The modern-day UK brewing industry involves a blend of traditional British ideas about brewing and real innovation around flavours, aromatics, textures and even packaging! The cause of this vibrant market is a culture of independent breweries created by true beer enthusiasts who are constantly experimenting and looking to push the envelope of what we know as beer.
According to Ibis World, there were 1,575 craft beer breweries operating as of 2021. The figure gives us some clues about the scale of the market and competition within it.
One known fact is that innovation is more likely to occur in competitive markets, and in the case of British brewing, there is no shortage. As we will discover, the UK’s craft beer brewing industry is a hotbed of innovation where brewers are constantly experimenting with flavours and new products as well as unique processes and equipment. What many brewers don’t realise is that these activities may qualify for R&D tax relief which can further aid their growth and development.
What are the challenges faced by smaller breweries?
Smaller breweries up and down the country face a number of challenges in 2021 and beyond. Economic impacts, attitudes towards sustainability and a crowded marketplace are all contributing to challenging times ahead. In addition, the impact of COVID-19 saw 82% of smaller UK breweries experience a slow in sales. Those that relied too heavily on B2B supply suffered greatly from lockdowns and pub/restaurant closures. As the UK brewing reels from the effects of COVID-19, it also faces other fundamental hurdles.
[H3] Consistency in output
Smaller brewing companies brew differently to their larger counterparts in that they make smaller batches at a time. Large scale brewers tend to make larger batches on mass-scale equipment, which makes quality control easier. Although lots of progress has been made in this field, finding a granular level of consistency that large breweries achieve will always be an issue.
Smaller breweries at the micro and local level sit within a difficult space in terms of production. Craft beer production is often very detail-oriented and too specialised to simply scale up. On the other hand, the methods and apparatus used by mass mainstream brewers would not be suitable to scale down and employ on a smaller level. For new breweries on the scene, this can be a costly and time-consuming process.
Environment and sustainability
Environmental consciousness has grown to an all-time high in recent years. Food and drink brands are all being watched carefully. It reportedly takes ⅚ liters of water to produce one pint of beer and the industry’s large water footprint is already well documented.
Balancing sustainability with packaging is also another area in which breweries will face increased scrutiny. Social responsibility ranks high in the upstart brewing philosophy and especially the customer base within this niche. Breweries are finding that there’s definitely an expectation to meet tangible carbon reduction goals.
Technological advances in the beer industry
British brewers have always been adept at brewing innovation – they are able to adapt to new trends due to a natural tendency towards experimentation, independence and the unique. This includes everything from the introduction of strange alien ‘hops’ to no-alcohol beers.
In modern British brewing, this tendency towards experimentation has yielded great things. It looks set to continue revealing great things for the foreseeable future. There has never been a better time for British beer enthusiasts to enjoy a variety of bold flavours in their beer, unexpected tastes and delicious new brews are emerging on a monthly basis with pubs, taprooms and specialist shops on hand to sell and celebrate them.
Alex Major, the landlord of the UK craft beer pub, The Famous Royal Navy Volunteer, believes that brewing in the UK has a rich history and a bright future.
“The number of talented brewers in the UK and their willingness to try new things and keep the high standard of the beer they produce – make it the home of beer! Innovation wise, there are new hops, malts & yeast being developed all the time and a committed bunch of brewers willing to push the boundaries. It’s an inventive, exciting, ever-changing marketplace.”
Innovative UK breweries
Across the country, the grassroots “can do” spirit of the small brewery scene is alive and thriving. Unlike larger food and drink brands that have struggled to adapt to apply innovation to their products, UK breweries have put their minds to work and delivered some interesting products.
Bellfield Brewery gluten free beer
Edinburgh-based brewery Bellfield beer was started by two coeliac friends who realised that beer shouldn’t be off the menu as gluten adds nothing significant in terms of taste! They set about removing gluten at every stage of the brewing process in round after round of R&D. Their work paid off and Bellfield now offer a range of gluten free beers spanning everything from pilsners, IPAs, lagers to ales. The success of their offering is backed up by many happy customers and their products are also certified by Coeliac UK.
Toast Ale & Friends of the Earth beer from bread
Friends of the Earth joined forces with Stroud-based brewery Toast Ales to create an amber ale made from unused organic bread from a local bakery. “Flour Power” is the driving force behind Toast Ale’s lower carbon footprint ambition and aims to raise awareness about food wastage (44% of bread in the UK is never eaten!) while also producing a smooth hoppy sustainable beer.
Small Beer – less water intensive beer
Small Beer is a Bermondsey-based brewery famed for producing low alcoholic table beer. Aside from their natural brewing practices and minimal processing activities, Small Beer has used Recovered water to clean their brewery. By doing this they have reduced the amount of water needed to make a pint of beer from 7-8 pints to 1.5 pints. This has led to Small Beer achieving “B Corp” for social and environmental impact.
[H2] South West Breweries
With our offices in Bristol, ForrestBrown is very lucky to have such a great culture of breweries. The South West’s brewing industry involves a blend of traditional British ideas about brewing, real innovation, and the South West’s own independent traditions.
This unique blend of approaches is boosted by reliance on more local, home-grown ingredients to produce award-winning beers, with genuine innovation growing from grassroots movements. The often fiercely local spirit lends itself very nicely to making new discoveries and breweries going their own interesting ways. Here is a small selection of them:
- Verdant Brewing Co
- Wild Beer Co
- Good Chemistry Brewing
- Wiper and True
- Moore Beer
- Arbor Ales
- Bath Ales
- New Bristol Brewery
How we claimed R&D relief for Wiper & True
ForrestBrown put together a team, combining a food and drink sector specialist along with tax professionals to help one of Bristol’s most innovative and loved breweries: Wiper & True. What started as a home brewing hobby quickly snowballed into a promising commercial venture, with the brewery opening for business in 2014. Michael Wiper and Al True have been forward thinkers since the kitchen brewing days, and the spirit of experimentation is alive and well across their product range. From hibiscus beer, innovative barrel-ageing techniques to cucumber and lime ales, and even collaborating with bands, Wiper & True were carrying out valuable R&D on a regular basis.
After shopping around for R&D tax advice, managing director Micael Wiper chose to work with ForrestBrown. His attraction was to the professionalism and diversity of our team, credible experience, and also the way that we merged sector specialist knowledge with deep tax insights.
“We spoke with several providers before choosing ForrestBrown. After researching the market, we found their diverse team of experts to be the most credible and professional”Michael Wiper, Wiper & True.
Could R&D tax credits prove a lifeline to British breweries?
Like other food and beverage producers, local breweries often depend on innovation to survive. In addition to the desire to innovate in terms of taste, texture and aroma of a typical beer, smaller and local breweries are forced to innovate in all of their processes in order to survive.
The last decade has seen an extraordinary rise in new breweries with accountancy group UHY Hacker Young reporting 216 new brewery openings from 2019-2020. Such a vibrant market has raised the bar in terms of innovation and pioneering new techniques.
R&D tax credits for Breweries
R&D tax credits are an extremely powerful form of cash as breweries look to expand their operation, and continue to innovate.
Qualifying activities for R&D in brewing
Resolving scientific or technological uncertainty is key to determining whether or not a project counts as R&D. For a much more in-depth discussion of your specific situation, you’ll need to get in touch with our experts and see if we can help. However, there are some general things to look out for as a brewer that might indicate a substantial R&D tax claim:
Creating a unique process
You’ve developed a unique process or product that very few competitors would understand how to replicate without a great deal of work and experimentation. It may be more efficient than alternative techniques or have a smaller carbon footprint.
Working in unusual circumstances
You could claim R&D if you’re a brewery in circumstances that are very unusual or unique and have chosen to develop processes to work around or exploit these circumstances. For instance, you may have created bespoke equipment and integrated it into the brewing process to overcome these challenges to produce exciting new product lines.
You utilise brewing research services
One of the best ways to provide hard evidence of R&D within brewing is to show that you’ve sought out formal scientific consultation for your activities. This is evidence that you are committed to tangible R&D. Campden PRI are the UK’s leading centre for brewing research and consult on a range of areas including environmental impact, beer analysis, yeast microbiology and process consultation amongst many other things.
A central force of constant innovation within brewing is the creation of products with different colours, textures and tastes. Using unconventional ingredients requires careful consideration because the delicate chemistry of the drink must be maintained as other ingredients are added. For example, how will you introduce antiseptic or preservative properties to a gruit beer? Is it even necessary? Are there uncertainties around the biological or chemical interactions between ingredients? Successfully making new combinations of ingredients whilst preserving freshness, taste and composition could count as an R&D activity
Replicating historical brewing products
R&D may come in the form of successfully reproducing historical drinks that are no longer understood or known by modern brewing professionals. From barrel-ageing techniques to experimentation with unusual types of yeast or hops, re-establishing lost arts and formalising the process all counts as R&D. The recent revival of mead is a perfect example of a historical product being brought back to the forefront through innovation from breweries like Wye Valley meadery.
These are broad topics – in practice, R&D tax claims and the specific amount that you can claim are circumscribed by specifics, so getting the help of an R&D tax specialist is important if you’ve got a potential claim of substantial size.
Have you been undertaking innovation in brewing tech?
If your brewery is interested in R&D tax credits, wherever you are in the UK, then we can help – again, use our contact page to find our details and give us a ring or drop us a line.
The UK is full of exciting, inventive breweries, making us very excited for reasons that go far beyond R&D tax credits!