Case Studies

Food & Beverage

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This $70M brewing company produces over 275,000 barrels of beer annually and currently sells in over 42 U.S. states plus Washington D.C.

R&D Tax Credit Qualification for Food and Beverage

The owner along with the brew master and other employees formulated ideas for brews by drawing from different avenues of inspiration including unique flavors unavailable in the market, culinary pairings, and history. New ideas were often discussed and evaluated by the Innovation Team, which consisted of the owner, brew master, quality control and operations. This group analyzed existing or new experimental hop varieties for quality and potential use. From this research, product viability was determined.

Conceptual flavor profiles were developed and research was conducted on these new flavor profiles. Alternative recipes were created that detailed the types and amounts of hops, malts, yeasts, and flavorings that would be added to the formula to brew the experimental beers.

The tean considered different variables and ingredients for new brews including, but not limited to, yeast strains, yeast pitching rates and times, heating and cooling temperatures and times, and the type and amounts for their different hop and yeast varieties. Once the Innovation Team approved thaecipe and process, trial runs were conducted. Samples from the first brew were tasted and sent to the lab for analysis on itschemical properties, such as yeast content, color, Alcohol by Volume (ABV), and pH. Depending on the type of trial or recipe, the first run often yielded positive results but required additional development, until the beer or beer component met their design specifications. As a result, changes were made to both the formulation and the process. Another pilot run and round of testing was performed. This process repeated until the specifications were met or determined unfeasible.

Quality personnel performed lab testing on the experimental brews and constantly test new yeast strains and bacteria in small fermentatiorruns. They reviewed the analytics to determine what the yeast was capable of in terms of flavodng, carbonation, and fermentation time. The information gathered from this research allowed the experimental brewer and the Innovation Team to make faster and more informed decisions when it came to developing and reformulating their experimental recipes in allstages of the project.

Upon approving the experimental recipe for production, the Innovation team was ready to scale up the process and recipe for the production equipment. The pilot system does not scale linearly and them was always uncertainty at this phase of which ingredients would be affected since they were working with a much larger system. Since an experimental recipe is typically a mix of malts, multiple hop varieties, and yeast, the team was uncertain which ingredients were being over-extracted consequently affecting the flavor and chemical properties. As a result, the team had to experiment with the ratio of amounts irorder to reproduce the taste,and chemical properties developed in the Lab and pilot runs. The first ran was rarely successful and required multiple runs and recipe/process changes before the production process was perfected.

This $65,000 offset in taxes has allowed the company to continue investing in the development of additional brews and reaching $70 million in sales.

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Results Speak For Themselves

Source Advisors began conducting R&D tax credit studies for the company when the company's revenues were $10 million. For nearly a decade, the company has benefited from R&D credits averaging $65,000 annually. This $65,000 offset in taxes has allowed the company to continue investing in the development of additional brews and reaching $70 million in sales. The company's ability to grow at this pace is, in large part, driven by sales of its new products.

Benefited from R&D credits




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