Report: Food and Beverage Innovation Plummets Nearly 50% in 2024

A combination of rising ingredient prices, raw material shortages and downsized product portfolios has left creativity in short supply for many CPG companies. According to a new Mintel report, only 35% of global CPG launches spanning the food, drink, household, health and beauty industries in 2024 have been genuinely new products – the lowest rate of innovation since Mintel began tracking new products in 1996.

The global downturn in CPG innovation is most prominent in North and Latin America. In the U.S., only 25% of CPG launches were new products in the first five months of 2024, compared to the global average of 35%.

What’s more? Food and beverage has seen the greatest innovation decline of all CPG sectors, accounting for only 26% of new products across all CPG innovation between January and May 2024 versus 50% in 2007. Per the report, F&B companies are favoring a renovation approach – like reformulations, new varieties, range extensions and new packaging – to offer consumers new, yet familiar, choices.

In the past few months alone we’ve seen an influx of brand refreshes from Lexington Bakes, Barritt’s Ginger Beer and MOSH as well as line extensions from Kooshy, Laoban, PLEZi and more.

There’s some good news for smaller brands: Bigger no longer equals better. A lack of R&D investment from large brands after the 2008 financial crisis created an environment in which startups like OLIPOP tapped into the rise of digital technology and gained a foothold in their categories. According to NielsenIQ data, 45% of growth in CPG between 2016 and 2020 was driven by small- and medium-sized brands, while private label captured 30%.

“As the digital transformation of CPG gathers pace, the old adage ‘innovate or die’ will never be truer, especially given that big brands have been growing more slowly than challenger brands and private-label. If big players fail to innovate more, this trend will dramatically increase as we enter the late 2020s,” the report reads.

Should Big CPG make an innovation comeback, it will face two key hurdles: artificial intelligence (AI) and private-label brands. Here’s the lowdown:

• The rapid emergence of AI and ecommerce has lowered the barriers to entry for emerging brands, allowing them to build brand equity and sales online before shifting into brick-and-mortar retail. Also, tech advancements have cut year’s long innovation cycles down to just months.
• Continued inflation has supported a switch to private-label alternatives (see: recent private label refreshes from Walmart and CVS). In May, 31% of U.S. adults said they purchased more store brands over the past two months.

Without genuine innovation, will consumers automatically return to big brands once they feel more financially secure? According to Mintel, unless the current innovation drought is reversed, the future profitability of, and potentially the survival of, established CPG industry players remain at risk.

Go Deeper: Listen to this episode of CPG Week to learn about the latest private label trends.