The consumer-packaged goods (CPG) industry is in an innovation crisis, with fresh ideas at a historic low. Mintel’s analysis reveals that only 35% of CPG launches in 2024 were new products, the lowest since they started tracking in 1996. Most releases have been repackaged or reworked versions of existing items, a dangerous strategy in a competitive market where consumers are quick to switch to private labels for better value.
The last two decades have made us risk-averse
Big brands are facing stagnation, particularly in North and Latin America, where true innovation is falling behind emerging markets like the Middle East and Asia-Pacific, where growth is being fuelled by a more dynamic, entrepreneurial approach. Economic challenges like rising prices and global disruptions from COVID-19 and the Ukraine war haven’t helped either. But the innovation drought stretches back years, exacerbated by the cautious, risk-averse strategies adopted after the 2008 financial crisis.
Food and drink companies are suffering the most, launching just 26% new products this year, compared to 50% in 2007. Meanwhile, beauty brands are also facing hurdles, with higher ingredient costs and tougher consumer scrutiny slowing down innovation.
AI is levelling the playing field
However, startup brands are nipping at the heels of the established players, and the rise of artificial intelligence (AI) is making it easier for smaller, more agile competitors to break into the market and disrupt.
AI is set to reshape the CPG landscape, accelerating product development and giving smaller brands a fighting chance in a real-time economy. Supermarkets are leveraging AI to refine their private-label offerings, using data insights to offer consumers better value alternatives.
The message for big brands? Innovate, or risk irrelevance. AI and agile competitors are closing in, and without bold, creative product launches, established players could lose out to the next wave of innovation-driven disruptors. The time to act is now. To read the full report, head to Mintel’s website.
To read the full report, head to Mintel’s website.