David McKay: A focus on innovation could further lift the spirits of Scotland’s brewing industry

Dr. David McKay
Dr. David McKay

Scotland’s brewers and distillers are developing something of a reputation around the world. With a strong history of bringing high quality spirits and beers to the global stage, the country had already earned its stripes on the international food and drink stage. But, a recent shift towards disruptive, innovative new practices has laid the foundations for new growth. 

The Scottish Government’s SPICE data recently reported an increase of 229% in the number of breweries since 2010, while the number of distilleries has grown by 69%. Driven primarily by a raft of new market entrants, especially craft producers, the industry has begun to enter a new, more entrepreneurial period, and it’s making a difference. Estimates from Scotland Food & Drink’s Brewing Industry Leadership Group suggest the sector’s contribution to the Scottish economy could be worth more than £500 million in turnover each year, supporting over 8,000 jobs. By 2030, the economic contribution could increase to £1 billion. 

The efforts of this new ‘sector within a sector’ shouldn’t go unrecognised. The food and drink industry has its own tech revolutionaries, reshaping the industry and helping to counterbalance a global decrease in the volume of alcoholic drink sales. Consumer habits are shifting towards drinking less, but spending more on high quality, specialist products that focus on provenance. Scotland’s new craft industry has arrived at the right time. 

But, there’s no escaping the challenges facing all globally focused businesses today. Increasing geopolitical uncertainty, driven – at least in part – by Brexit, is creating a more risk averse marketplace, with exporters, naturally, worried that increased tariffs and bureaucratic trade barriers, could halt further bold growth ambitions. Now, more than ever, is the time for the industry to be more disruptive, more innovative and more collaborative. 

The north east has been at the forefront of this growth as an incubator, with a large number of microbreweries and some bigger names that have revolutionised the market by challenging traditional industry perceptions. The city can, and should, be held up as an example of how the wider drinks industry can ensure a successful, sustainable, long-term future. 

With a high degree of innovation being undertaken, companies in the brewing and distilling sectors should be considering Research and Development (R&D) tax incentives, which can offer sizeable financial incentives, freeing up businesses to continue their growth trajectory, without pressing pause on innovation. 

The business community is enduring a prolonged period of uncertainty, but the brewing and distillery industry is forecast to continue its growth path. In this landscape, R&D incentives will continue to play an increasingly important role in stimulating an increase in innovation and development to assist Scotland in maintaining its position as a global leader in the industry. 

Dr. David McKay is Director of Innovation, Reliefs and Incentives at KPMG UK

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