The food and drink sector has basically been around forever and is a significant contributor to the British economy. According to the Food and Drink Federation, it is the UK’s largest manufacturing sector, contributing £29bn to the economy, accounting for 20% of manufacturing in the country. In its entirety, the food and drink supply chain employs 4.3 million people and contributes £120bn. Not massively surprising, as both food and drink are very useful for staying alive!
Resultantly, there is fierce competition between long established businesses and new start-ups to increase their market share. Combined with the sector’s growing regulatory requirements and changes in consumer behaviour, such as the growing popularity of the vegetarian or vegan lifestyle and the increasing desire for meal replacements, new product development is increasing at an exponential rate. Furthermore, the growing climate crisis has forced companies to adapt other aspects of their operations, such as how their products are packaged or distributed, driving further innovation within the sector.
Due to the nature of the industry, R&D tax credits can be applied to businesses throughout the supply chain. Despite this, it is estimated that up to 65% of eligible SMEs are still not recovering their costs. Why? Because there is significant misunderstanding surrounding what HMRC actually define research and development to be.
Generally, when people think of R&D in the food and drink sector, they picture the development of meal replacements or meat alternatives. Whilst these activities obviously do qualify, eligible R&D in the industry extends much further. A few of the many examples include:
- Improving existing products by enhancing their nutritional value, removing allergens, food dyes and preservatives, or even extending shelf life through changes to a recipe’s formula.
- Overcoming challenges to develop ‘free from’ products.
- Improving production processes by enhancing efficiency, ultimately reducing operating costs and wastage.
- Reducing the carbon footprint of your products and manufacturing processes by developing sustainable packaging, or improving logistical operations through the integration of IT systems.
- Reacting to changes in regulation; ensuring a product tastes the same whilst ensuring it complies with new legislation.
In summary, qualifying R&D is abundant throughout the sector. If you are conducting any of the activities mentioned in this article, or are doing something which is a little different and difficult to achieve, get in touch with one of our team. With a 100% success rate and an average recovery of £70,000 per year for our clients, you know you will be in safe hands and recover everything you are entitled to.