Ready-to-drink (RTD) cocktails emerged as the fastest-growing segment of the alcohol industry in 2019, with a market share of nearly $650 million. Today’s consumers are health and wellness conscious, and companies are focused on premiumization, sustainability, and using natural ingredients. As a result, new wine, spirit, and malt-based canned cocktails are hitting the market on a (seemingly) daily basis. To produce a drink that resonates with consumers, significant research and development (R&D) is invested in RTD product lines, including innovations in ingredient sourcing, manufacturing, and canning/bottling processes. Some of these costs can be recouped by claiming the R&D Tax Credit.
Employee wages, raw materials and supplies, and third-party contractor costs associated with research and development activities are considered qualified research expenses (QREs). Companies can receive refunds of up to 22% of total QREs through federal and state tax credits, depending on the state in which your company or firm operates.
Example activities that qualify:
- Creating, testing, and revising new drink formulations
- Investing in green or eco-friendly product lines or manufacturing processes
- Optimizing canning procedures to ensure product quality and shelf life
- Investigating the use of alternative raw materials in an existing product line (different sugar sources, flavorings, etc.)
- Implementing robotics or automation to the manufacturing process to increase efficiency
- Developing new prototype batches and optimizing scale-up production processes
Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?
- Brew Masters / Brewers
- Process Engineers
- Product Managers
- QA / QC Personnel
- Software Developers