You Can Have Your Cake and Eat It Too: The Research and Development Tax Credit for the Food and Beverage Industry
Food and beverage innovation is a key driver in helping companies in the industry deliver on strategic goals by getting the right products to market with speed and establishing significant competitive differentiation. Successful food and beverage innovation is essential in helping companies achieve sustainable growth and profitability for the long run. We have found that the vast majority of food and beverage executives believe that product innovation or portfolio adjustments to ‘healthier’ trends will be the key drivers they turn to for revenue growth over the next three years. While executives acknowledge that achievement of strategic goals will be largely dependent on product innovation, many companies struggle with effectively delivering on innovation initiatives to meet those goals. Failure rates of new food and beverage products is extremely high. Several challenges that we have heard expressed by food and beverage manufacturers over the past few years include: 1) constant changes in consumer demands and volatile economic conditions, there exists a 2) highly competitive environment with an abundance of product choices, making it exceedingly difficult to create significant competitive differentiation, 3) intense price competition through pressure from competitors and private-label brands, 4) fluctuating commodity prices of crops and raw materials, and 5) developing strategy and product development initiatives to meet increasing regulatory change. For many food and beverage manufacturers, a large portion of current revenue comes from products that have been introduced into the product portfolio within the last few years. Therefore, catalyzing successful innovation is critical to the long-term strategy and success of the organization. Increasingly, companies are recognizing the importance of taking advantage of tax credits and incentives available to the Food and Beverage industry as a critical weapon in remaining competitive and harnessing innovation.