Estonian biotech company ÄIO has been awarded a €1.2 million grant from Enterprise Estonia to advance FERM-OIL, a new project focused on scaling sustainable, fermentation-derived flavoured fats.
The total project budget amounts to €2.3 million.
Bridging The Gap Between Lab Innovation And Industrial Food Production
FERM-OIL aims to take ÄIO’s Flavoured Fat ingredient from laboratory and pilot-scale development to validated industrial production. The lipid-rich yeast biomass delivers umami flavour and functional mouthfeel and is designed to replace animal fats and land-intensive tropical oils in a wide range of food applications.
Over the next three years, the project will generate the technical, safety, and consumer data required to bring the ingredient to market, addressing one of the food industry’s most persistent challenges: scaling novel lipid solutions beyond the lab.
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Tackling A Critical Missing Piece In Alternative Foods
While alternative and plant-based proteins have advanced rapidly, sustainable lipid ingredients have lagged behind. Many lipid innovations struggle to meet industrial, regulatory, and cost requirements at scale.
FERM-OIL addresses this gap by validating fermentation-based lipid production using local food, forestry, and agricultural side-streams, helping translate promising research into real-world manufacturing.
From Pilot Lines To Industrial Validation
The project will focus on optimising fermentation processes at lab and pilot scale, validating second-generation feedstocks, and transferring production to an industrial contract manufacturing facility. Test batches will be used for downstream processing optimisation, quality analysis, shelf-life testing, and novel food safety assessments.
By the end of the project, ÄIO aims to reach Technology Readiness Level 6, confirming industrial readiness and laying the groundwork for commercial deployment.
Functional Performance Across Food Categories
FERM-OIL will test Flavoured Fat across savoury, bakery, and beverage applications, working closely with potential customers to evaluate performance in real production environments. Feedback will focus on taste, texture, mouthfeel, and overall consumer acceptance.
Early prototypes have already demonstrated versatility, including replacing cocoa powder and brown sugar and improving texture in broths and sauces.
Turning Side-Streams Into High-Value Lipids
Founded in 2022, ÄIO uses yeast fermentation to convert low-value side-streams such as wood residues, dairy by-products, and food industry waste into high-value, climate-resilient lipids. The approach reduces reliance on climate-sensitive supply chains and enables local ingredient production.
The company’s long-term vision is to allow food manufacturers to produce essential lipid ingredients locally, using their own industrial by-products.
Strengthening Europe’s Circular Bioeconomy
FERM-OIL positions Estonia and the wider region as leaders in circular bioeconomy innovation. The project demonstrates how existing industrial infrastructure can be adapted to produce next-generation lipid ingredients alongside traditional commodities.
By validating industrial-scale production and completing safety requirements for a novel food dossier, ÄIO aims to unlock follow-on investments, including a planned 4,000-tonne-per-year production facility and future licensing agreements.
Positioning For Global Growth
ÄIO is currently backed by €6.8 million in seed funding and approximately €3 million in grants from Enterprise Estonia, the Environmental Investment Centre, and the EU CBE-JU programme. The company collaborates with more than 120 partners worldwide and has attracted interest from major food manufacturers.
With FERM-OIL, ÄIO strengthens its role in the fast-growing microbial lipid and single-cell oil markets, accelerating the transition toward resilient, locally produced food ingredients.
