Press release: ÄIO secures €1.2M grant to scale up sustainable fermentation-based flavoured fats for future food applications

The new FERM-OIL project, which aims to replace animal fats and tropical oils will validate industrial-scale production of ÄIO’s novel Flavoured Fat ingredient, using local food, forestry, and agricultural side-streams to create sustainable, functional lipid solutions for diverse food products.

TALLINN, Estonia (December 18, 2025) – ÄIO, an Estonian biotechnology company developing sustainable, non-animal fats and oils through innovative fermentation processes, has been awarded a €1.2 million grant from Enterprise Estonia to advance its new project FERM-OIL. Total budget of the project is €2.3 million.

Over the next three years, the project will take ÄIO’s Flavoured Fat, a lipid-rich yeast biomass with umami taste and functional mouthfeel, from lab and pilot scale to validated industrial production, while generating the technical safety, and consumer data needed to bring the ingredient to market. The project aims to close the gap between lab innovation and real-world food manufacturing.

Despite strong progress in alternative and plant-based proteins, the food industry still faces a critical gap in sustainable lipid ingredients that can complement these.  Lab-scale alternatives often struggle to scale and meet industrial or regulatory requirements, leaving a gap in functional, nutritious, and climate-resilient lipid solutions. FERM-OIL addresses this challenge by bridging the gap between lab innovation and industrial food production.

“With FERM-OIL, we are tackling one of the hardest parts of food innovation, the jump from lab to factory,” says Dr Mary-Liis Kütt, Chief Innovation Officer at ÄIO and lead of the FERM-OIL project.

“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 project will optimize ÄIO’s fermentation process at lab and pilot scale, validate second-generation feedstocks (industrial side-streams from food, forestry and agriculture), and transfer production to an industrial contract manufacturing facility (CMO). Test batches will be used for downstream processing optimisation, quality analysis, shelf-life studies, and novel food safety assessment. By the project’s end, ÄIO aims to reach TRL6, a key milestone demonstrating industrial readiness.

Founded in 2022, ÄIO’s technology converts local low-value side-streams, such as wood, dairy, and food industry residues, into high-value, future-proof lipids through yeast fermentation.

“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,” says Nemailla Bonturi, Co-founder and CEO of ÄIO. “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.”

The broader vision is to enable food manufacturers to produce essential lipid ingredients locally, using their own side-streams, and to reduce dependency on animal fats and land-intensive tropical oils.

Through FERM-OIL, ÄIO will test Flavoured Fat in a range of savory, bakery, and beverage applications, working closely with potential customers to understand performance in their processes and gather feedback on taste, texture, and consumer acceptance.

“Estonia and the wider region have a unique opportunity to lead in circular bioeconomy,” says Prof. Petri-Jaan Lahtvee, Co-founder of ÄIO and Professor at Tallinn University of Technology. “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. That is real circularity in action.”

By the end of the project, ÄIO aims to reach TRL6, a key milestone demonstrating industrial readiness. This will include validating process requirements at industrial scale and completing the safety assessment needed to submit a novel food dossier to the European Commission. The project will lay the foundation for follow-on investments in a 4,000 t/year production facility and large-scale technology licensing deals.

ÄIO is currently backed by €6.8M in seed investments and around €3M in grants from Enterprise Estonia, the Environmental Investment Centre, and the EU CBE-JU programme. With FERM-OIL, the company strengthens its position in the rapidly growing microbial lipids and single-cell oil markets, working with over 120 partners worldwide, including interest from leading food manufacturers.

“Ultimately, this project is about making future foods real,” Kütt adds. “We want a world where essential ingredients like fats and oils can be produced locally, from local resources. Flavoured Fat is our contribution to that future, and this grant helps us get there much faster.”

For additional information: ÄIO PR KIT with pictures

Nemailla Bonturi, PhD
Co-founder & CEO
ÄIO (äio tech OÜ)
+372 5919 2322
nemailla.bonturi@aio.bio

About ÄIO

ÄIO is an Estonian biotechnology company pioneering the production of sustainable, non-animal fats and oils through innovative fermentation processes. Founded in 2022 as a spin-off from Tallinn University of Technology (TalTech) by bioengineers Prof. Petri-Jaan Lahtvee and Dr. Nemailla Bonturi, ÄIO transforms agricultural, food and wood industry by-products into high-value ingredients for the food, cosmetics, pet food and oleochemical industries.

Utilizing specialized yeast fermentation, ÄIO’s technology converts sugars extracted from second-generation feedstocks into oils and fats rich in functional lipids, antioxidants and pigments. This approach offers a sustainable alternative to traditional palm oil and animal fats, reducing land use by up to 97% and water consumption by a factor of ten compared to conventional methods.

ÄIO collaborates with over 120 partners worldwide to source industrial side-streams and test its oils and fats, striving to reduce reliance on unsustainable ingredients and promote a healthier planet. For more information, please visit https://aio.bio.