In a previous post, I wrote about how grants can help provide incentives for innovation. This post is a follow-up showing insights into how some companies are doing just that. It's all about leveraging investment and finding new markets.
There are numerous government programs available for businesses to innovate. Perhaps you're questioning the rationale behind government grants and even suspicious of "free money". You wouldn’t be alone. It is well known that governments aren’t high on the “things I trust” list of most people.
However, it makes good economic sense for governments to support business innovation, because as businesses grow, so too does the economy. Stimulating growth in export markets is important, because that brings more money into the Australian economy.
The federal and state governments offer grants to eligible applicants to motivate business growth. Not all grants are focused on export markets. Some programs target our local communities. One such example is the Victorian Salt Reduction Innovation Grants (VSRIG), being promoted on this Building Healthier Food platform, and supported by Food Innovation Australia and VicHealth.
From the businesses that have already engaged in the VSRIG program, the results are promising. Whilst it is too early to reveal the identity of the businesses and the commercially sensitive details of projects, I can provide insights on the commercial benefits.
Business are exploring new snack markets and more convenient channels to customers, reformulating existing products and creating new products for new emerging markets. On average, projects are expected to grow revenue by $400,000 from a $50,000-$125,000 development cost. The grant funds ($25,000) provided by VicHealth and FIAL offset the development cost from 20% to 50%, which is a good discount on top of an early-mover advantage. With average costs of development and production removed, this gives an ROI of about 20%.
The purpose of the VSRIG grants are to reduce the amount of salt being consumed by helping food manufacturers reduce the amount of salt in their products. Whilst salt intake is a personal dietary decision, many experts indicate that on average, salt intake is greater than recommended. We also know that the 'health conscious consumer' is emerging as a mainstream market. This is observed not only in Australia with major retailers focusing on health, but also in export markets. There is no doubt that consumers are seeking healthier alternatives. This is good news for food manufactures who are interested in growing their markets, because there are funds and experts readily available to help.
For success from these types of grants there are two important considerations. Firstly, seeking a specific market opportunity (or customer) and secondly, engage the right consultant or expertise to help. Whilst reducing salt can help differentiate a product and access new customers, it must be done with consideration to product quality and safety. Historically, salt was added to a food to combat microbiological activity and increase shelf-life. But as we discover more about healthy eating and alternative preservation options, a balance can be found, where flavour doesn't need to be compromised.
The Building Healthier Foods platform not only provides access to the funds, but can also make connection to expert to ensure a quick and effective development. There are still some funds available for businesses with a Victorian footprint to support development of lower salt products. To learn more about how you can access the Salt Reduction grant https://bhf.news/blog
Angus Crossan is currently the Leader of The FIAL Matrix and Innovation Manager at Food Innovation Australia Limited. The FIAL Matrix is a new collaborative portal system supporting innovation in food businesses in Australia. Angus is also an experienced start-up venture builder, innovation trainer, and investor in agri-food research and innovation. linkedin.com/in/anguscrossan