Hands-in-soil-of-growing-plant

How the food and beverage sector is helping to save the planet

Darren Rigden, Partner, Audit and Business Solutions
30/11/2021
Hands-in-soil-of-growing-plant

Companies are much more focused on sustainability and using environmentally friendly productions techniques and packaging following pressure from both consumers and governments. The food and beverage sector is one of the more innovative sectors which is working hard to improve its environmental impact. The sector is currently tackling food waste, reducing food miles, improving packaging and reducing CO2 and other greenhouse gas emissions.

Big brands are taking the problems seriously, for example Carlsberg, is aiming for a zero-carbon footprint by 2030. PepsiCo has committed to using aluminium containers for water rather than plastic bottles, and as the Food and Drink Federation states on its website:

“The FDF and our members are fully committed to cutting CO2 emissions, promoting efficient water use, building a more circular economy for packaging, embedding environmental standards in transport practices and reducing food waste. We also want to increase understanding of sustainable supply chains and natural capital.”

It goes on to say that the sector contributes to over a quarter of greenhouse gases. Brewdog has gone a step further and is now carbon negative, removing twice as much carbon as it emits. Therefore, success in the sector could have a real impact on the environment. We are definitely seeing a lot of innovative approaches to tackle the issues through our clients and contacts.

Food waste and sustainability

Food waste has a number of impacts on the environment ranging from wasted energy and materials, through to increasing emissions both directly as the food degrades, and also through additional transport and processing costs to deal with the excess.

I have seen several initiatives aimed at reducing waste and ensuring excess food and drink is put to good use including, community-based schemes to help with the environment impact and also those who are struggling financially. With the threat of high inflation, the demand for these schemes is likely to increase.

Food security continues to hit the headlines as populations grow and demand for food increases, while climate change has had a number of devasting effect on harvests. This feeds into sustainability and ensuring that food waste is minimal. At the end of the day it is not in anyone’s interest for food or drink to be wasted. It is also driving several trends in the industry including the production of no meat-based products.

Packaging

Packaging is key concern for the sector with a focus on recycling, the reduction of plastic and also the ability to pack, store and transport food and drink as cheaply and a sustainably as possible. The industry is looking at improving packaging to lengthen shelf lives, thereby potentially reducing food waste by, for example, experimenting with different gases and anti-microbial packaging materials. The use of plastic in packaging is likely to attract the continued attention of governments who may use taxes to persuade the sector to find alternatives.

In addition to using packing which is more environmentally friendly in its own right, companies are also looking at the types, shapes and nature of packing to aid transportation so that products can be packed more effectively, with a reduced weight so that they can be transported with reduced energy requirements. Interestingly, there was a recent article from Crowe Global on airships, which is one way new transportation methods could help the environment.

Packaging improvements also include developing materials with a smaller carbon footprint due to a streamlined production process or reduced supply chain.

Improving packaging presents yet another opportunity for those conducting research and development in this area to consider whether they qualify for R&D tax credits.

Technology is likely to play a key part in all these areas as well as helping with transparency and traceability, helping consumers gain confidence in the environmental impact of food miles and sustainable packaging. Technology will ultimately allow people to access much more data from the packaging via bar codes, QR codes and near field technology, allowing them to see how environmentally friendly a product is. To reduce food waste, intelligent packaging can be developed which use indicators and sensors to monitor factors outside the packaging like temperature and humidity, or internal factors like freshness so that food is not just discarded when it passes a set sale buy date, which might not be appropriate depending on how the product has been stored.

Reduced emissions

Across the sector there are various initiatives to reduce emissions and as we have seen in the press recently there is an increasing drive by governments across the world to cut emissions which is filtering down to businesses in the form of incentives, taxes and levies. In addition, new reporting requirements are coming into effect forcing companies to disclose what they are doing. With increasingly green consumers, this will put additional pressure on businesses to think green. We are already beginning to advise our clients on what requirements exist at the moment, the planned requirements for the future and how best to comply and capitalise on these requirements. Clients are seeing this as an opportunity to show their green credentials which is becoming more important for their customers.

One trend that is arising from pressure to reduce greenhouse gases is the increased demand for meat alternatives, driven partly by health and partly from an increasing interest in protecting the planet. As well as requiring research and development, which may qualify for tax credits, we might see some grant funding in the future as the government is keen to reduce CO2 emissions.

The use of CO2 in the sector was also highlighted recently by shortages, and I wonder whether there will be shift away from reliance on it and a search for an alternative, again possibly something the government may look at in terms of grants and tax incentives.

Tax incentives to help the environment

All of the potential solutions will require continued research and development (R&D) into new products and processes. R&D tax credits could help with cashflow and all projects should be discussed with your advisor to see if they qualify. R&D does not mean men in white coats mixing chemicals, it is much broader and we have helped many businesses in the sector to maximise their R&D tax credit claims on a broad range of projects.

Nurturing new business

The changing views of consumers will result in businesses having to adapt. This will lead to new opportunities for businesses to start up and spin off from existing businesses and universities, where they can then be nurtured and access specific funding. Although this brings challenges for cashflow and business planning, there are some good advisors out there along with experts in the sector and forums that can help you on this path. Crowe can help with forecasting, business planning and outsourcing initially to get your business up and running, and can also help with ensuring your systems and controls are fit for purpose from the start. Our corporate finance teams continue to be busy with the sale and reconstruction of the businesses along with helping our client’s source appropriate financing.

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How can Crowe help?

Our team have been supporting businesses in the food and beverage sector for many years. If you would like to talk about how Crowe can support your business with its ambitions, then please contact Darren Rigden.

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Darren Rigden
Darren Rigden
Partner, Audit and Business Solutions
Kent