Is the cost-of-living crisis leading to impoverishment on supermarket shelves? FMCG manufacturers are launching significantly fewer innovations, while food retailers are rationalising their ranges, further reducing the success rate of launches.
Declining confidence
Last year, FMCG manufacturers introduced 144,432 products on the British, Dutch, French, German, Italian and Spanish markets. While that may seem much, it is 16.5 % less than 2021’s 172,997 launches. In France, the number of product launches even fell by almost a third, from 27,317 to 19,843, a study by research firm Circana (the result of the merger between IRI and NPD) shows.
Both manufacturers and retailers are now giving priority to their existing core ranges, to protect their volumes and market share, the researchers think. The figures may also reflect declining confidence in charging higher prices for new products, a tricky exercise after all in times of high inflation and cost-conscious shoppers.
Competition on the shelf
Remarkably, large manufacturers scaled back the number of product launches the most. Smaller and medium-sized companies, with faster reactions to changes in the market, accounted for 75 % of the number of new products and 68 % of sales realised through innovations. This means that just one in four new products was launched by large brand manufacturers. Proportionally, these did deliver higher market share value though, at 32 % of total new product sales.
According to Circana, innovation remains a source of sustainable growth even in difficult times: brand manufacturers need product launches to maintain growth and market share. New products are still fuelling demand, despite inflation. However, competition on the shelf is increasing: retailers are rationalising their ranges and eliminating slower selling items. This makes it harder than ever for new products to survive. Of all new products launched in 2021, 74 % remained on the shelves the second year. 23 % of references did double sales value in that second year.
