Unlocking R&D Tax Relief in FoodTech, Fermentation & Sustainable Beverage Innovation

FoodTech is no longer confined to novel ingredients or consumer-facing apps. In the UK, it increasingly sits at the intersection of process engineering, formulation science, automation, digital manufacturing, sustainable packaging and resource-efficient production. Food and drink is the UK’s largest manufacturing sector by turnover, and the sector is being pushed to innovate by changing consumer demand, sustainability targets, packaging reform and productivity pressure.

That matters for R&D Tax Relief because many food and beverage businesses are undertaking genuine technical development without necessarily describing it as “R&D”. Where a company is trying to achieve an advance in science or technology, and the route to that outcome is not readily deducible by a competent professional, the work may qualify.

In FoodTech, that can arise in areas such as fermentation control, formulation stability, packaging redesign, digital process optimisation, waste reduction, water efficiency and low- or no-alcohol product development.

Why FoodTech innovation matters now

Across UK food and drink manufacturing, innovation is increasingly being shaped by resilience, productivity and sustainability rather than by product novelty alone. R&D investment is being driven by the need to create a more resilient and nutritious food supply, while automation and digitalisation are seen as major levers for improving sector productivity. At the same time, regulation and policy are influencing technical priorities, including sustainability targets, packaging rules and waste reduction.

This is especially relevant for producers working with complex natural inputs, tightly controlled production environments or branded flavour profiles. A business may know the commercial objective, but not whether it can be achieved consistently and economically within the limits of raw-material variation, microbiological behaviour, process control, shelf-life performance, packaging constraints and resource efficiency. That is where routine manufacturing ends and real technological uncertainty begins.

Typical qualifying R&D drivers in FoodTech and beverage manufacturing

Fermentation and process-control optimisation

Fermentation-led products often depend on managing highly variable biological and chemical processes with repeatable commercial outcomes. Small changes in raw materials, sugar conversion, temperature behaviour, yeast performance, filtration or blending can all affect flavour, alcohol profile, stability and batch consistency.

Where a business is developing improved control systems, new monitoring methods, smarter process intervention logic or revised production conditions to stabilise product quality, that can involve genuine technological uncertainty. This is particularly relevant in fermented and fruit-based beverages, where consistency and sensory profile are closely linked to process behaviour.

Low- and no-alcohol innovation

Low- and no-alcohol products are no longer a side category. Drinkaware reported in 2025 that 44% of UK drinkers were using alcohol-free or low-alcohol drinks to moderate their intake, up from 31% in 2018, while use of alcohol-free options rose from 18% to 31% over the same period.

For producers, that creates a technical challenge rather than a simple line extension. Reducing or removing alcohol can alter aroma retention, sweetness balance, mouthfeel, microbial stability and overall product character. The uncertainty is often how to preserve the expected drinking experience while changing a core part of the underlying process. That may require repeated experimentation in fermentation, blending, stabilisation, flavour retention or process redesign.

Raw-material performance and agricultural variability

Many FoodTech challenges begin before production starts. Natural inputs do not behave like standardised industrial materials. Seasonal variation, crop characteristics, storage conditions, sugar and acid balance, flavour profile and processing suitability can all influence manufacturing outcomes.

This is especially relevant for producers whose finished product quality depends on the interaction between agricultural inputs and downstream processing. Where a business is trialling different raw materials, growing systems, storage approaches or blending strategies to determine technical suitability for a desired production outcome, that can support qualifying R&D activity.

Sustainable packaging and filling-line performance

Packaging has become a major innovation driver in UK food and drink manufacturing. Public policy, consumer demand and sector-wide sustainability programmes are all pushing businesses to reduce material use, improve recyclability, support reuse and refill, and redesign packaging systems for lower waste and lower carbon impact. UKRI’s Smart Sustainable Plastic Packaging programme funded more than 80 projects spanning novel materials, reuse and refill systems, advanced recycling, AI-enabled sorting and data-driven packaging design.

For food and beverage producers, packaging changes often create technical uncertainty of their own. Lighter-weight containers, alternative substrates, recycled content, revised closures or new pack formats can affect sealing, line speed, fill accuracy, transport performance, shelf stability and product protection. Where these issues require structured testing and engineering development rather than routine substitution, they may qualify.

Water, energy and resource-efficiency engineering

Sustainability in FoodTech is increasingly an engineering challenge. Sector sustainability programmes continue to focus on cutting water use, reducing packaging impact, lowering emissions and improving resource efficiency across the supply chain. Industry commentary also highlights renewable energy, energy-efficient machinery, advanced recycling and waste-reduction systems as active areas of technology adoption.

That can translate into R&D where a business is trying to determine how to reduce process water, redesign cleaning systems, recover waste heat, lower energy intensity or improve yield without compromising hygiene, throughput, quality or product consistency. In practice, these objectives often require pilot work, process redesign and iterative plant trials.

Automation, digitalisation and smarter manufacturing

UK food and drink manufacturing is putting increasing weight on automation, digital technology and AI as routes to higher productivity and resilience. The sector has identified a material growth opportunity from greater adoption of automation, digital technologies and AI, including robotics, precision packaging, automated sorting, predictive maintenance, machine learning and digital twins.

For manufacturers, the challenge is often not whether these technologies are useful in principle, but how to make them work in a specific production environment with legacy systems, variable inputs, hygiene constraints and demanding throughput requirements. That kind of adaptation and integration work can involve genuine technical uncertainty, particularly where off-the-shelf solutions do not perform reliably in the intended setting.

What kinds of FoodTech projects may qualify?

Qualifying activity may arise in projects such as:

• developing low- or no-alcohol products that preserve flavour, stability and mouthfeel
• improving fermentation monitoring or process-control systems to increase batch consistency
• trialling new raw materials, fruit inputs or agricultural approaches to assess technical suitability
• redesigning cleaning, water-recovery or energy systems for more efficient production
• engineering new packaging formats that maintain filling-line and distribution performance
• deploying digital process control, predictive maintenance or data-led quality systems
• solving scale-up issues when moving from pilot batches to commercial production

The important distinction is that the work must go beyond routine product refresh, ordinary process tuning or standard capital investment. It needs to involve a real attempt to resolve technical uncertainty through structured development and testing.

Why this matters for ambitious food and beverage producers

The UK sector is large, innovative and technically active, but it is also operating under heavy pressure from costs, regulation and productivity constraints. FDF reported in 2025 that many food and drink manufacturers were scaling back investment because of cost and regulatory pressure, even though automation, R&D and product innovation remained strategic priorities.

That is exactly why R&D tax relief can be valuable. It helps support businesses that are investing in difficult technical work to improve products, processes and production systems at a time when innovation is essential to competitiveness.

Could your FoodTech development qualify?

If your business is working on fermentation-led development, process optimisation, new formulations, sustainable packaging, digital manufacturing, automation or resource-efficiency improvements, there is a realistic possibility that some of that work may involve qualifying R&D.

The strongest claims usually come from businesses that can clearly explain:

• what technical advance they were trying to achieve
• what uncertainty made the work non-routine
• why the answer was not readily available at the outset
• and what development work was undertaken to resolve it

How we help

We work with innovative food and beverage manufacturers to identify qualifying R&D and turn complex technical development into robust, compliant R&D tax relief claims.

In FoodTech, that means understanding the real technical substance behind formulation work, fermentation control, packaging engineering, digital process optimisation and sustainable manufacturing improvement.

Where businesses are solving real technical problems rather than carrying out routine production activity, R&D tax relief can provide meaningful support for continued innovation.

(E) enquiries@advaloremgroup.uk (T) 01908 219100 (W) advaloremgroup.uk

Written by Panos Farantatos – Senior Technologist

Panos is an ex-CERN R&D Fellow and a 2026 Global MBA candidate from Imperial College London with a 5-year Dipl.Ing. in Electrical & Computer Engineering. Panos has led cutting-edge R&D projects as an R&D Engineer since 2010, specialising in Integrated Systems, Systems Engineering and Project Engineering Lifecycle Management in the domains of Electromagnetics, Electromechanical Manufacturing, Industry 4.0 and Smart Sensing.  

Since 2019, he has been consulting with SMEs and Large Companies on securing government-endorsed innovation funding with emphasis on R&D Tax Relief, helping clients claim over £24M of tax benefits. 

While Panos is sector agnostic, some main domains he has focused on over the years are Software/Fintech/Blockchain, Manufacturing, Agricultural Science, Construction, Automotive Engineering, Electronics/Embedded Systems, Biomedical Engineering, Waste Management, and Architecture.