The R&D Tax Credit Aspects of Clean Food
has been an increasing trend towards the
movement of clean eating or eating foods which contain no artificial
ingredients. As more people become health conscious, food companies
have also become aware of the change in food decisions made by
A large part of this change involves the research
and development of new ingredients and reformulating recipes for
existing products, as well as the creation of new food products. Many
companies have begun the transition to providing clean food products
and have provided customers with the transparency of what ingredients
are utilized in their food during this process.
To produce clean food for consumers, companies have
to establish which ingredients they deem as unhealthy. The next step is
to determine what new changes and processes need to be implemented in
order to provide healthier food products. As preservatives and
artificial ingredients are removed from existing products, recipes will
have to be reformulated and new methods of food safety,
preservation and packaging will have to be developed.
Research & Development Tax Credit
in 1981, the federal Research and
Development (R&D) Tax Credit allows a credit of up to 13% of
eligible spending for new and improved products and processes.
Qualified research must meet the following four criteria:
- New or improved products,
processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include employee wages, cost of
supplies, cost of testing, contract research expenses, and costs
associated with developing a patent. On December 18, 2015,
Pre¬sident Obama signed the bill making the R&D Tax Credit
permanent. Beginning in 2016, the R&D credit can be used to offset
Alternative Minimum tax and startup businesses can utilize the credit
against $250,000 per year in payroll taxes.
FDA regulates the overall safety of certain
ingredients and amount of ingredients that are allowed to be
incorporated into food products. Many additives are used to provide a
longer shelf-life or generate a better taste and appearance. Although,
many additives are used to create an appealing product there are some
ingredients that are harmful to our health.
In particular, the FDA has declared that food
manufacturers will have a time period of three years to remove
partially hydrogenated oils (PHOs) from all products due to the
determination that PHOs are unsafe for individuals to consume. The
ingredient, PHO, is ultimately displayed as trans fat on nutrition
This new requirement by the FDA prompts
manufacturers and food scientists to reformulate recipes to compensate
for the loss of this additive. Companies will have to substitute PHO’s
with new ingredients that will allow products to maintain a similar
texture and consistency. Many food brands and restaurants have
already begun transitioning to providing customers with cleaner food
Bread promised customers during 2014 that
their menu would only contain clean ingredients and the company has
successfully met their goal with a completely clean food menu.
items don’t contain artificial flavors, artificial preservatives, and
artificial sweeteners and colors. The Company collaborated with food
and health scientists to examine which ingredients should be removed
and how existing recipes should be reformulated.
For example, Panera examined every single food item
including their balsamic vinaigrette which was composed of natural
flavors, rosemary extract and balsamic vinegar. The company discovered
that the ingredients contained processed ingredients, emulsifier and
artificial colors. All of these artificial additives were replaced with
all natural ingredients to create a healthier form of balsamic
Analyzing every menu item took a significant amount
of time to modify in order to achieve clean food recipes. Panera Bread
not only spent time revamping food at their restaurants but also their
food items that are sold in grocery stores.
Chick-fil-A has declared that the company will serve
chicken without any traces of antibiotics by 2019. The company will
take on a 100% antibiotic-free process of raising chicken which has
required communication with the United States Department of Agriculture
(USDA) and their vendors. This decision was encouraged from research
findings which displayed that more than 70% of individuals stated that
antibiotics in meat products were an issue.
There is a significant amount of changes that have
to be conducted in order to fully implement this plan. For example,
Chick-fil-A will have to create the proper environment for raising
chickens including regulating ventilation, temperature, and ammonia
levels. This initiative is one of the many beneficial changes
since the company has also already removed trans fats and artificial
coloring from food items.
Papa John’s has transitioned towards becoming one of
the healthiest pizza chains. During 2016, Papa John’s removed synthetic
and artificial food colors, preservatives and high-fructose corn syrup
from their food items. The chain has recently experimented with organic
toppings on pizza at several restaurants in Lexington, Kentucky to
determine if this should be a new implementation.
Primarily, Papa John’s is testing four ingredients
which include organic roma tomatoes, green peppers, yellow onions and
mushrooms. Besides, providing organic topping options the company has
also decided to offer a gluten-free crust option in some areas.
General Mills removed artificial coloring and
flavoring from seven of their cereals which includes Trix, Reese’s
Puffs, Cocoa Puffs, Golden Grahams, Chocolate Cheerios, Frosted
Cheerios and Fruity Cheerios. Specifically, General Mills has
successfully eliminated 75% of artificial flavors and colors from their
A R&D team researched and conducted experiments
to achieve natural coloring and flavoring for these cereal products.
The team examined and analyzed approximately 69 color and 86 flavor
alternatives, completed 98 tastings and created about 300 recipes.
There were many challenges to achieving the exact
same taste and color of each cereal when switching to new ingredients.
In particular, General Mills is still trying to establish new
ingredients for blue and green coloring of Trix cereal pieces.
The Hershey Company stated that there will be a
transition to utilizing more natural ingredients in their
chocolate products by 2020. This change
will lead to chocolate without artificial
sweeteners or colors. In particular, the company has created
Simply 5 chocolate syrup which only contains five ingredients.
Besides eliminating ingredients, Hershey’s has
implemented certain technology from SmartLabel and Sourcemap to
increase the transparency of ingredients utilized. These tools provide
product information to customers online through QR codes displayed on
product packaging and wrappers, as well as, learn about the origins of
have recently been two popular alternatives in
development for meat products which include plant-based
burgers and lab-grown meat. Both products taste similar to meat and are
beneficial due to the prevention of killing animals, the utilization of
fewer resources in the environment, and the ability to provide a
healthier alternative for individuals.
Memphis Meats is a company based in San Francisco,
California that has begun experimenting with the development of
lab-grown meat or “clean meat.” Food scientists have experimented with
growing self-renewing cells. With innovations in stem cell research and
tissue engineering, companies, such as Memphis Meats, will be able to
create clean meat. One of the challenges that companies encounter is
growing stem cells efficiently enough in order to reduce the price of
the product and amount of energy required to create the cells.
During 2011, Pat Brown a former professor from
Stanford University created the startup, Impossible Foods, with the
intent to provide individuals with alternative health conscious food
options. Investors have been drawn to contribute money to Impossible
Foods allowing the company to continue research and development
activities of creating plant based burgers which look and taste like
meat based burgers. These plant-based food items offer nutritional, as
well as, environmental benefits.
One of the important ingredients utilized in the
burger is soy leghemoglobin or heme which is what makes the product
taste similar to meat. The company received a patent for the
utilization of heme which is created from genetically modified yeast
and fermentation. The Impossible Foods burger was primarily sold at a
New York City restaurant, Momofuku, and is currently available at
multiple restaurants around the United States.
brands and restaurants are increasingly
transitioning to provide customers with healthier and natural food
alternatives. As new technology continues to be developed new food
products, such as plant based or lab-grown burgers, will be created.
Companies who are involved with removing artificial additives and
reformulating food recipes are eligible to take advantage of the
federal R&D Tax Credit.