From tight margins to tax‑aware growth in the food industry

A regional food and beverage producer operating several plants and distribution centers faced mounting pressure on margins. Rising raw material costs, energy prices and retailer demands for discounts left little room for error. Tax had always been treated as a compliance function, focused on filing returns and handling occasional audits. However, a series of uncoordinated investments and reorganizations created a patchwork of tax positions. When a significant audit resulted in unexpected assessments, the board decided that a structured approach to tax strategy planning and execution was no longer optional. Radner’s team was asked to design and implement this transformation.

The engagement began with a diagnostic phase that went beyond traditional tax reviews. Radner’s team visited production sites, warehouses and the central planning office to understand how the supply chain actually worked. Discussions with operations revealed seasonal production peaks, contract manufacturing arrangements and complex promotional campaigns with retailers. These business realities had direct tax implications, especially for inventory valuation, promotional spend and cross‑border movements of goods. The diagnostic showed that many tax decisions were made ad hoc, without a unifying framework.

Radner’s team compiled a comprehensive inventory of tax‑relevant processes. This included corporate income tax, VAT, excise duties on certain beverages, property taxes and payroll taxes for seasonal workers. Each process was mapped to responsible teams, systems and controls. The mapping exercise uncovered inconsistencies in how similar transactions were treated in different plants. For example, promotional discounts were sometimes booked as marketing expenses and sometimes as price reductions, leading to different VAT outcomes. The lack of standardized treatment increased both risk and administrative burden.

To prioritize actions, Radner’s team performed a structured risk and opportunity assessment. Historical audits were analysed to identify recurring themes and authority focus areas. Transaction data was sampled to test compliance with key rules, such as VAT on free samples and excise duty calculations. At the same time, potential opportunities were identified, including underused investment incentives for energy‑efficient equipment and regional development grants. The assessment revealed that while the company was generally compliant, it was leaving value on the table and exposing itself to avoidable disputes.

With this insight, Radner’s team worked with the CFO and tax manager to define the target state for tax within the organization. The vision was to move from reactive compliance to a model where tax considerations were integrated into investment planning, pricing and supply chain decisions. This required not only technical changes but also shifts in roles and responsibilities. A roadmap was developed, grouping initiatives into quick wins, medium‑term process changes and longer‑term structural adjustments. The roadmap formed the backbone of the tax strategy planning and execution program.

One of the first quick wins focused on investment incentives. The company had recently invested heavily in energy‑efficient ovens, refrigeration and wastewater treatment. However, documentation for these projects was scattered and not aligned with incentive requirements. Radner’s team reconstructed project files, working with engineers and project managers to capture technical specifications and environmental benefits. Applications for tax credits and grants were prepared and submitted where deadlines still allowed. Within a year, the company recovered a meaningful portion of its investment through incentives that had previously been overlooked.

Process standardization came next. Radner’s team designed a set of tax accounting guidelines tailored to the food and beverage sector. These guidelines covered areas such as treatment of promotional activities, rebates, spoilage, free samples and consignment stock. Workshops were held with plant controllers and finance staff to explain the rationale behind each rule. The team also helped configure the ERP system so that specific transaction types automatically triggered the correct tax treatment. This reduced manual adjustments and improved consistency across locations.

Excise duties presented a particular challenge for certain beverage lines. The rules were complex, with different rates and exemptions depending on alcohol content, packaging and distribution channels. Radner’s team conducted a detailed review of excise calculations and reporting. Several inefficiencies were identified, including conservative assumptions that led to overpayment in some cases. By refining measurement methods and documentation, the company was able to optimize its excise duty position without increasing risk. Clear procedures were established to ensure that new product launches would be assessed for excise implications from the outset.

On the corporate income tax side, transfer pricing between production entities and distribution companies required attention. Historically, margins had been set based on internal negotiations rather than functional analysis. Radner’s team performed a structured review of functions, assets and risks across the value chain. Based on this, transfer pricing policies were redesigned to reflect the actual roles of each entity. Benchmarking studies supported the new margins, and intercompany agreements were updated. This not only reduced audit exposure but also provided clearer insight into profitability by business line.

VAT on cross‑border movements of goods was another area of focus. The company operated a central warehouse serving multiple countries, with frequent stock transfers and returns. Radner’s team analysed the flows and identified opportunities to simplify and improve VAT treatment. In some cases, call‑off stock arrangements were introduced to reduce administrative burden and avoid unnecessary registrations. Documentation requirements were clarified, and standard operating procedures were created for logistics and finance teams. The result was fewer errors, faster reconciliations and a lower risk of penalties.

Governance and communication were critical to making these changes stick. Radner’s team helped establish a tax steering committee, chaired by the CFO and including representatives from operations, procurement and sales. The committee met regularly to review progress on the tax strategy roadmap and to assess tax implications of major business decisions. A tax policy document was drafted, setting out principles for acceptable planning, documentation standards and escalation paths. This policy was approved by the board, signalling that tax was now considered a strategic matter.

Training played a central role in embedding the new approach. Radner’s team developed tailored training sessions for different audiences: high‑level briefings for executives, practical workshops for plant controllers and focused sessions for sales and marketing on promotional activities. Real‑life examples from the company’s own operations were used to illustrate concepts. Over time, non‑tax staff began to recognize when a decision might have tax implications and when to involve the tax manager. This cultural shift reduced the number of surprises and last‑minute issues.

As the new processes and structures took hold, the impact became visible in financial results. The company’s effective tax rate stabilized, with fewer one‑off adjustments from audits or corrections. Cash tax savings from incentives and optimized excise duties were reinvested into automation and product development. Provisions for uncertain tax positions decreased as documentation improved and positions became more defensible. The finance team could forecast tax payments with greater confidence, supporting better cash flow management in a business with strong seasonality.

Relationships with tax authorities also improved. During subsequent audits, the company was able to present clear documentation, consistent policies and evidence of board‑approved governance. Radner’s team supported audit responses, using the structured narrative developed during the tax strategy planning and execution project. Audits became more focused and less disruptive, with fewer adjustments and shorter timelines. Authorities recognized that the company had invested in robust compliance and risk management.

In the medium term, the company used its strengthened tax position to support strategic moves. When evaluating the closure of an older plant and the opening of a new facility in another region, tax implications were integrated into the business case from the start. Radner’s team modelled the impact of different locations on incentives, property taxes and logistics‑related VAT. This allowed the board to compare scenarios on a like‑for‑like basis, including tax. The final decision balanced operational efficiency with a sustainable tax profile.

For this food and beverage producer, the transformation of tax from a narrow compliance function into a strategic partner delivered both quantitative and qualitative benefits. Through coordinated tax strategy planning and execution, Radner’s team helped the company unlock incentives, reduce volatility and embed tax awareness into everyday decisions. In an industry where margins are thin and regulatory scrutiny is high, the ability to manage tax proactively became a key contributor to resilient, tax‑aware growth.