“The beloved world of chocolate is facing a seismic shift as climate change and environmental pressures make traditional cocoa production increasingly unsustainable. Cocoa prices are soaring, and the future of this key ingredient looks uncertain. Major players in the chocolate industry are pressed to find innovative cacao alternatives, and consumers may soon experience chocolate made from entirely new ingredients.” (Forward Fooding)
The KAWA PROJECT, USA, is one of the many startups that are trying to create cocoa substitutes, be it with or without fermentation. But the KAWA PROJECT is so far the only one that uses spent coffee grounds as their raw material. Here´s a talk that I had with founder Aaron Feigelman:
Hello Aaron, great to talk to you today! When I stumbled over the Kawa Project at the end of 2023, you and your business partner Richard Shore, who is a former lawyer and an experienced businessman, wanted to extract oil from spent coffee grounds. Since then, you’ve changed gears. What was the reason for this change?
The reason why we changed gears was mainly because of two things. First of all, the applications that we found for the oils represent hundreds of millions of dollars of opportunity, but when the value of the oil is quite low, you can only do this from a production standpoint at a very, very large scale to make the economics make sense. But we couldn't find the right partners on the investment and manufacturing side to do that.
We had some companies that actually wanted to buy tons and tons of oil a couple of years ago, but we couldn't figure out how to execute that. And then also, let's not forget, we were generating all the solids as residue that we didn't have a good use for at that time. From a sustainability standpoint it's kind of a waste of energy resources to do all this transportation, extraction, all this work to just then throw away a lot of the resultant material in the form of powdered solids.
Here in the United States, it's not easy to build a business with investors unless you can convincingly pitch that it is a multi-billion-dollar opportunity. It's kind of how things work here. Everyone wants to invest in things that can be massive.
Monetizing just the oil alone will not be that massive. However, finding a good use case for the residues could be a good deal, because of just how much is produced.
We finally did some pilot projects with some big confectionary companies, and we found that there were really strong applications in the chocolate market. That's when we had our wake-up moment. Targeting the cocoa market is fascinating because it's such a big market. Our timing was awesome, because now the price of cocoa is shooting up so it couldn't have been a better decision for our team to put the oil aside and focus on the powder.
So, what did you do with that residue?
We started thinking about taking the powder and further fermenting it by using microorganisms, because that process allows you to generate additional cocoa-like flavours. We dug deeper into that, and eventually we were able to obtain some really nice patents on that process; one is pending, and one is already accepted. Due to the different and broad patents that we were able to obtain on this fermentation process we now have lots of opportunities and believe we can defensibly own the cocoa market as it relates to work with spent coffee grounds.
About a year ago we raised some money from AgFunder and participated in the Space-F program in Thailand. We decided to invest that money into further developing the powder.
Which cocoa market segment are you targeting specifically?
We are specifically looking at bakeries, confectionary applications and some beverages.
Like with coffee, there have been a number of crises in the cocoa commodity market, but after a short period of time the market recovered. This time however, it might be a bit different due to the complexity of the crisis, with factors like plant diseases, aging trees, under-investments in the cocoa sector especially on farm level, the lingering impact of inflation etc.
True. In fact, we don't know what will happen. Maybe farmers are ripping out their cocoa trees, planting more lucrative cash crops. The farmers are the ones who always are at the tail of the profit chain.
I imagine that farmers in other countries like, Brazil for example, they will start farming cocoa soon because of the opportunity to make some good money. I don't think we'll ever see cocoa as cheap as it was. We also don't know yet the real impact of climate change on cocoa production, which most likely will have the same impacts, be it in Western Africa, Brazil or elsewhere.
Thanks to the fact that more and more people are realizing that climate change in fact is real, we are now in a general and global phase of innovation, including finding substitutes for cocoa…
Totally! As somebody who's trying to do this, as somebody who's trying to create an alternative or a substitute, nothing is more convincing as a pitch to a customer than a price getting very expensive. That's the moment where you better get creative and come up with something new.
There are a number of spent coffee grounds upcycling companies like Kaffe Bueno and Connecting Grounds in Denmark, Eco Bean in Poland, Caffe Inc in The Netherlands etc. Are any of them doing what you are doing?
I know about all these companies. Most are focused on making chemicals for the cosmetics industry, dyes, and the like. To my knowledge we are the only ones focusing on a cocoa substitute. We are certainly the only ones in the United States working on this.
Let's have a closer look at what you exactly are doing; for example, where do you source your spent coffee grounds and how do you process them?
We work with our large coffee brewing partners, which makes the collection so much easier.
The interesting part is actually our fermentation step. Over time we learned that there are similar flavour compounds in cocoa and coffee; there are some overlapping notes. Our objective is to extract those notes that aren't similar, and keep the ones that are. That's our goal. The only reason why we ferment further is because we want to add flavour notes that aren't in the coffee.
Let me recap: you know how you can produce and adapt your cocoa substitute, you have filed some patents, but you are not yet in production? Do I have this right?
We have already manufactured a couple of thousand pounds with somebody who might become a manufacturing partner, and we are doing pilot runs with potential customers. We do have the supply chain in the United States to actually start producing.
What are your next steps?
Right now, we're continuing to pilot with these various cocoa buying companies – both big and small.
And of course, we´re continuing to raise money.
Aaron, I wish the KAWA PROJECT the best of luck on its journey!
