The sweetener for Delacombe's Ferndale Confectionery, in regional Victoria, is a $400,000 modernisation grant from the federal government.

The family business will put the money towards building a third manufacturing facility for new products, and an expanded warehouse.

It's expected there'll be at least 10 new jobs created from the upgrade.

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General manager Leigh Edward said the company is on a "very aggressive growth path" - since introducing the marshmallow lines in 2017, he said the group's revenue had grown by 70 per cent.

"We'll be expanding our capabilities for our marshmallow production, which will include new and innovative products never seen before in the Australian market - we're installing coating technology, so irresistible marshmallows coated in various ingredients," he said.

"The overall project, just the capital itself, is around a $2 million investment by the business, this grant will contribute towards that."

Last year, several Ballarat companies received grants from the federal Manufacturing Modernisation Fund - applicants are selected by an independent industry panel, with money to be spent within two years.

Victorian Senator Sarah Henderson said the grants encourage investment, and improve the skills of workers.

"By encouraging businesses to enhance their operations through investment in cutting-edge technologies we're also supporting them to create new job opportunities, boost economic growth and build a highly skilled manufacturing workforce," she said in a statement.

For Ferndale, it'll reinforce the commitment to Ballarat, Mr Edward said.

"The business has already got a 26 year history here in Ballarat, we opened our first site in '95, now as a second generation family business, we love Ballarat and everything it has to offer, including the space that's available to expand, the pool of outstanding candidates we can employ, and proximity to Melbourne," he said.

"We have no reason to ever want to uproot and leave, we're a Ballarat family, we beat the Ballarat drum pretty hard."