29 Jul 2024 Global FMCG innovation reaches an all-time low

A new Mintel report reveals just 26% of new food & beverage launches in the first five months of this year were truly novel products….

Fast-moving consumer (FMCG or CPG) companies are understandably obsessed with what the near future will look like. To quote the US computer pioneer Alan Kay, ‘the best way to predict the future is to create it’.

Mintel’s analysis shows that such creativity has been in short supply in recent years, and this innovation drought risks the future profitability, and potentially, even survival, of established CPG industry players.

The new report from Mintel that says true innovation in food & beverage and across consumer packaged goods categories is at its lowest level since the market research firm began tracking new products in 1996.

Mintel’s Global New Product Database (GNPD) shows that for the first five months of 2024, just 35% of global CPG launches (i.e. across food, drink, household, health, beauty, personal care and pet care) are genuinely new products.

It means that so far in 2024, 65% of launches are ‘renovation’ ie line extensions, reformulations, new packaging or relaunches.

Declining innovation comes at a time when big brands have just pushed through significant price increases, in many cases without offering consumers any additional benefits. This makes it easier for consumers to switch to private-label alternatives.

For example, in May 2024, almost a third (31%) of US adults admitted to buying more store brands over the past two months. Will those consumers automatically return to big brands once they feel more financially confident?

Food and drink innovation falls by almost half

When comparing different CPG industries, innovation has declined the most in food and drink, which launched just 26% of new products between January and May 2024 compared to 50% in 2007.

Food and drink companies have preferred to launch new varieties/range extensions or new packaging, as a way to offer new, but familiar, choices to consumers.

According to Mintel’s Director of Food and Drink, Jonny Forsyth, “Most of the innovation over the past two decades has come from the eCommerce channel. However, food and drink manufacturers have to cope with complex supply chains, low margins and the need for temperature control when delivering fresh food and drink. The barriers to entry are therefore much greater than if you are starting a business in categories like beauty and personal care, household goods or vitamins and supplements.”…..