Why is the R&D so important?
When creating everything that is new, apart from the vision and strategic sense, it is necessary to create the right product that will meet the customer's expectations. In addition, business models in many industries have changed significantly over the past few years, introducing volatility into their business. This volatility and its skilful management have become a competitive advantage that in many cases allows you to run a profitable business. This is due to the fact that volatility is attractive to a customer who often reaches for a new product because it has changed, thus differentiating it from competitors' products. In many cases, innovations revolutionize the competitive position, becoming the engine of growth in the form of increasing income and business efficiency. Moreover, the introduction of changes in products results from the availability of raw materials, nutritional trends, and eco-awareness of consumers. Each planned change of a product requires a careful assessment of the feasibility of the change in the context of product quality and its life cycle (in some industries legally regulated) as well as an assessment of the likelihood of success. That is why many companies spend exorbitant amounts on R&D and treat R&D as an important area of their activity.
And what is it like in the FMCG sector?
From the perspective of a producer from the FMCG sector, the R&D area is crucial. The very definition of the sector (fast moving consumer goods) determines an open approach to the product portfolio, expecting product development, creating consumer patterns, modernizing and creating new packaging, adapting products to the lifestyle and age group of consumers. R&D activities supported by marketing communication often lead to a change in the buyer's behavior, perception or use of the product. Ultimately, each organization aspires to commercialize its products as much as possible to maintain its competitive position. The role of R&D is not only focused on product innovation.
The R&D team plays an important role in the process of selecting material suppliers and subcontractors, creating products that are safe for the customer and meet quality standards.
In addition, R&D conducts a continuous process of changes in the product portfolio by modifying recipes in order to improve their quality, taste and other ingredients that create utility value for the consumer. The year 2020 and the legal and tax changes introducing the sugar levy were a test of the effectiveness and efficiency of R&D teams, which tested and introduced product changes at an express pace in order to avoid overburdening customers with the sugar levy. The successfully implemented changes ensured the maintenance of the competitiveness of products and will be the engine of growth for the coming years.
Innovation support mechanisms
Many countries are determined to be at the forefront of innovation economies rankings. Economies are changing macro policies in response to the growing benefits of the economy, where innovation and technology drive economic growth (like in the case of China). Comparing the position of Poland against this background, it appears that we still have a lot of catching up to do. In the last few years, mechanisms supporting the development of innovation have been introduced. More and more entities use tax deductions in the form of R&D relief and the choice of IP Box taxation. The Polish Deal and the announced new EU perspective allow us to assume that innovation is becoming the leitmotif in various types of support mechanisms for the development of enterprises.
Dominika Kopanicka
Finance Director (Deputy CFO)
Hortex Group
