- ÄIO secured EUR 1.2M from Enterprise Estonia to scale sustainable FERM‑OIL production
- The startup transforms local side-streams into functional, high-quality fermentation-derived fats for such industries as cosmetics and food
- FERM‑OIL targets taste, texture, and food industry usability while reducing environmental impact
- The roadmap includes industrial-scale validation, TRL6 milestone, and large-scale production and licensing
Last December, ÄIO—the well-known Estonian biotech startup specializing in sustainable fermented non-animal fats and oils—received a EUR 1.2M grant from Enterprise Estonia for its FERM‑OIL project, with a total budget of EUR 2.3M. The initiative seeks to replace animal and tropical fats by scaling industrial production of ÄIO’s novel Flavoured Fat ingredient, leveraging local food, forestry, and agricultural side-streams to deliver functional, eco-friendly lipid solutions across various food applications.
ÄIO in a Nutshell: History, Problem, and Solution
Dr Petri-Jaan Lahtvee (COO) and Dr Nemailla Bonturi (CEO), both experts in fermentation and sustainable process development, founded ÄIO in 2022. The startup originally was a TalTech spin-off focusing on turning agricultural and wood industry side-streams into valuable, high-performance ingredients.
ÄIO addresses major environmental and ethical issues associated with conventional fats, including palm oil, coconut oil, animal fats, and mineral oils. These traditional sources contribute to deforestation, biodiversity loss, high water and land use, and greenhouse gas emissions, while also raising animal welfare and health concerns. The startup aims to provide sustainable alternatives that reduce the ecological footprint of the cosmetics, food, and other lipid-dependent industries.
The company develops innovative, fermentation-derived fats and oils for cosmetics and food applications (including their new FERM‑OIL project). Their technology transforms local organic side-streams into functional, high-quality lipids that perform like traditional fats while using far less land and water. By offering scalable, eco-friendly ingredients, ÄIO enables brands to meet consumer demand for sustainable, high-performance products without compromising quality.
Since its founding, ÄIO secured multiple grants to advance its research and commercialization. In mid-2025, the startup received a grant of EUR 1M from Estonia’s public Applied Research Program (RUP), coordinated by the Estonian Agency for Innovation and Economic Development (EIS). The grant is meant to fund the startup’s three-year cosmetics-focused R&D project.
Turning Grants into Impact, Bringing FERM‑OIL to Food Industry
The new EUR 1.2M grant from Enterprise Estonia marks ÄIO’s further expansion into the FoodTech space. FERM‑OIL embodies circular economy principles, technical ambition, and international impact, all of which are central to Enterprise Estonia’s funding strategy.
Despite advances in alternative and plant-based proteins, the food industry still lacks scalable, sustainable lipid ingredients to complement them. Many lab-scale solutions fail to meet industrial, regulatory, and functional requirements, leaving a gap for nutritious, climate-friendly fats.
Dr Nemailla Bonturi, Co-Founder and CEO at ÄIO
ÄIO’s FERM‑OIL project tackles this challenge by advancing its Flavoured Fat—a lipid-rich yeast biomass with umami flavor and pleasant mouthfeel—from laboratory and pilot experiments to validated industrial production. Over the next three years, the project will generate critical safety, technical, and consumer data to ensure that the ingredient is ready for real-world food applications and bridge the gap between innovation and commercial-scale manufacturing.
‘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, and that novel lipids can become a reliable pillar of future food security,’ Dr Bonturi states.
ITKeyMedia approached ÄIO’s chief innovation officer and project lead Dr Mary-Liis Kütt to find out more about FERM-OIL project’s development, challenges, implementation, and ambition:
What were the specific challenges in aligning FERM-OIL’s industrial production with the EU’s novel food safety requirements?
Dr Mary-Liis Kütt: One of the key challenges is designing the FERM-OIL process so that safety considerations are embedded from the very beginning. The EU’s novel food requirements demand a high level of consistency, traceability, and control across raw materials, fermentation, and downstream processing. At industrial scale, this means demonstrating reproducibility across batches, validating process parameters, and generating robust compositional and safety data under conditions that reflect future commercial production. Scaling fermentation while maintaining a well-characterised product profile requires careful process design, analytical development, and documentation aligned with EFSA expectations. FERM-OIL is specifically structured to close this gap between lab innovation and regulatory-ready industrial production.
What consumer insights influenced your product development and market positioning for FERM-OIL?
MK: Our development is strongly guided by two consistent consumer signals: the demand for familiar eating experiences and the growing concern around the sustainability and health impacts of conventional fats. Consumers are open to innovation, but they do not want compromise on taste, texture, or cooking performance. This led us to focus FERM-OIL on delivering functional and sensory parity with animal fats and tropical oils, rather than positioning it as a niche or ‘alternative’ product. At the same time, transparency, traceability, and environmental responsibility increasingly influence trust. This shaped our emphasis on fermentation, controlled production, and clear ingredient storytelling.
How do you plan to differentiate the sensory profile of FERM-OIL flavoured fats from conventional animal fats and tropical oils?
Dr Mary-Liis Kütt, Chief Innovation Officer at ÄIO
MK: FERM-OIL is designed to be sensorially adaptable rather than fixed. Through fermentation and downstream processing, we can influence lipid composition and flavour-carrying properties to match specific applications. Compared to animal fats, FERM-OIL can deliver a cleaner, more consistent flavour profile without variability linked to feed or seasonality. Compared to tropical oils, it avoids waxy mouthfeel or heavy melting behaviour. Our internal sensory work focuses on balance: delivering richness, mouthfeel, and umami or savoury notes where desired, while avoiding off-flavours often associated with oxidation or processing. This allows FERM-OIL to perform across diverse food categories, from savoury to ready meals and processed foods.
How do you plan to collaborate with traditional food manufacturers who may be risk-averse toward novel lipid ingredients?
MK: FERM-OIL is intentionally designed to meet industry needs rather than disrupt them. While it is a novel ingredient, we focus on formats and functionalities that fit seamlessly into existing manufacturing environments. In many cases, this can even simplify things for our partners. For example, we are developing FERM-OIL as a stable, dry powder, and as a functional combination of lipids, fibres, and proteins.
This approach can offer practical advantages such as longer shelf life, easier handling, and improved stability compared to liquid or shorter-shelf-life commodities. We work closely with manufacturers through pilot trials, application testing, and technical support to ensure that the ingredient performs reliably in real production settings. Rather than asking companies to adapt to us, our goal is to meet their technical, operational, and commercial requirements.
How can FERM-OIL integrate into existing supply chains without creating new bottlenecks?
MK: FERM-OIL is intentionally substrate-agnostic. This means we are not dependent on a single agricultural crop or by-product stream. Instead, the process can utilize a range of food, agricultural, and forestry side-streams, reducing exposure to supply shocks. From a logistics perspective, fermentation-based production allows decentralised manufacturing closer to demand, rather than long, climate-sensitive import routes. This flexibility supports integration into existing supply chains while improving resilience rather than introducing new dependencies.
Grants normally don’t cover IP. What IP strategies are most relevant for FERM-OIL?
MK: FERM-OIL builds on a layered IP strategy. While public funding supports development and validation, core innovations are protected through a combination of patents, trade secrets, and process know-how. This includes proprietary yeast strains, fermentation conditions, downstream processing methods, and application-specific formulations. In addition, scale-up knowledge and operational expertise form a significant part of our competitive advantage, as these elements are difficult to replicate without direct experience.
How do you anticipate consumer sentiment about fermentation-derived food ingredients to evolve?
MK: We expect fermentation to be seen increasingly as a familiar and trusted technology rather than a novelty. Consumers already accept fermentation in everyday foods, from bread and cheese to yoghurt and soy products. As climate pressures and supply volatility affect conventional ingredients, fermentation-derived fats will likely be understood as a practical, reliable solution rather than a radical departure. ÄIO is preparing both to respond to and help shape this narrative by focusing on clarity, education, and demonstrated performance, rather than fear-based or overly technical messaging.
Dr Petri-Jaan Lahtvee, Co-Founder and COO at ÄIO, Professor at the Tallinn Unversity of Technology
By the project’s conclusion, ÄIO plans to achieve TRL6, signaling industrial readiness. This milestone will involve validating processes at industrial scale and completing safety assessments required for a European Commission novel food submission. The outcomes will pave the way for follow-on investments in a 4,000 t/year production facility and enable large-scale technology licensing opportunities.
To wrap up in the words of Dr Lahtvee, ÄIO’s co-founder/CEO and TalTech professor, Estonia and the wider region have a unique opportunity to lead in circular bioeconomy as ÄIO’s FERM-OIL will demonstrate that second-generation feedstocks can be turned into high-value, scalable ingredients, exemplifying real circularity in action.
ÄIO’s FERM‑OIL project highlights the critical role of sustainable, fermentation-derived lipids in bridging the gap between lab innovation and industrial food production. By transforming local side-streams into functional, high-performance fats, the project addresses environmental, ethical, and supply-chain challenges associated with conventional animal and tropical oils. Its successful scale-up will not only advance Estonia’s position in the circular bioeconomy but also provide globally relevant, climate-resilient solutions for the future of food.
Kostiantyn is a freelance writer from Crimea but based in Lviv. He loves writing about IT and high tech because those topics are always upbeat and he’s an inherent optimist!
