A novel in situ product removal (ISPR) method that uses microcapsules to ext. inhibitory products from the reaction suspension is introduced into fermn. technol. More specifically, L-phenylalanine (L-phe) was transformed by Saccharomyces cerevisiae to 2-phenylethanol (PEA), which is inhibitory toward the yeast. In order to continuously remove PEA from the vicinity of the cells, the reaction suspension was brought into contact with capsules of 2.2-mm diam. that had a hydrophobic core of di-Bu sebacate and an alginate-based wall. This novel process combines the advantages of a normal in situ extn. process (fast mass transfer and simple process set-up) with the benefits of a membrane-based process (redn. of the solvent toxicity and avoidance of stable emulsions). In particular, the microbial cells are shielded from the phase toxicity of the org. solvent by a hydrogel layer surrounding the org. core. By placing the microcapsules into the fermenter, the final overall concn. of PEA in a fed-batch culture was increased from 3.8 to 5.6 g/L because a part of the inhibitory product dissolved in the di-Bu sebacate core. In another fermn. expt., the capsules were placed in a fluidized bed that was connected via a loop to the fermenter. In addn., the fluidized bed was connected via a second loop to a back-extractor to regenerate the capsules. By alternating the extn. and back-extn. cycles, it was possible to limit the PEA concn. of the fed-batch culture in the fermenter to 2.4 g/L while producing important quantities of PEA that accumulated in an external reservoir. [on SciFinder (R)]