A process is provided for the in-situ extn. of a fermn. product esp. for products which result from the transformation of an amino acid and which are sol. in the fermn. broth. The sol. product is then removed from aq. phase by extn. into an org. phase where the solvent used is encapsulated so that the product can freely permeate the capsule but the microorganism can not. The process envisions that the fermn. broth be circulated to a sep. extractor for the sepn. In this manner not only may a toxic end product be removed from the fermn., but an extractant that is toxic for the microbial population may be employed. Thus, oleic acid was encapsulated in sodium alginate microcapsules which were sterilized and placed in an external extractor. Saccharomyces bayanus was fermented in the presence of L-phenylalanine to produce 2-phenylethanol. The fermentor contents were circulated into the extractor and after 28 h fermn. the 2-phenylethanol concn. in the org. phase was 17.5 g/L while the concn. in the fermn. was 3 g/l, a level which is not inhibitory to the yeast. [on SciFinder (R)]