Xylitol has become a popular sugar reduction solution for confectionery in Mexico. However, it currently costs roughly five to six times as much as regular sugar. This is a major bottleneck to its large-scale application in the food industry.
Most companies that have successfully scaled xylitol for food applications typically rely on chemical hydrogenation. But with rising clean-label demands, various startups are venturing into fermentation-derived xylitol.
A startup needs to prove four things to the procurement teams to win large-scale adoption: consistent food-grade purity (like Non-GMO), competitive cost, a lower carbon footprint, and a stable supply of biomass.
That’s precisely the bet Mexico-based food-tech startup Creative Food Labs is making. The startup has promised investors it can produce fermentation-derived xylitol at 50% of the current market price. It’s already showing early signs of progress: moving from flasks to 120-liter bioreactors, the startup is targeting 500 liters in the coming years.
We sat down with Javier Larragoiti, Founder of Creative Food Labs, to find out exactly how they’re doing it. This article contains notable highlights from our entire conversation.
Also Read:
This interview is part of our exclusive Scouted By GreyB series. Here, we speak with the founders of innovative startups to understand how their solutions address critical industry challenges and help ensure compliance with industry and government regulations. (Know more about startups scouted by GreyB!)
“We believe we can make it at least 50% cheaper than current xylitol, and that would open up applications far beyond gum and oral-care products, where only a small percentage is used.”
– Javier Larragoiti
Javier Larragoiti is a chemical and biochemical engineer, entrepreneur, and researcher with an MSc in Biochemical Engineering from UCL and a Bachelor’s in Chemical Engineering from Universidad Iberoamericana, Ciudad de México.
Before founding Creative Food Labs, Larragoiti worked across biotechnology, chemical engineering, and R&D roles at organizations including Universidad Iberoamericana, Harvard University, BASF, and Unilever. His early research focused on developing biotechnological processes to produce chemicals from organic residues, including xylitol from corncob.
His work has earned recognition through programs and awards such as MIT Innovators Under 35, Santander X 100, and YLAI 2023, as well as scholarships from CONACyT-SENER, Roberto Rocca, and Ibero. Through Creative Food Labs, he is working at the intersection of food innovation, waste valorization, and healthier sugar alternatives. has secured backing from the European Innovation Authority.
Upcycling agricultural waste into a sugar alternative
Creative Food Labs is a Mexico-based food tech startup that upcycles agricultural waste into ingredients for the food industry. Its first focus is xylitol, a sugar substitute commonly used in gum and toothpaste, but one that the company believes has much wider potential in food. By using fermentation to convert waste streams like corn cobs into xylitol, Creative Food Labs is building a more sustainable and potentially lower-cost production model. The company is now also developing a second process based on sugar cane bagasse, which could help it expand manufacturing beyond Mexico and into larger sugar cane-producing markets such as Brazil.
What is Creative Food Labs building, and why did you choose xylitol first?
We upcycle agricultural waste into ingredients for the food industry. We have a broader roadmap of ingredients we want to make, but right now we are focused on one product: xylitol. It is a sugar substitute that people usually associate with chewing gum and toothpaste, but we see a much bigger opportunity for it in food.
We chose xylitol because, unlike many other sweeteners, it behaves a lot like sugar. It has roughly the same sweetness level, and that makes it especially interesting in markets where people are used to the taste and mouthfeel of sugar. In Mexico, that matters. People want sweetness that feels familiar, and xylitol gives us a better chance of replacing sugar without changing the eating experience too much.
How does your technology turn agricultural waste into xylitol?
Our process starts with agricultural waste. We have always worked with corn cobs, which are what remain after the kernels are removed. We convert that material into xylitol through fermentation rather than the conventional chemical route. That has been our main production method since the beginning.
This year, we returned to the lab to develop a new process using sugar cane bagasse instead of corn cobs. That is exciting for us because it opens the door to producing in other parts of Mexico and in other Latin American countries where sugar cane is more abundant. It is not just about changing the feedstock. It also means selecting a new microorganism and building a new process around it.
Where does xylitol perform better than other sugar alternatives?
When you choose a sweetener, you have to be honest about where it works and where it does not. Xylitol is not the best option for beverages. If you are making a diet soda, high-intensity sweeteners like stevia, sucralose, or monk fruit make more sense because a tiny amount can sweeten a huge volume.
Xylitol is much more interesting in solid products. In cakes, pastries, candies, and gelled desserts, you need more than sweetness. You need bulk, texture, sponging, and heat behavior. Xylitol is much closer to sugar in those functions. It also caramelizes, which helps with color and sensory familiarity. That is where we think it can really make a difference.
If xylitol is so functional, why has it remained a niche ingredient?
The main reason is cost. Xylitol has about the same sweetness as sugar, so you use it in a one-to-one ratio. But today it costs roughly five to six times more than sugar. That makes it too expensive for most mainstream food applications.
That is exactly why we built this company. Our promise to investors and customers is that if we can scale our fermentation process, we can produce xylitol much more cheaply than the conventional route. We believe we can make it at least 50% cheaper than current xylitol, and that would open up applications far beyond gum and oral-care products, where only a small percentage is used.
What have you learned about scaling fermentation for this product?
Scaling has been the biggest challenge. We started in flasks, then moved to a half-liter bioreactor, then 14 liters, and now we are working at 120 liters. Every time we move to a bigger system, a new problem appears. There is no version of scale-up where you solve everything once and then just repeat it.
Right now, foaming is one of our biggest issues. We create so much foam in the bioreactor that it can overflow and carry the product out with it. We tried antifoaming agents, but too much of that affects yeast productivity. So we designed a mechanical solution with metal strips attached near the impeller to keep breaking the foam continuously. That has helped, but we know the next scale-up will likely bring a different issue.
What other process bottlenecks have you had to overcome?
Fermentation is only one part of the process. After that, we remove the yeast by centrifugation, then clean up byproducts with activated carbon columns, and finally evaporate and crystallize the xylitol. Each of those stages can become the bottleneck during scale-up.
At one point, crystallization was the problem because we were not getting the granule size we needed. So the challenge is never just one thing. It can move from fermentation to separation to crystallization. What we have learned is to take smaller steps. It is slower than I imagined, but it gives us more control and lets us understand what needs to be fixed before the next jump.
How are you preparing the company for larger-scale production?
We are trying to strengthen our team with people who have real fermentation scale-up experience. We are still not a huge company with the budget to bring in every expert full-time, so we are being very deliberate about how we build those capabilities.
We also rely heavily on our board of advisors. When a new issue appears, we need people who have seen similar production problems before and can help us think through them quickly. That combination of internal hiring and external guidance is probably our best defense against the unknowns that always come with scale-up.
How much xylitol are you producing today, and what comes next?
Last year, in 2025, we produced and sold 27 tons of xylitol. This year, we expect to produce and sell 45 tons, and so far, we are on track. The next major step is moving to a 250-liter system, which is where we are headed now.
For us, reaching around 500 liters will be a major proof point. We believe that once we get there, we will have solved enough of the process to move more confidently toward industrial scale. I used to think that getting to pilot meant the hard part was over. Now I know it is more of a hill-by-hill climb.
Could the feedstock supply become a bottleneck as you grow?
At the beginning, yes, that was a real concern. We were working with small farmers, and that is difficult to scale. The supply can be inconsistent, and logistics become expensive very quickly.
To solve that, we partnered with two large food companies after receiving investment. One supplies corn cobs, and the other supplies sugar cane bagasse. We are also located close to them, which helps a lot with logistics. In our view, this is the only realistic way to scale a waste-based process without letting feedstock become the bottleneck.
What should food companies understand about xylitol’s regulatory and usage limits?
Like every sweetener, xylitol has a practical daily limit. If you consume too much, it can have side effects. In xylitol’s case, the main one is a laxative effect, and tolerance can vary by country and by person. That is another reason I do not think it is the right fit for beverages, where people may consume large amounts very quickly.
That said, xylitol also has clear benefits. It is known for dental protection, and it can act as a prebiotic in the right amount. We do tell customers and users to be careful about one specific issue: xylitol is toxic to dogs. So any brand using it needs to be thoughtful about how products are communicated and consumed.
Why was it important for Creative Food Labs to stay non-GMO?
That came directly from the market. Many of our B2B customers are moving toward cleaner labels, and they want ingredients that fit that positioning. Even though the final ingredient may not contain genetically modified material in the usual sense, using a genetically modified microorganism can still create labeling and perception challenges.
So our yeast is adapted, not genetically modified. That helps us stay aligned with what customers are asking for and makes the ingredient easier to position in a market that is increasingly sensitive to how food is made, not just what the final specification says.
Where do you see the company expanding next?
The biggest expansion lever for us right now is feedstock flexibility. By developing a process based on sugar cane bagasse, we are giving ourselves a path into regions where corn is not the best source. That is especially important across Latin America.
Brazil is the obvious example because sugar cane is abundant there. If we can make that process work well, then expansion becomes much more practical. It is not just about selling into new markets. It is about producing closer to where the waste is generated and building the process around local agricultural realities.
Meet our Interviewer – Shabaz Khan, Marketing Manager at GreyB
Shabaz Khan, Marketing Manager
Want to find other scalable startups working on healthcare technologies? Please fill out the form below to contact our experts.
