The UK beer market contributes to 16.3% of the whole European market value, second only to Germany. Although many companies in the sector are investing in innovative brewing processes and the development of new products, only a handful are recovering everything available to them through the R&D tax credit incentive.
How is the UK beer market recovering after the pandemic?
It’s safe to say we like our beer! However, as reported to Mintel, Covid-19 heavily impacted beer sales due to the closure of pubs and restaurants. It is estimated the sector will not recover and reach the levels pre Covid-19 until 2024. In addition, the overall consumption of beer in the country is falling – mainly due to the spread of health-conscious attitudes amongst the British population. Consumers are increasingly oriented towards healthier options such as non-alcoholic and low-calorie products (likely in an effort to mitigate the beer belly). These are, in fact, two of the major trends shaping the market, alongside the rising desire for sustainably brewed beer. Particularly, consumers aged 18-24 are concerned about sustainability and tend to prefer sustainable brands over others when it comes to purchasing decisions.
R&D tax credits to implement a sustainable production
In terms of sustainability, the consumption of water is one of the biggest issues related to the sector. Beer itself is primarily water, which, on average, accounts for 90% of the product’s composition. The consumption of water is not strictly related to the production process only, but also to washing and other operational-related activities involving the brewing process. Although water usage does not hugely impact the breweries’ costs, it does impact the environment, as water scarcity represents one of the major threats for the planet’s future. As such, many breweries in the UK are developing new mechanisms to reduce the consumption of water, and many of the costs associated with this innovation can be recovered under the R&D tax credit incentive – often resulting in a significant cash benefit to the business.
Increasing the use of renewable energy and recyclable packaging are two additional changes that must be implemented in order to make the production of beer a more sustainable process. Various major players within the beer market have started ‘move to zero’ plans, aiming to become powered by 100% renewable energy. Similarly, an increasing number of producers are switching towards recyclable packaging – incentivising the return of empty containers from consumers in order to reduce wastage. As with the reduction of water consumption, activities associates with the reduction of unsustainable energy usage and wastage using innovative technologies and processes can also be recovered under the R&D incentive; importantly, brewers can recover the cost of staff time, consumables (including some ingredient and utility costs) and subcontractors associated with such projects!
However, R&D is not limited to the above. In fact, the process of developing new beers, such as those with unique flavour or aroma profiles, or ever non-alcoholic, gluten free or low-calorie options can qualify as an R&D project.
If you are running a brewery and are wondering whether your activities qualify for R&D, get in touch with one of our experts. We’re always happy to have a quick exploratory chat!
If you would like an expert team who are committed to sustainability to compile your R&D application, fill in the form below and one of us will be in touch!