6 Drivers of R&D – Food & Drink Industry

The food and drink industry is one of the largest contributors to the UK economy which means there is a large R&D budget available too. Companies in this industry are constantly innovating to remain competitive, meet consumer demands and comply with regulations, yet so many do not realise. There are R&D tax credits available from the UK government to be granted to these companies for their R&D activity and we want to raise awareness of the factors that result in qualifying activities.

By using the PESTLE (political, economic, social, technological, legal and environmental) model, we have identified 6 factors that drive R&D in the food and drink manufacturing industry. These factors should help identify R&D activity your business may be involved in:

Brexit has imposed changes across several sectors, the food industry included. Due to the trade barriers it could create, local suppliers may be more cost effective and thus, research into new suppliers or alternative markets to source raw materials from may be necessary. To retain foreign sales, UK companies may also need to develop products that are worth the extra tariffs customers may have to pay which may force them to innovate.

Companies in this industry face a lot of economic pressure to produce high quality goods at a low price. A challenge is created due to the rising cost of raw materials, leading to research into alternative, cheaper ingredients that can be used. A development process is then required to determine what raw materials will provide the same taste and texture.

Consumer demands change constantly and create a need for R&D to produce or adapt products to meet their needs. For example, due to the major increase in travel in recent years, consumers are experiencing new taste sensations which they seek when they have returned home. Research into exotic ingredients and experimentation with flavours is undertaken as a result.

A demand for healthy products has also encouraged R&D activity across food manufacturers to source nutritious ingredients and adapt recipes to contain less harmful ingredients such as fat, salt and sugar. Changes in consumers’ dietary requirements also lead to recipe adaptations such as gluten free versions of products.

To increase efficiency food manufacturers can be driven to invest in R&D activity to advance the technology used in their manufacturing processes. Technology is currently being advanced to lengthen shelf-life and to detect food safety and quality problems sooner to reduce waste. Population growth has also lead to investments in technology to upscale production. Moreover, investments in technology can be encouraged to capture and manage internal and external data. For example, a company can build a bespoke system that allows them to track employee efficiency or customer preferences.

Regulations, such as the 2016 Sugar Tax that imposed extra charges on drinks with high levels of added sugar, drive companies to adapt products to avoid penalties without sacrificing their desired taste, texture and aesthetic. This can involve periods of experimentation and research into alternative ingredients that deliver the desired flavour.

Corporate Social Responsibility (CSR) and ethical sourcing are recent considerations for some companies as consumers and non-governmental organisations expect natural, environmentally-friendly products and for factories to reduce their emissions. As a result, R&D into recyclable packaging and less harmful manufacturing processes are required to stay competitive.

Success Story – Sat Bains

An example of a company who successfully claimed R&D tax credits in the food industry is Sat Bains. Based in Nottingham, this restaurant’s R&D for an aerated chocolate dessert made them eligible for the incentive.  R&D came in the form of experimentation with ingredients, techniques and temperatures, for 9-10 months, to create a dish with the right chocolate, fat content and stability. After working with a team of R&D tax credit specialists they received their entitled funding from HMRC.

We are interested in building relationships with businesses in the food and drink industry to help them successfully claim the funding they are potentially entitled to. With a 95%+ success rate we can almost guarantee it.

To have your eligibility assessed by one of our experts contact us on:

Tel: 01292 388 031

E-Mail: info@amas.biz

Office: 8 Miller Road, Ayr, KA7 2AY

We look forward to hearing from you!