New figures shared exclusively with Marketing Week reveal that innovation in Europe’s consumer packaged goods (CPG) sector fell by 20% last year, driven by inflationary pressures and broader economic challenges.
According to Circana, smaller CPG companies are driving large-scale innovation, producing “Superstar” products with higher average sales per launch than those from major players. By leaning into local and sustainability credentials and catering to shoppers’ demand for exciting, lifestyle-enhancing products, these challenger brands are proving highly effective at generating sales through innovation, underscoring the saying that “small is mighty.
Ananda Roy, Senior Vice President and Industry Advisor, Consumer Goods, Circana, commented: “Consumers love new products that fit their lifestyle and dietary choices, and help them to meet their lifestyle goals. They’re prepared to pay more for items that offer something genuinely different. But making sure new products live up to expectations is crucial, otherwise consumers will ‘silently quit’. The message to CPG manufacturers and brands is clear and simple: now is the time to innovate.”
This insight comes from Europe’s Innovation Pacesetters 2025 report, released by Circana. The study examines more than 75,000 new CPG launches and product updates across 2024, spanning categories such as food, drink, household, personal care, baby, and pet products. It combines point-of-sale data from Circana’s six largest European markets, France, Germany, Italy, the Netherlands, Spain, and the UK (EU6), with consumer research to unpack buying behaviour.
Circana is a leading provider of technology, AI, and data solutions for fast-moving consumer goods companies, durable goods manufacturers, and retailers. Through its predictive analytics and advanced tools, the company helps clients track market share, gain deeper insight into the consumer behaviors behind it, and identify opportunities to drive faster growth.
The UK and the Netherlands, which faced the steepest inflation rates, also recorded the sharpest declines in innovation sales value. In edible categories, innovation sales dropped by 28% in the UK and by 43% in the Netherlands between 2023 and 2024. Despite this setback, the UK continues to lead as the most significant innovation market, with 7% of edible product sales generated by new product development (NPD), the highest share among the EU6 countries.
“Innovation is the lifeblood of CPG, a proven source of growth and a way of delighting shoppers who are eager for new products at a time of cost cutting and uncertainty,” said Roy.
Circana’s research also shows that new products typically gain stronger traction in their second year on the market. This is when more shoppers trial them, distribution challenges are resolved, and pricing is refined. Many launches that started out as ‘Rising Stars’ (€500,000 – €1m in sales per SKU) or ‘Mainstream’ (€100,000 – €500,000) in their first year often progress to ‘Superstar’ status (over €1m in sales) by year two.
