Nova Scotia company pioneers method of turning used coffee grounds into valuable cocoa alternative

It may not seem like discarded coffee grounds and chocolate have much in common, but a Nova Scotia company has forged an innovative link between the two that is both eco-friendly and profitable.

Quinn Cavanagh is a 27-year-old from Hammonds Plains who took note of massive amounts of spent coffee grounds streaming to local landfills while earning his chemical engineering degree from Dalhousie University. Not only did the level of wasted biomass bother him, it also got him thinking about possible ways to repurpose it as part of a business.

After some research and brainstorming, he landed on the idea of turning the used grounds into food and agriculture alternatives, with a cocoa substitute at the top of his list. Cavanagh then put the concept to the engineering test and has since pioneered Kaffika at his Dartmouth company, RFINE Biomass Solutions. He sees exciting potential for Kaffika as a replacement for cocoa, which is the primary ingredient in chocolate.

Cavanagh touts his product as “the same colour, the same fineness and particle size, and same performance without adding weird new chemical additives. It’s 100 per cent whole food coffee grounds (turned) into a very wonderful alternative for cocoa powder.”

“One side of our business is we’re basically like a specialized waste management company that services large industrial factory beverages and coffee,” Cavanagh said.

“Customers are people that manufacture things like instant coffee or canned and bottled cold coffee beverages that are producing spent coffee grounds at industrial tonnage capacity. So what we do for them is we divert that material from the landfill.

“Working with RFINE gives you the promise that on Day 1 of our service, you will be zero to landfill. We also measure and report through audited third parties the carbon benefit of this diversion that we report back to our customers. In order to manage these contracts and divert 100 per cent of material from landfill, we have to embrace what we (call) the entire value chain. We work as low value as soil amendments. We work with farmers within a 20-kilometre radius from these factories. We provide those high-quality organics that they till into their soil.

“We also make an animal bedding product, as well, specifically for the backyard chicken market. But, really, our primary focus is to manufacture what we call Kaffika, which is a cocoa extender. This is a product that can replace cocoa powder anywhere cocoa powder is used, from bakeries to beverage to confection. It’s a stable cost, stable supply alternative to cocoa, which has gotten very volatile, very expensive, and very, very bad for the environment.”

That volatility is no small factor in his business plan. As recently as 2022, the annual average price for a tonne of cocoa was $3,381, but that basically tripled in 2024 and 2025. At one point in December 2024, the cost for a tonne peaked at $18,457.

The market has since stabilized somewhat, with the current price standing at $8,333 per tonne. But Cavanagh is banking on continued unpredictability as his way to push farther into the marketplace with Kaffika, which he says RFINE can produce and sell for roughly 40 per cent less than the current price for traditional cocoa.

“There’s this big push in the food manufacturing industry right now to identify alternatives,” said Cavanagh, who is the company president and director.

“The outlook for cocoa is very bleak. We work with some of the largest food manufacturing companies in the world that deal with cocoa at the commodity and farm level. And the reality is, the issues that they’re having in growing it are persisting. And with a super El Nino coming in the pipeline, the industry is just a mess.

“So it’s in short supply, and quality has reduced dramatically, as well. It’s all just gotten very volatile. And it’s not just that it’s expensive; it’s sometimes hard to come by. If you’re a local bakery in Nova Scotia, you might not even be able to get enough cocoa powder for your chocolate offerings, let alone at the lowest price. And the price moves around week to week.”

The second pillar of Cavanagh’s endeavour is at the environmental level. He says on his company website “more than 11 million tonnes of spent coffee grounds are generated worldwide annually — that’s 3,000 tractor-trailer loads. If landfilled, that volume creates nearly 9.8 million tonnes of CO2e (carbon dioxide equivalent) emissions.”

“So it’s a couple things,” he said. “One, from avoiding it going to the landfill and doing something better with it, whether it’s soil amendment, animal bedding, or our cocoa extender, we see a 99 per cent greenhouse gas emissions reduction by not having it go to landfill and not having it anaerobically decompose and produce methane. That’s really the key greenhouse gas that we’re avoiding by giving it a second life. Methane is a potent greenhouse gas that’s very harmful for the environment.

“Why the cocoa extender is that much more exciting and sustainable is our customers now use less cocoa. Cocoa is a very carbon-intense ingredient. It’s, again, riddled with not just carbon sustainability issues but ethical challenges, forced labour — you name it. It’s just a dirty, dirty crop and commodity that really needs some alternatives. So we’ve got low-cost, sustainable and ethical alternatives in that regard. ”

Cavanagh first started work on the venture in 2021 while he was still a Dal student and incorporated the company a year later. Since graduating in 2024, he’s been ramping up operations and is pushing forward with patents and approvals.

“It’s going the best it ever has,” he said.

“It’s been a long, hard road of (research and development) and scale-up work. I see this type of business having three key milestones, the first one being supply. Do you have enough of this raw material to justify a business case? That was a big focus from 2022 to, basically, 2024. How can we get enough of this stuff in the quantity, quality and consistency we need to make a food improvement? That’s where we leaned into onboarding these big factories, which we got under our belt.

“Now we have under contract about 75,000 tonnes of material that we’re liable for every year, so that’s 3,500 truckloads every year that are running the roads that we’re responsible for. But that’s wonderful because that was the first key milestone. We have more than enough coffee than we know what to do with, and we can manage it while making money.

“The second milestone is to have a conversion process to take it from its raw form into something more valuable. We now have full-scale industrial manufacturing under global food standards that is ready to go. And then the last milestone is, of course, making sure people actually want to buy that stuff that you can make. It’s one thing to have it and to be able to turn it into something more valuable and hopefully address some issues in the industry, if you will. But it’s more important that people actually start adopting your solution. That’s exactly where we are. So we’re working through all the levels of commercialization, from local bakeries here in Halifax all the way up to some of the largest global commodity companies in the world.”