CHICAGO — A dearth of new product launches this year — especially in food and beverages — has pulled innovation by consumer packaged goods companies worldwide to an all-time low, new research from market intelligence firm Mintel shows.

Through the first five months of 2024, 35% of global CPG launches in the food, beverage, household, health, beauty, personal care and pet care categories were “genuinely new” products, while 65% were “renovation” launches such as line extensions, reformulations, new packaging or item relaunches, according to Mintel’s Global New Product Database.

The Chicago-based market researcher said the data marked the lowest level of CPG innovation it has recorded since beginning new product tracking in 1996. Genuinely new products for 2024 through May were down from 42% in 2019, before the pandemic, whereas renovation launches rose from 58% in 2019.

Food and beverages experienced the biggest decrease, with brand new products representing 26% of launches from January through May 2024 versus 50% in 2007, or down by almost half, Mintel reported. That compares with brand new products accounting for 33% of launches in that five-month span for the household category (51% in 2007), 37% for health (59% in 2007), and 46% in beauty and personal care (52% in 2007).

Mintel noted that food and beverage manufacturers have favored new varieties, range extensions and/or new packaging over brand new offerings as ways to give consumers something different but also something familiar. 

“Most of the innovation over the past two decades has come from the e-commerce channel,” Jonny Forsyth, director of food and drink at Mintel, said in the researcher’s “Role of Innovation in the Future of the CPG Industry” report. “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.”

Geographically, North America and South America sit below the global innovation average of about 35% of CPG launches being genuinely new products. In North America, including the United States, just 29% of product launches are brand new items, ahead of 28% for South America but less than 34% for Europe, 37% for Asia-Pacific and 46% for the Middle East and Africa, Mintel’s data show. The researcher observed that this may be more of a reflection of faster economic growth in developing markets than mature markets, as the International Monetary Fund pegs 2025 growth at 4.2% for emerging market and developing economies versus 1.8% for advanced economies.

The COVID-19 pandemic disrupted CPG innovation but didn’t trigger the decline in new product releases, Mintel pointed out. Though overall CPG innovation fell from 42% in 2019 to 35% in the first five months of 2023, that rate of decline was no worse than between 2013 and 2019, and the beginning of the decrease goes back further. In 2007, the year before the global financial crisis, just over half of global CPG launches were brand new products, and that share dropped to 43% a decade later, according to Mintel.

“After the shock of the 2008-09 global financial crisis, larger CPG companies may have consciously decided to innovate less because of concerns about return on investment,” the research firm said.

Along with factors such as higher ingredient costs and shortages in raw materials, CPG manufacturers also have had to adjust to changing shopper behavior.

“From a consumer perspective, anxious shoppers have also been more concerned about getting value for money than discovering new and exciting products,” Mintel explained. “As Domino’s CEO Russell Weiner recently told The Wall Street Journal, ‘Consumers just don’t want surprises.’”

More recently, the rapid emergence of artificial intelligence (AI) stands to level the innovation playing field for smaller CPG brands and private labels, Mintel said in its report. AI algorithms can make sense of a multitude of digital data points to spur innovations, create marketing campaigns, develop consumer insights and bolster customer service, shortening innovation cycles that once took years to just months.

“Supermarkets can — and surely will — use AI algorithms to harness this big data so they can create better private label products at more competitive prices,” Mintel said. “Innovation will be a central pillar for bigger CPG brands to survive and thrive against such challenges as we enter the second half of the 2020s.”