US government pressure to remove petrochemical dyes from the food industry is driving investment into precision fermented alternatives.
In 2025, the US Food and Drug Administration (FDA) announced new measures to phase out petroleum-based food dyes.
Ever since, investments have flowed into precision fermented food dye startups across the US and Europe.
By December 2025, Denmark’s Chromologics secured $8 million for its biobased red, while US startup Michroma partnered with Korean giant CJ CheilJedang in September to set up multi-national production capacity.
Wider consumer scepticism towards synthetic additives and supply chain disruptions are set to lock in demand for the biobased dye trend longer term.
Here is how precision fermented food dye became the biotech sector of the moment.
Voluntary phase-out
The $3.8 billion global food colouring market is currently dominated by petrochemical products.
However, natural colourings have been drawing significant investments thanks to a new initiative from the US FDA last year.
The US FDA has requested that the food industry voluntarily eliminate petroleum-based dyes, promising to establish national phase-out timelines for companies.
The announcement did not amount to an enforceable ban on petroleum dyes. Instead, the FDA head Robert F. Kennedy has described the initiative as “an understanding” with industry.
Nonetheless, the FDA’s stance has already shaken up the food and biotech industries, drawing investment into biobased startups that offer high-performing biobased alternatives to synthetic food dyes.
Better dyes with biotech
One of the food companies adjusting to the US FDA’s anti-synthetics crusade is Mars and its iconic confectionery brand M&M’s.
Following the phase-out announcement, the company said it would be pulling blue and brown sweets from its product. Its decision to remove, rather than replace, the blue and brown reflects the difficulties companies currently face in substituting synthetic dyes.
Switching to existing natural dyes is not so simple. Plants like beetroot and carrot contain bright pigments but these tend to under-perform on saturation power. In other words, you need to use more of it to get the intense colours that consumers associate with certain food products.
The lower saturating power of conventional natural dyes is driving supply shortfalls. Because natural dyes are often weaker, food companies can need 50 to 100 times more product to achieve the same saturation. Producers are struggling to meet demand as food companies scramble to replace synthetics.
In the case of M&M’s, Mars reported technical and production challenges replicating blue and brown with natural ingredients like spirulina. Apart from issues with weaker colour saturation, natural colours extracted from plants also have a tendency to fade over time or under heating.
Turning up the saturation
Many biobased startups have the tools to solve these problems, offering a new generation of high-performing natural dyes made using precision fermentation.
One of the high-tech natural food dye startups is Michroma, which won the Global Food Tech Award Americas heat announced in San Francisco this year.
Michroma has been solving the problems associated with conventional natural dyes using precision fermentation – a biological manufacturing method that uses microbes to make custom chemicals for you.
Precision fermentation unlocks food dyes that have similar features to synthetic ones but are made entirely from biological ingredients. The process begins by inserting a DNA sequence into microbes. This programmes the microorganism to produce specific molecules.
When the edited microbes are grown inside photobioreactors, they produce large volumes of whatever chemical has been specified by their DNA. The producer can then harvest and process it.
Michroma uses filamentous fungi as its chemical-producing microbe. This organism is genetically programmed to make a red food pigment that is pH and heat-stable as well as durable. According to the company, its red can hit a high saturation with just a fraction of the amount you would need with ordinary natural pigments.
When done right, precision fermentation is a highly sustainable way of manufacturing food ingredients. The raw materials needed in the process are generally cheap and abundant. Microchroma feeds its fungi on agricultural waste, a highly sustainable input.
Because of precision fermentation’s generally low input requirements, large volumes of highly-customised biochemicals can be made with a fraction of the water, land, and processing costs needed by the traditional dye industry, where pigments are extracted from harvested plants or animals.
Seeing red
Red is the most popular food dye in the industry, leading with a 34% global market share.
Unsurprisingly, this is the colour segment where biotech companies have focused their R&D efforts.
Denmark has been a hub of activity when it comes to commercialising biobased reds. Danish precision fermentation startup Chromologics secured €7M ($8M) in November 2026 to commercialise its natural food-grade alternative to synthetic red, Natu.Red.
Chromologics is further away from commercialisation than many other biobased dye startups that have attracted funding over the past year. It still needs regulatory approval from both the European Food Safety Authority (EFSA) and the US FDA.
The company will also need to build out high-capacity fermentation facilities to scale up production – something it says that the November 2026 capital injection will support.
More established Danish names are trying to tap the US market too. Oterra, founded in 1897, supplies natural dyes to the food industry. It is now in a partnership with Debut, a Californian AI-led biotech company, to develop a fermentation-derived substitute for Red 40 – one of the synthetic dyes that the FDA said it wants to eliminate from the food supply by 2026.
Right now, food companies needing a natural alternative to Red 40 will opt for natural dyes like carmine, derived from crushed beetles and cochineal insects. However, like all conventional natural dyes, chemical differences mean that it doesn’t offer a seamless substitution.
Oterra and Debut are pitching for a red pigment that surpasses both synthetic and natural options, preserving the performance benefits of petrochemical colour in a non-toxic biobased package.
A safer white
Petroleum-based dyes are the target of the US FDA food dye regulations. However, it’s not the only toxic feedstock in the food dye industry coming under regulatory scrutiny.
The metal titanium dioxide has been used to make a popular white dye since the late 18th century. The US FDA still allows food uses but the EU finally banned it in 2022, driving European innovation to find biobased alternatives.
Denmark’s Seprify has been at the forefront of developing alternative white dye feedstocks. In March 2026, Seprify picked up a €13.4m Series A round to scale its plant-based white colouring made from wood pulp.
Seprify’s long-term partnership with the larger firm Oterra played a fundamental part in attracting the capital. The two companies announced in November 2025 that they could start a strategic commercial partnership for marketing Seprify’s titanium-free dye.
Even before the 2025 announcement, Oterra and Seprify had already spent two years jointly testing Seprify’s white colouring in diverse food applications, from plant-based dairy to meat and bakery icings.
Oterra’s established presence as an ingredients supplier enabled the startup to gain a foothold in the food industry even before its Series A. Through the partnerships, Seprify gained access to Oterra’s testing capabilities and market know-how, setting it up for smoother commercialisation.
Pre-scaling supply crunch
Industry demand for vibrant food colours is set to persist. After decades of high-octane synthetic dyes, consumers expect a degree of colour intensity to certain products.
Right now, this insistence on colour is colliding with consumer and regulatory demands for non-toxic additives.
This tension has produced a big gap in the market, where consumer culture and regulations have left food companies scrambling for alternatives before fermented dye firms have had time to scale.
Whether the recent precision fermented dye investments will translate into enough capacity to plug this supply gap remains to be seen.
More regulation, more demand
To really secure scale-up in biobased dyes, more action is needed from the US government.
The investment boom in biobased dyes after the FDA announcement proves the power of government to spur scale-up. Although falling short of a full ban, the pressure it created on industry still managed to unlock a new market for precision fermentation startups and attract investors to the sector.
Still, the biobased industry needs more regulatory certainty. Although many companies have pledged synthetic dye phase-outs, others have not. The lesson here is that enforceable and blanket laws restricting petrochemicals are vital for biobased products to break into the mainstream.
Fortunately for the precision fermented sector, however, demand for biobased dyes is not just coming from the threat of regulation. There is an even longer-term demand-boosting narrative at play in the form of climate change.
Precision fermented food dyes are set to become more important as climate change makes natural ingredients harder to source. Already, the food industry has begun to register interest in precision fermented coffee, chocolate, and olive oil – all segments where harvests are being hit by changing weather patterns.
Regardless of regulation, food companies that invest in fermented ingredients today are investing in their future, mitigating the supply risks that come with a more volatile climate.
The post The fermented food dye funding spree appeared first on World Bio Market Insights.
