Fermtech nets £2.5M to scale cocoa shell ingredient for chocolate and bakery cost savings

UK-based Fermtech has secured £2.5 million (US$3.3 million) in funding to scale production of Koji Cocoa, its cocoa alternative made from cocoa shells. The clean label ingredient is said to offer 25–33% cost savings in chocolate and baked products versus cocoa, helping manufacturers address price volatility, compressed margins, and rising consumer prices in the cocoa market.

Extreme weather has caused failed cocoa harvests and shortages in West and Central Africa, where more than 70% of global cocoa is grown. Recent cocoa price spikes have spurred cocoa-free chocolate innovations, as industry giants turn toward ingredients that reduce their reliance on cocoa.

According to a USDA cocoa sector report, the Ivory Coast’s cocoa production in 2023/24 was about 24% lower than the 2022/23 season due to adverse weather conditions. Downpours and droughts have negatively impacted cocoa harvests, compounded by outbreaks of diseases like black pod.

Climate-related challenges position Koji Cocoa’s launch at a “critical time” for the global chocolate industry, says Fermtech. Koji Cocoa is its first commercial product and a proof point for its natural fermentation technology at scale. 

The biotech innovator produces its cocoa substitute using side streams of the cocoa plant that are normally discarded, using solid-state fermentation — an industrial process that transforms fibrous agricultural side streams (shells and hulls) into high-value, low-carbon food ingredients.

Andy Clayton, CEO of Fermtech, describes Koji Cocoa as an “extension to cocoa yields.”

“By making use of side streams from cocoa processing, in addition to other side streams, it allows the cocoa crop to go 5–10% further on a global scale,” he tells Food Ingredients First.

Fermtech leverages biology to optimize harvest value rather than expand farmland, and applies its technology across crops such as cocoa, oats, and wheat.

Substituting cocoa flavor

The Oxford-based company preserves the natural flavors of cocoa while breaking down indigestible components into soft, nutritious ingredients using the solid-state fermentation method. 

CEO Andy Clayton says Fermtech is working to build a domestic UK cocoa production industry using locally sourced side streams such as cocoa shells as key inputs (Image credit: Fermtech).“Koji Cocoa provides 100% flavor substitution compared to cocoa powder and cocoa mass in applications such as milk chocolate, baked goods like cakes, brownies, and muffins, and creams and fillings. Its processing behavior and shelf life are equivalent to cocoa powder,” Clayton says.

The company claims its fermentation method can maintain the taste, color, and texture while incorporating a sustainable and circular approach — offering up to 98% lower carbon emissions, without requiring additional farmland.

Cocoa flavor replication has triggered a wave of innovations in the cocoa-free category, as it moves from niche experimentation to formal IP protection, according to Innova Market Insights. 

Voyage Foods (upcycled grape seeds), WNWN Food Labs (fermented barley, wheat, and millet grains), Nukoko (fava beans), and Planet A Foods (oats and sunflower seeds) are among the start-ups holding patents for cocoa-free chocolate using various plant-based ingredients.

Cocoa cost savings

For the seed funding, UK’s climate investor Elbow Beach facilitated funds worth £2 million (US$2.7 million), while the total £2.5 million (US$3.3 million) round investment includes participation from Carbon 13 and Empirical Ventures.

The cash injection will enable Fermtech’s scale-up of Koji Cocoa and broader platform in the UK and globally.

Koji Cocoa provides substantial cost savings to manufacturers for end products by reducing the amount of traditional cocoa needed in the US$27 billion+ global cocoa ingredients market, says Fermtech.

Due to the current volatility in the cocoa market, the company agrees to “long-term off-take agreements with built pricing,” says Clayton.

Koji Cocoa is made from discarded cocoa plant side streams using solid-state fermentation which preserves natural flavors (Image credit: Fermtech).“Often, we look for full circularity with partners, so they provide us with substrates at fixed agreements, and we sell them products under the same terms.”

To secure a large-scale, consistent supply of cocoa shells, the company works with “some of the world’s largest cocoa processors” as well as secondary market suppliers.

“We are working on building a domestic UK cocoa production industry with locally sourced side streams such as cocoa shells as the key inputs.”

Scaling cocoa substitutes

Fermtech is already working with companies in the global food and snacking industry to showcase Koji Cocoa’s versatility and strong market potential.

“We are currently producing at a small scale (single-digit metric tons) in China, and trialing production in the UK. We will focus on making those technical trials a success, then work with our partners on the financing and commissioning of scaled production in the UK,” says Clayton.