UK brands launched fewer product innovations in 2022, as economic burdens and the cost-of-living crisis continue to put pressure on retail supply chains.
According to the latest report from retail research company Circana, there were 144,432 new products launched across Europe in 2022, compared to 172,997 in 2021 – resulting in 16.5% fewer innovations as sales in FMCG products continue to decline.
Covering the six largest markets in Europe (France, Italy, Germany, Spain, UK and Netherlands), the research reveals declining product innovations across larger brand manufacturers – showing a growing shift from the gamble of developing new products.
The largest drop was seen in France where new product launches fell from 27,317 to 19,843 (-27.4%).
Product innovations now make up 6% of total FMCG value sales, with volume and value increase making them a source of sustainable organic growth.
The report claims that fewer innovations from both manufacturers and retailers reflects a move towards prioritising existing core ranges to maintain availability on shelves, protect volume and share – as businesses continue to grapple with inflationary turbulence.
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Small and medium-size manufacturers were responsible for 75% of all new products launched, contributing 68% of total value sales from new products.
The report also found that shoppers are more likely to try new products that are at a lower price (59%), readily available (50%), easy to shop & use (both 56%) or fits the shopper’s routine (46%).
Global SVP of strategic growth insights at Circana, Ananda Roy, said: “The evidence from the analysis means innovation continues to be a sustainable source of organic growth, despite difficult trading conditions and the cost of living crisis.
“While the ability to command a significant premium is constrained, new product launches continue to deliver the volumes that brand manufacturers need to maintain growth and market share.”
Roy concluded: “To remain competitive, brand owners need to make the benefit of the innovation relevant to evolving consumer needs. They need to tap into and market the transformation, not just the product feature.”
Earlier this year, it was revealed that private labels now make up 38% of total FMCG value sales in Europe, as shoppers continue to look for deals on everyday groceries.