The support from HIE will enable Tods of Orkney to invest in the equipment needed for a big increase in oatcake production.
Made in Stromness to a traditional recipe, and sold under the Stockan & Gardens label, the oatcakes are sold by supermarkets, delicatessens and other food outlets throughout the UK.
An investment of around £425,000 in new equipment is planned, with HIE contributing £105,000 towards the total cost.
HIE development manager Maureen Shearer said: "The business is an important employer in Stromness, with a hugely loyal workforce, and will be well placed to increase production as a result of this expansion.
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"We welcome their ambition to increase sales throughout the UK, where there's potentially a massive market for such high-quality, traditional products."
Tods of Orkney has a 30-strong workforce and is investing in modern equipment to boost the efficiency of the production and packing systems at its oatcake bakery in Stromness.
Director Eddie Wight said: "It will always be a hands-on process and we're hoping that increasing production will help us create more employment as well.
"An investment of this scale reflects our confidence in the product, in the people working for us, and in our long-term commitment to Orkney.
"Despite the economic conditions, we have remained constantly busy. It's a great product and this expansion in activity will put us in a great position to explore new markets as well as introduce some new exciting additions to our range"
The company is keen to encourage customers to use oatcakes in new and imaginative ways. It has produced recipe cards that show how the savoury biscuits, traditionally eaten with cheese, can also be used in dishes such as oatcake quiche and the Scottish pudding cranachan.
Work to install the new equipment, which includes a third packing line for the bakery, is due to begin early in 2010.
(GK/BMcC)
