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R&D Rate Reduction will hurt vital product development in F&B

2014 Federal Budget

The announcement that the Government will reduce the research and development (R&D) rate by 1.5% will further stifle product innovation in the food and beverage sector.

According to our recent study Australian food and beverage companies currently spend only 1% of turnover on R&D for product innovation which is significantly below their US counterparts which are closer to 2%. New reforms will see an even further reduction in spend,” said Tony Pititto, National Head of Food & Beverage.

"Australian food and beverage companies are becoming more challenged with private labels increasingly moving onto supermarket shelves. The development of new products is one way companies can reduce reliance on private labels by opening up new opportunities for their products either through existing channels or new channels such as export markets.

“The change is likely to lead to less innovation in an industry which must innovate to combat the challenges of the duopoly supermarket position in Australia and must look at product innovation for export markets and new distribution channels,” said Mr Pititto.

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