Substituting cocoa: Compound Foods circumvents price hikes as consumers embrace “reimagined” ingredients

Food companies are exploring alternatives to at risk commodities as climate change and supply chain disruptions push food ingredient prices upwards. US-based Compound Foods is one such firm that taps fermentation and upcycling to formulate “drop-in replacements” for coffee and cocoa for use in beverages, confectionery, and baked products.

Food Ingredients First catches up with the company’s CEO and founder, Maricel Saenz, and head of product, Swetha Mahadevan, to understand consumer acceptance of such alternatives and how the innovation navigates the challenges facing traditional cocoa and coffee cultivation.

“We started from a simple but urgent question: how do we future-proof beloved ingredients like coffee and cocoa in the face of climate change, supply chain disruptions, and rising costs? Coffee and cocoa are among the most vulnerable crops in the world, and the system behind them is under a lot of pressure,” says Saenz.

“We saw an opportunity to create sustainable, scalable alternatives that taste great, work seamlessly in existing applications, and offer supply chain resilience for brands.”

The World Bank’s beverage price index increased by 18% in December, following surges in coffee and cocoa prices caused by renewed supply concerns.

Elevated cocoa prices have also hit chocolate giants, and their impacts are expected to affect businesses throughout this year. Meanwhile, coffee supply shortages in key producing countries like Brazil and Vietnam are driving a spike in coffee prices.

Surges in cocoa costs are expected to impact chocolate businesses throughout this year.

Eyeing “beanless” taste and function

Compound Foods’ “beanless” coffee and cocoa ingredient platform is built around “great taste, functionality, and versatility,” Saenz continues. The ingredients are designed to fit within existing manufacturing and product development processes, so brands can innovate without having to reinvent their operations.

Mahadevan agrees that the ingredients are developed as “drop-in replacements” for coffee and cocoa for easy integration in formulations.

“We have a robust flavor base and can tailor profiles, such as acidity, fruitiness, depth, and caffeine levels, to meet specific customer needs.”

“Our beanless coffee is suitable for use in hot and cold beverages, functional drinks, and as a flavor booster in baked goods, ice cream, and confections. Beanless cocoa works well in hot cocoa beverages, baking, and confectionery applications.”

“Reconstructing” roast flavors

Mahadevan tells us that the company leverages traditional fermentation methods, including submerged and solid-state fermentation, to create flavor notes such as “acidity, fruitiness, and nuttiness” in the coffee and cocoa substitutes.

However, replicating the complex flavor profile of coffee without using coffee beans posed challenges.

“The biggest scientific challenge was replicating the multidimensional flavor of coffee — specifically, identifying which key flavor drivers matter most to consumers for an enjoyable experience.”

“Our approach focused on using natural, climate-resilient crops, and upcycled ingredients, combined with controlled roasting and traditional fermentation, to reconstruct the foundational flavors of roast, acidity, bitterness, caramel, and astringency. This required extensive formulation, analytical iteration, and consumer sensory testing,” she explains.

Beyond agricultural constraints

Saenz highlights that the company’s production process is designed to address two of the biggest challenges facing traditional coffee and cocoa: rising costs and environmental impact.

“Because we are not tied to the agricultural cycles of coffee or cocoa, we are able to offer more predictable pricing and reduce the volatility that brands are seeing in their supply chains today.”

Compounds Foods’ ingredient is not tied to the agricultural cycles of coffee or cocoa, allowing it to reduce the supply chain volatility.“We also source our raw materials from multiple upcycled and renewable sources, which gives us even greater flexibility and resilience — helping companies better plan their operations and manage their margins.”

The fermentation-based process also “dramatically” reduces land, water, and resource use compared to conventional farming, he adds.

“By using upcycled ingredients, we also help reduce food waste and make better use of existing resources. Coffee and cocoa are both resource-intensive crops, and their production is highly vulnerable to climate change.”

He believes that “reimagining” how these ingredients are made can help the firm reduce its environmental footprint without compromising on taste or functionality.

“The new normal?”

Saenz says that Compound Foods’ ingredients have received positive early feedback on their taste and performance.

“It has been exciting to see brands immediately envision how they could use our products. As we continue to scale, we expect even more momentum from companies actively looking for sustainable, reliable alternatives to traditional coffee and cocoa.”

Consumer perception is also evolving rapidly, and he observes a growing understanding that “innovation in food is not only inevitable but necessary, especially when it comes to climate resilience, supply chain stability, and long-term food security.”

“Consumers today are more open to trying reimagined foods when they deliver on taste, quality, nutrition, and values like sustainability.”

“Our approach has always been to lead with taste and functionality first. We want people to love the product and feel even better knowing it is also a more sustainable choice. Over time, we believe reimagined foods like ours will not be seen as alternatives, but as part of ‘the new normal,’” he concludes.