RTD (Ready to Drink) Cocktail R&D Tax Credits

Consumers nowadays are concerned about their health and wellness. For this reason, businesses in the alcoholic beverage industry are concentrating on premiumization, sustainability, and utilizing natural ingredients. As a result, it seems like there are new wine, spirit, and malt-based ready-to-drink (RTD) beverages available every day.

With a market share of $782.8 million in 2021 and an expected growth rate of 13.4% from 2022 to 2030, RTD cocktails have become the alcohol industry’s fastest-growing subsegment. RTD product lines spend heavily on research and development, including improvements in ingredient sourcing, manufacturing, and canning and bottling processes.

However, many companies are still unaware that RTD (Ready to Drink) research and development tax credit can recover some of those costs. In fact, with the help of state and federal R&D tax credits, you can get a refund of up to 22% of your total QREs. However, the exact amount will depend on your firm’s location, as different states have different R&D tax programs.

Qualifying Costs and Activities

Every cost you incur during research for third-party contractors, employee salaries, raw materials, and supplies is considered a QRE. Using this incentive, you can also cover positions like software developers, technicians, QA and QC personnel, process engineers, C-suite, product managers, formulators, consultants, brew masters, and brewers. Moreover, activities that are eligible for the R&D tax credit in the RTD (Ready to Drink) industry include:

• Developing, evaluating, and refining novel drink formulas;

• Investing in environmentally friendly or green product lines or production methods;

• Improving canning techniques to secure shelf life and product quality;

• Exploring using various raw materials in a current product line (different flavorings, sugar sources, etc.);

• Increasing productivity by adding robotics or automation to the production process;

• Creating additional prototype batches and improving processes for scale-up manufacturing.

When You Need Expert Help

You can contact our team of tax credit experts to calculate your R&D tax credit without upfront costs.

FAQs

What kind of companies can apply?

RTD companies that conduct qualifying research activities.

What data do I need to calculate credit?

Claim period gross receipts.

What information do I need to provide?

General ledger expense detail, payroll records, project notes, project lists, emails, lab results, and other documents regarding QREs for the claiming period.

Is credit carryforward an option?

Yes, up to twenty years.