March 17th, the annual holiday honouring Irish heritage—or of a cartoon version thereof anyway—is indeed a day worth celebrating for the makers and purveyors of whiskey, beer and green attire. However, holiday or not, the whiskey beverage industry may already be celebrating due to a soar in popularity in recent years.
In fact, Australians now drink almost 19 million glasses of whiskey in an average four weeks—around three million more glasses than in 2009. Moreover, young Australian’s in their 20s and 30s have replaced over-65s as the nation’s biggest whiskey drinkers, thanks to what market researchers have coined the “Mad Men effect”. Nonetheless, the steady rise of whiskey drinkers, aside from the Don Draper aspirants, is most likely due to more options being available in the market.
Ultimately, the variant of alternatives available for the beverage comes down to an investment in research and development (R&D) to expand the products scope. In the Fast Moving Consumer Goods (FMCG) industry, food and beverage innovation is one of the critical factors of success. As a consequence, R&D typically occurs in several disciples within this industry, such as: food science, manufacturing, chemistry, mechanical and chemical engineering.
Consider Johnnie Walker, for instance, who created an interactive whiskey software product. The company created a bottle which sends personalised communications to the user if they wave a smartphone in front of it, for example a promotional offer or a cocktail recipe. The bottle can be tracked down the supply chain, from the manufacture to end product user, allowing for detailed customer insights.
Thus, from developing and testing the beverage formulation to giving the tangible product a ‘digital make-over’, the options for innovation in this field are seemingly broad. However, it is an often overlooked fact that the expenditure incurred to bring these innovations to market is potentially available for a tax rebate of up to 45 per cent.
To elaborate, the Australian Government offers an R&D Tax Incentive which assists in offsetting the costs of R&D and improving a company’s cash flow. The incentive scheme offers a refundable 45% tax offset for companies with an aggregated turnover of less than $20 million per annum, as well as a non-refundable 40% tax offset for other eligible companies.
On the whole, R&D is a valuable tool for growing and improving products – whether that is for expanding the horizons of whiskey or simply growing innovation within your own businesses area. The government has a purposely broad range of industries which qualify for the incentive to encourage innovation in Australia. As noted above, the program operates as a tax offset, which means companies undertaking eligible R&D activities can fundamentally receive a reward back from the government. Could the R&D Tax Incentive be the luck you need this St Patrick’s Day?