KAFFE BUENO, a biorefinery for spent coffee grounds. An interview with Alejandro Franco, Denmark

The following interview with Alejandro Franco, one of the co-founders of "Kaffe Bueno", Denmark, took place in October 2022. "Kaffe Bueno" was the first company that upscaled spent coffee grounds to coffee oil and KAFFIBRE™; but now the company has bigger plans...

Hello Alejandro, thanks for taking the time to speak with us today! As I'm sitting far away from you, I would like to start with the following question: Your company, Kaffe Bueno is located in Copenhagen, Denmark, and on your website it's written that you use spent coffee grounds "as a platform to produce ingredients for personal care, nutraceuticals and functional foods & beverages"; how do I have to imagine a biorefinery for spent coffee grounds that, as you told me, will be fully operating in about May 2023?

Well, I would say it depends on your imagination. It's a production plant with a lot of machines where coffee grounds come in, and we take them through different downstream processes to break them down into their composing molecules. And then we make ingredients out of those molecules.

Until your biorefinery is fully running, I assume, you are collaborating with external partners?

Yes! For the last couple of years we have been outsourcing, but we also have our pilot plant here in Copenhagen at Alfa Laval Innovation House, where we have been developing all the processes. Last year we got a 2.5 million€ grant from the European Commission to build the refinery, so now we are in the process of building it, and May 2023 is our goal to start our own production.

As far as I know, none of the three co-founders of Kaffe Bueno have a background in chemistry, chemical engineering, or anything similar. And now you are building a biorefinery?

‍I mean, the science and information is available to anybody who wants to look for it. You only have to be curious; and that's what we are, we don't see the lack of a diploma in science or a scientific background as a barrier. We started reading research papers and using science as a tool to solve problems, rather than starting in the lab for the love of science. Our approach is to understand the big picture of the coffee value chain and its huge volume of waste and by-products. There's a lot of bioactive molecules within the coffee by-products.

After googling and reading and googling and reading again and again, we started thinking of different ways to take advantage of those unused chemical compounds. But, for sure, over time we collaborated with specific institutions, for instance to establish proof of concepts like lipid extraction, we collaborated with technological institutes and universities. We hired our first bioprocess engineer only last year.

Did any of you at least have experience in coffee before?

Yes, we did. Growing up in Colombia, coffee was always a big part of our culture and heritage. And, in the beginning of Kaffe Bueno, we worked on directly trading with coffee farmers in Colombia and bringing their coffee to Denmark for Danish businesses. We did this during the day, as a way to generate revenue, while during the night we figured out what was the best way to upcycle coffee grounds.

Though before that, we didn’t have any experience with coffee. We had studied international business.

I’m actually not surprised to hear that. I have noticed that it's not usually “coffee people” who are upscaling by-products, it's people who've never had to do anything with coffee but obviously see opportunities. Are the "coffee people" focused too much on growing, roasting and brewing?

Totally! With roasters for example, everyone is more concerned with roasting their beans in a way that they become suitable to brew a tasty beverage. They don't look beyond the roasted and extracted bean, it's not part of the concept of roasting. They just look at the bean as something necessary to get a cup of coffee. Kaffe Bueno, on the other hand, is neither a roaster nor a coffee shop, we see the potential of what others perceive as waste that's left over during the process which leads to a cup of coffee. Maybe you have to be an outsider to see this.

Ok, let's talk about these "outsiders". To establish a biorefinery, a Research and Development department, pay the staff etc. you need money. You mentioned the grant from the EU. But this might not be enough? Or is it?

No, it certainly is not. We have different revenue streams. We have a business background and we know that a business needs money. Without money, we cannot do research and follow our vision. For that, as mentioned before, we initially started importing green coffee from Colombia. But of course, this was not enough.

We founded Kaffe Bueno in 2016, then in 2017 we got some grants, and then another one for proof of concept. In 2019 we started producing our coffee oil by subcontracting, and we started making some revenue. In 2020, we got an investment from a venture capital firm and struck a global distribution agreement with industry leader Givaudan. From then on, we have been boosting the growth through the investment and sales revenue. In 2021 we got the grant from the European Innovation Council. Now we are raising our “Series A” round for further growth, commercialization, and R&D.

That sounds great, one grant after the other, but I'm sure it's not as easy as it sounds to get these grants.

Oh no, no, no, it's not easy at all, it's quite difficult. First you must demonstrate your value before you can expect anything. And, not to forget, although we received these grants, we only started paying salaries to ourselves in 2020. For almost four years we all worked without any income. It wasn't an easy time for us.

But now your business is picking up. What do you think: how many biorefineries extracting chemical compounds from spent coffee grounds are needed to have an impact on the reduction of coffee waste and its greenhouse gas emissions? So far you are the first and only one doing this, but one refinery will not be enough.

Of course not. Our plan is to have many biorefineries around the world. As you know, the spent coffee grounds can only be collected within a certain radius. For that we simply need more refineries, but how many refineries? I don't have a straight answer for you. But with more than 10 million tons of coffee consumed in 2022, man, there's a lot of work to do! So we definitely will need a lot more refineries, a lot more!

Increasing the value of spent coffee grounds by finding more applications of the molecules from this coffee waste also means that we can indirectly affect the prices paid to farmers for their coffee in a positive way. The next step for us could be investments in farms to help them with reducing their greenhouse gasses directly. But this will take some time.

I asked this question because we really have to look at the scale. Upscaling 500 or 1000 tons of spent coffee grounds is good, for sure, but as we know, it's not good enough.

Right. Our flagship biorefinery, our R&D and headquarter is in Copenhagen. As we increase the demand of certain molecules and tap into high volume applications, we can make joint ventures with larger companies to establish larger biorefineries located closer to them to meet their volume needs. This will allow us to help replace the synthetics and petrochemicals in everyday products like cosmetics, nutraceuticals, functional foods etc. Besides the fact how much spent coffee grounds we can collect and process, we hope to help change the perception of coffee in general. Instead of people looking at it as being just a beverage, we have to explain to them that a cup of coffee is just a fraction of a plant with a much greater potential.

And especially in the spent coffee grounds there is so much more potential!

Absolutely! In our refinery we basically refine them. That means we break down all the molecules and then refine them so that they suit certain applications. We are focusing on some particular markets like cosmetics, nutraceuticals, and food-and-beverage. This is where we specialize and where we see the highest potential to not only unlock coffee’s true potential, but to increase its value as much as possible. On the other hand there's many other markets that are completely different, and that do not need as much refinement. Think about pellets, briquets or compost made from spent coffee grounds. But the compost market, for example, needs to evolve. Right now it is still in its very early days, and selling it to add a bit to someone's garden doesn’t help. To have an impact, it is necessary to industrialize the production of compost or fertilizer. It has to be standardized and brought to a scale to be applicable in agriculture. That's the only way to go.

To sell your refined products you need a market, you need companies buying them. You mentioned the health, wellness and food industry. How do you convince them to buy your products?

We do not start with R&D. We start with the market. We don't look at what we have and say: "How can we sell this?" What we do is look at the markets of interest, try to understand their pains. We then go back to the lab and look at how we can solve their problems. When we approach a potential customer, we know that we are actually addressing needs and pains that this company has, so it's not really about convincing. They can test our solutions, we receive feedback, and if our product isn't working we can alter it.

I see.

For example, a few weeks ago we started pre-launching a campaign for new ingredients for the cosmetics industry. These ingredients were all developed with this mindset. I mean, I'm talking everyday with companies, I just had one before we started our talk. One of these people said that not even big players in the industry would have such a pipeline that addresses specific market needs the way we are, so I feel like we're doing something right.

One of your products is coffee oil. You claim it can be used as an ingredient for both the health and wellness and food industries. But aren't you confronted with very different regulations?

Yes, the oil is food grade and good for consumption, and at the same time it's suitable for cosmetics. But you are right, the regulations are different, and way more complex for food than for cosmetics. For food products you will have to go through heavy processes for certification.

Did you get your coffee oil approved by EFSA, the European Food Safety Authority, as a traditional or a novel food ingredient, respectively?

It took us over two years to prove to the EFSA that none of our ingredients require novel food categorization. Our KAFFOIL™ (a lipid extract), which is extracted from the spent coffee grounds, and KAFFIBRE™ (our defatted coffee fibers) that we make from the residues of this process, are all part of the coffee bean. And roasted coffee beans are not only extracted to get a beverage, they are also consumed for instance covered with chocolate or ground as ingredients in confectionery etc. So, there is no problem consuming the whole roasted bean; it has been done in many places of the world for a long time. So, it's a traditional consumption.

Thanks to Kaffe Bueno’s process with the EFSA, now there is an official statement acknowledging that defatted spent coffee grounds are safe for human consumption.

I asked this question because more and more biorefineries are being established for all kinds of food products. Organic material is treated with enzymes, bacteria, fungi etc. The question being: is the final product just a modification of the original material, or is it a new product due to molecular or structural changes resulting from that treatment?

It depends on whether chemical changes in the structure of the molecule have taken place or not. If not, it's not novel, provided there's a significant traditional consumption in the EU. That is how the regulation is built. In our case there are chemical changes happening throughout the roasting process, but the final outcome of our treatment is not different from what is found in the coffee beans after roasting.

Let's say you extract a protein or polyphenols and you don't change the chemical structure, would this cause a problem for you?

Yes and no, it depends. It depends on what you're extracting and how you're extracting, because if it's considered a selective extraction, then some other regulations come into play. For example, if you're going for, let's say, a protein, although the case of protein is actually complicated, you will need to prove that the composition of what you're putting on the market is in line with whatever is registered. And if it's not, then that is the challenge.

One of your first products is coffee flour, but you changed the name from "coffee flour" to "Kaffibre". Is this product approved by EFSA as fiber?

It is approved. After a long process, EFSA finally declared that the defatted coffee grounds are not novel and are safe for consumption. We learned that it is not always about the facts. It's often about the mindset of the regulators. If something is new, well, they believe it's new; but chemically it's not new. Fibers are fibers if you look at the molecular structure. They think we haven't consumed fiber from coffee. But fibers from coffee beans are found in your coffee beverage, at least some of it. So, we consume these fibers with each cup of coffee. Plus, unused roasted coffee grounds are widely used in bakery and confectionery products. It took us two years to convince them. It has not been easy.

Just for clarification: we are talking about insoluble, not soluble fiber?

Right!

Who so far showed interest in your "KAFFIBRE™"?

99% of our "KAFFIBRE™" we sell to personal care companies. In the food sector sales are only starting to take off, most of what we do sell is in Italy. Coffee is a big part of Italian culture. They are not afraid of putting it in sweet and savoury foods.

And those personal care companies use your coffee fiber as...?

As an exfoliator.

I see. But you have to be price competitive.

Sure. In the beginning we were competing with microbeads, which were used for exfoliators, until they were banned. Now we are competing with exfoliators that are natural, like ours, but small companies in this sector often make a big mistake. They think that just because their product is sustainable that would be enough to be successful, but they ask for crazy prices and they never are competitive. This contradicts the whole sustainable narrative. If you want to be impactful you have to produce large volumes for an acceptable price. For that reason, sustainability is for us an expectation rather than a USP ("Unique Selling Proposition ''). What you need to do is compete in terms of efficacy and price, and that's exactly what we are doing.

On the other hand, it is in the food market where price matters most. People are willing to pay more for their skincare products than for food. The food business is about volumes, and it is much more price sensitive than personal care.

Talking about price: Do you pay for your spent coffee grounds?

It depends on the company. Yes and no. Waste or by-products are not yet seen as a source of income.

Spent coffee grounds contaminate quickly. For that: how clean do spent coffee grounds need to be for them to be viable for your refinery?

This is a challenge. That's why what we are doing is quite difficult. The preservation step is key, because in Europe you are not allowed to decontaminate a raw material if you want to use it as a food ingredient, the raw material must be uncontaminated. We solved this challenge by developing some IP's. But still, we have to run microbiological tests as soon as the coffee grounds arrive and in different steps throughout the whole process. The spent coffee grounds as well as our refined products have to be perfectly clean, meaning free of pathogenic bacteria.

I assume collecting spent coffee grounds from Coffee shops or restaurants doesn't make sense for you.

Correct! We do not collect from coffee shops or other small businesses. We focus on high volume suppliers.

Do you think the oil, the fibers and all the compounds you can extract from the spent coffee grounds will help the food, health and cosmetic industry in their shift to use more natural ingredients?

Yes, I am convinced of it. With or without spent coffee products, there is already a transition towards natural ingredients, and I believe that coffee can play a role in accelerating this transition. The big problem with natural ingredients at the moment is that they hardly can compete in performance or price with synthetics and petrochemicals. And this, as mentioned before, is something we try to solve. We will focus on making these natural ingredients high performing, even better than synthetics, and at the same time price competitive. In the early stages, a premium price is unavoidable. However, as we grow and reach certain scale milestones, we can increasingly make our prices more competitive as the manufacturing price as our costs will drop. This is in large part why we focus on applications where scientifically-proven performance directly substantiates premium prices. At the same time, these are the toughest markets to penetrate, but in my opinion, it’s worth it. Slowly but surely, we are demonstrating our coffee-derived molecules can substitute for unsustainable synthetics and petrochemicals, hence helping accelerate the transition to natural ingredients.

A big roadblock in selling upcycled coffee by-products is simply the word "coffee". If people hear something like "Cascara, the dried coffee cherry" or "coffee mucilage extract", the first question will be "Does it taste like coffee?" How do you deal with that situation?

Trust me, this is one of the most difficult and annoying problems that we face, because it's all about perception. Coffee is so ingrained in people's daily lives that they cannot think of it as something else than the beverage. That's why we focus on scientific proof of the efficacy and performance of the product, so that we can show the industry: please forget about the word “coffee”, you should use our products because they are good, and because you can replace some of your non-natural ingredients with them.

Maybe best is to not mention the word at all?

That's the thing. Many people, many companies would buy our ingredients because it is from an upcycled coffee by-product. But a lot of personal care companies don't want to have any coffee smell. This has been another barrier for us, but fortunately we have fixed it now. I mean, it's kind of a paradox: on one hand they want these ingredients that we extract from spent coffee grounds, but on the other hand it should not smell or taste like coffee. But I understand that cosmetic companies are very, very picky, especially when it comes to fragrances.

Despite this "paradox" you have just had a big success with Nivea's new face cream that contains your KAFFOIL™. The thing is, it's not just an ingredient. The label says: made with "Oil from recycled coffee"! This must be very motivating?

Seeing one of our ingredients in a product from the most used brand in Europe is a big step to changing the world’s perception of coffee – not as a beverage but as a sustainable health or "youth" elixir. It is humbling and motivating to know to date our ingredients are found in small and large brands across 15 countries. This is just the beginning.

Alejandro, I wish you all the best for Kaffe Bueno's future! Thank you so much for your time and for sharing your expertise and experiences with us!