Food Manufacturing Is Also R&D: How Traditional Food Manufacturers Turn Production Challenges into R&D Opportunities Insights from Chobani Australia’s Localisation Journey

Introduction

In Australia, research and development (R&D) extends far beyond the high-technology sector, serving as a critical driver of innovation, productivity improvement and risk mitigation across traditional industries, including agriculture and food manufacturing.

To encourage businesses to investigate genuine technical uncertainties, the Australian Government provides a legislated support framework through the R&D Tax Incentive (R&DTI). The programme is broad in scope and substantial in scale: each year, thousands of eligible companies undertaking R&D in Australia receive billions of dollars in funding and tax support—for example, in the 2022–23 income year alone, 12,956 companies claimed a total of A$16.2 billion in R&D expenditure under the programme.

For eligible R&D entities with aggregated turnover below A$20 million, the refundable R&D tax offset is generally calculated as the applicable corporate tax rate plus an 18.5 percentage-point premium—a cash refund that can exceed 40% for qualifying small and medium-sized businesses, subject to the relevant eligibility and control rules.

By offsetting a portion of eligible R&D costs, the R&DTI helps businesses absorb most of the “financial trial-and-error cost” of scientific exploration, encouraging companies at a national level to take on complex challenges involving technical uncertainty.

In practice, however, the primary barrier for many organisations is not a lack of willingness to undertake R&D or awareness of available support, but the difficulty of identifying potentially eligible R&D activities within routine operations.

Companies frequently struggle to determine whether day-to-day manufacturing challenges involve genuine technical uncertainty and, more importantly, how to transform those uncertainties into structured, well-documented R&D activities that can be assessed against the relevant eligibility criteria.

Food manufacturing exemplifies this challenge. Taking Chobani Australia’s localisation journey as a case study, this article examines how food processing challenges can be transformed into structured R&D activities—using scientific methodologies to address technical uncertainty, improve production stability and develop more reliable manufacturing systems.

When Proven Experience Fails: Why New Market Manufacturing Requires a Structured R&D Approach

To consumers, transferring the manufacturing of an established, commercialised food product into a new market may appear straightforward. It may seem intuitive that replicating a proven formulation and production process in a different region should deliver an identical outcome.

In commercial food processing, however, applying an existing manufacturing model to a new market is rarely a matter of simple replication.

Unlike conventional manufacturing sectors that rely heavily on highly standardised synthetic materials, food production is inherently dependent on biological and agricultural inputs.

These raw materials are influenced by regional climate conditions, agricultural practices, production environments and supply-chain characteristics, resulting in different physical and chemical properties across locations. Consequently, applying identical formulations, plant configurations and operating parameters in a new market can lead to unexpected variations in product quality and processing performance.

For established food brands entering new markets, the core challenge is therefore not simply “how to manufacture an existing product”, but rather how to systematically understand the relationship between local raw material characteristics, manufacturing processes and final product quality, and establish a production approach suitable for the new operating environment.

Importantly, the uncertainty created by differences in local raw materials cannot be effectively resolved through experience-based adjustments alone. Instead, overcoming these technical challenges requires a structured scientific approach involving hypothesis formulation, controlled experimentation and systematic validation.

This process of investigation is precisely where research and development creates value in food manufacturing.

Chobani Australia: Bridging Established Knowledge with Localised R&D

Chobani Australia’s localisation journey illustrates a common challenge faced by food manufacturers when adapting established production approaches to new market conditions.

When establishing its production facility in Mulgrave, Victoria, Chobani needed to adapt its existing manufacturing knowledge to an Australian operating environment. While established food production processes may be successfully validated in one market, differences in local raw materials and supply conditions can create new technical uncertainties when applied elsewhere.

In food manufacturing, agricultural inputs are naturally variable. Australian milk differs in its compositional profile and functional characteristics from the US milk that had underpinned Chobani’s proven American production process, meaning established formulations, equipment configurations and process parameters could not simply be transferred—they required further investigation and optimisation to achieve consistent results under local conditions.

Chobani’s product philosophy is built around clean-label principles—simple ingredients and no artificial flavours, colours or preservatives—reflecting the brand’s core commitment to natural production across its range.

More broadly, for food manufacturers operating within clean-label product requirements, understanding the interaction between local raw materials and processing conditions can be critical to achieving consistent product outcomes.

The Australian Government’s published R&DTI case profile highlights Chobani Australia’s use of the incentive to support product development and leverage local milk profiles in its Australian yoghurt production.

From a broader food manufacturing perspective, R&D activities in this area may involve investigating raw material variability, process performance and product-quality consistency to better understand the relationship between manufacturing conditions and final outcomes.

As highlighted by Chobani Australia Managing Director Peter Meek:

How Can Manufacturing Challenges Be Transformed into Structured R&D Questions?

For food manufacturers entering new markets and facing raw material variability, the first step in R&D planning is to identify and define operational uncertainties as structured research questions that can be investigated through a scientific approach.

In situations where established manufacturing processes encounter variations in local raw materials, a structured R&D approach typically requires the identification of several key research elements.

To address this type of R&D question, businesses typically need to examine the relationship between different factors across three interconnected levels:

Through this type of R&D design approach, businesses can transform previously unexplained production variations into structured R&D activities that can be analysed, validated and continuously optimised.

How Can a Structured R&D Approach Reduce Production Uncertainty?

When production outcomes vary across different market environments, businesses cannot rely solely on previous experience to make adjustments. Instead, they need to use a structured R&D approach to gradually understand the key factors influencing product performance and improve production predictability.

For this type of food manufacturing R&D activity, a structured approach typically involves three progressive stages:

Long-Term Value of R&D and Implications for the Food Manufacturing Industry

By transforming production uncertainties into structured R&D activities, businesses gain value beyond one-off product improvements or process adjustments. More importantly, they develop a deeper understanding of the key variables within complex manufacturing systems and a stronger ability to manage their effects on production outcomes.

For Chobani Australia, this type of R&D exploration helped the company further understand the relationship between local raw material characteristics and product quality, contributing to the development of more consistent manufacturing outcomes within a new market environment.

This case also demonstrates that, within food manufacturing industries that rely heavily on agricultural inputs, innovation does not necessarily require the development of entirely new products or technologies.

Much of the value created through R&D comes from understanding the variables within complex production systems and using research to establish more reliable manufacturing approaches.

For manufacturers seeking to enter new markets, optimise existing products or respond to changing supply conditions, transforming operational challenges into structured R&D activities represents an important pathway for strengthening innovation capability.

At the same time, policy mechanisms such as the R&D Tax Incentive can offset a portion of the eligible costs associated with experimental R&D. This can support continued investment in research and help businesses translate research findings into stronger long-term manufacturing performance.