It started with Dry January and Sober October, but now, as consumers continue to become increasingly health-conscious, the low and no-alcohol beverage market is growing, innovating and evolving at pace.
Statistics from Global Data suggest one fifth of British adults are teetotal, with similar trends across Europe. So, this isn’t a short-term fad. The growth of “low and no” is here to stay.
As drinks manufacturers tap into these opportunities, developing new flavours, using new ingredients and embracing innovation to fine-tune and improve their production methods, the scope for R&D – and in turn, R&D tax relief – is huge.
That’s why the Cooper Parry R&D Incentives team arranged a roundtable event with businesses from the sector to discuss the key trends and where the opportunities lie, hosted by Rebecca Prince, our Senior R&D Incentives Manager and lead on all things Food & Beverage.
WHAT IS R&D IN LOW AND NO-ALCOHOL DRINKS?
From improving your product’s taste, sugar content or shelf life, to implementing improved production methods, the creation of high-quality, low/no-alcohol drinks involves plenty of challenges.
As many of us look to make healthier choices, overcoming these challenges to tap into a fast-growing market could come with a big pay-off; especially when you consider the cash benefit you could stand to claim through the R&D incentives regime on all qualifying activities.
R&D IN PRACTICE: INSIGHTS FROM OUR CHAT
Many of the businesses we spoke to at the roundtable were working on re-creating the heat sensation and mouthfeel that you get from alcohol, trialling a variety of ingredients including ginger and chilli.
Because alcohol is such an excellent preservative, shelf life was a hot topic too, and trying to produce drinks in a low and no-alcohol range with a similar shelf life to their boozy counterparts took significant time and investment for our guests.
Of course, flavour is as important as ever, and our guests spoke about the different combinations of ingredients they had tried to make sure the spirit and the various tonics/mixers worked in harmony. When you’re creating gin, for example, the botanical flavours bind themselves to the alcohol. So, when you take that alcohol away, creating a sophisticated, high-quality flavour profile becomes much more challenging.
We discussed the fact that a gin-inspired range can’t legally be classified as ‘gin’ if the alcohol level (ABV) is below 37.5%. So, as an interesting alternative, one of our guests had developed and launched a gin dropper product, which is essentially highly concentrated, flavoured gin that can be added to a tonic using a dropper.
This method maintains the gin flavour, and it’s still technically an alcoholic gin, but because you only need a few drops instead of a full measure, the resulting drink is very low in alcohol when mixed with tonic.
Rebecca Prince, our Senior R&D Incentives Manager and Food & Beverage lead, said:
“The opportunities and challenges arising in this sector cannot be underestimated. Developing an adult, sophisticated drink that consumers want to keep coming back for is the ultimate goal. There is certainly something to be said for creating very low alcohol beverages that retain the taste sensation experienced when drinking their full strength alternatives – and there was consensus that perhaps the dropper approach, together with increasing complex flavour development, could be the answer. Right now, with the increased interest that younger drinkers seem to be showing in this area, the race is on!”
HOW CAN YOU GET THE R&D BENEFIT YOU DESERVE?
With such a wide scope of expenditure eligible to be included in claims in the low and no-alcohol space, it’s worth speaking to a specialist R&D adviser and taking a look at your whole supply chain to make sure any changes you’ve made have been included.
If you haven’t made an R&D claim before – or you think your current claim may have missed qualifying activity – the good news is you have two years from the end of your accounting period to file a claim for R&D tax credits retrospectively, covering all qualifying expenditure throughout this timeframe.