Fruit seed-based alt dairy to quadruple production capacity, ‘double down’ on NPD

Austrian start-up Kern Tec is upcycling side streams – apricot, cherry and plum pits – from jam and juice processors to make ingredients for plant-based dairy and confectionery products.

Having closed a $12m Series A funding round, the founders are preparing to scale-up production and commercialisation of its ingredients. “This investment will accelerate our global scaling capabilities and enable more products to the market that are derived from the valuable stone fruit seeds,” ​said co-founder and managing director Luca Fichtinger.

“This will scale our impact of reducing waste, whilst unlocking further growth in the plant-based dairy industry.”​

Kernels – without the cyanide​

Kern Tec was founded in 2019 to make use of these would-be-waste streams that juice processors or pitting stations mostly sell onto biomass companies send to landfill. In Europe, an estimated 50,000 metric tons end up in landfill alone.

But stone fruit pits, and more specifically their seeds – or kernels – have nutritional value in the form of oils or protein. Apricot kernels, for example, can contain up to 23% protein depending on the variety. They are also high in unsaturated fats and vitamin E.  

The problem is that stone fruit kernels contain a dangerous chemical known as amygdalin. When digested, the body converts amygdalin into the toxic substance cyanide. Kern Tec has developed proprietary technology to extract amygdalin, ensuring cyanide-free ingredients for human consumption.

Kern Tec suspects alternative dairy products made using its upcycled ingredients could be amongst the most sustainable in the world. “We have conducted a life cycle analysis and found that our seeds have up to 95% less water use, 50% less CO2 emissions and, what I think is worth the most – no extra land use compared to other nuts,”​ Fichtinger told FoodNavigator.

Kern Tec on the market: ‘Consumers love the idea of a circular ingredient’​

In alternative dairy, Kern Tec’s ingredients can be used in across a wide range of applications, from plant-based milk to yoghurt and cheese alternatives.

The company is already selling branded dairy alternatives into retailer REWE in Austria and has developed a product line in the snack category with Swiss retailer Coop.

The start-ups plans on entering the German market in the near future, having established a collaboration with a ‘notable’ Germany dairy company, Fichtinger revealed. Results from this partnership will ‘come to market very soon’, launching with an expansive range of dairy alternatives based on Kern Tec ingredients.

Overall, Kern Tec has signed purchase orders for its ingredients worth ‘millions of euros’ in revenues in over the coming years.

The products are branded according to whether they are for B2B or B2C markets, explained the co-founder. Kern Tec’s B2C range for its local Austrian market is sold under the Wunderkern brand. The initiatives helps the start-up test its products on the market and get a feel for consumer perceptions.

“This this information, we can improve our recipes and create better products,” ​we were told. “Overall, the perception of our dairy alternatives, as well as chocolate spreads, was very positive – people are curious to try the products and love the idea of a circular ingredient.”​

Plans for €12m Series A funding​

With the new funding, Kern Tec has plans to boost production, supply chains, and NPD.

Specifically, the start-up plans to quadruple production capacity and introduce ‘new technologies’ to its lines. “Secondly, [we’re] scaling the value chain throughout Europe, Asia and the US,” ​Fichtinger told this publication.

The funds will also help increase its team size, and to ‘double down’ product development efforts for dairy alternatives and new categories.

The Series A was led by Telos Impact, with participation from the PeakBridge Growth 2 fund and the European Innovation Council (EIC) Fund. The latter was established under the EU Horizon Europe programme and is solely funded by the European Commission.

“Our investment will provide Kern Tec with the means to scale their business in Europe and, thanks to their innovative technology, contribute to saving resources and supporting farmers and businesses,” ​commented EIC Fund Board chair Svetoslava Georgieva.

For PeakBridge, which also participated in the fundraise, food ingredients innovation – such as that pioneered by Kern Tec – play a ‘pivotal’ role in transforming the food industry towards healthier and more sustainable products at affordable costs.

“Kern Tec’s initiatives pave the way for responsible production and consumption, while also offering enhanced flavour possibilities,” ​said Erich Sieber, PeakBridge co-founder and general partner.