and land-intensive tropical oils. Through FERM-OIL, ÄIO will test its Flavoured Fat across savory, bakery, and beverage products, working with partners to validate performance, taste, texture, and consumer acceptance.

“Estonia and the wider region have a unique opportunity to lead in the circular bioeconomy,” said Prof. Petri-Jaan Lahtvee, Co-founder of ÄIO and Professor at Tallinn University of Technology. “With FERM-OIL, we will show that second-generation feedstocks can be transformed into high-value, scalable ingredients. Facilities that produce commodities today can, in the future, also manufacture next-generation lipids on-site, making circularity real in practice.”

By the end of the project, ÄIO aims to reach TRL6, validating industrial-scale production and completing the safety work required for a novel food submission to the European Commission. This will set the stage for follow-on investments in a 4,000-tonne-per-year production facility and large-scale licensing.

ÄIO is backed by €6.8M in seed funding and ~€3M in grants, and is strengthening its position in the fast-growing microbial lipids market, working with 120+ partners and engaging leading food manufacturers.

“Ultimately, this project is about making future foods real,” Kütt added. “We want essential ingredients like fats and oils to be produced locally, from local resources. Flavoured Fat is our contribution to that future, and this grant helps accelerate the journey.”