CPG Innovation Is at Its Lowest Rate Since 1996. That’s Not a Creativity Problem.
The industry is staring down a genuine innovation crisis. The companies that solve it won’t do it by brainstorming harder.
Something is broken in how consumer packaged goods companies develop new products. Not broken in a fixable-with-a-new-process-framework way. Broken in a way that points to a structural gap that most CPG boardrooms haven’t named correctly yet.
Here are the numbers. Mintel’s Global New Products Database found that in the first five months of 2024, just 35% of global CPG launches across food, drink, household, health, beauty, personal care, and pet care were genuinely new products. That’s the lowest proportion of true innovation Mintel has recorded since it began tracking in 1996. The remaining 65% were renovations: line extensions, reformulations, new packaging, relaunches. In food and drink specifically, the number is starker. Only 26% of launches were truly new, compared to 50% in 2007.
Meanwhile, BCG’s analysis confirms the same trend from a different angle: 76% of yearly product launches fail outright, and two-thirds of those don’t even reach 10,000 unit sales.
The industry is innovating less, and what it does launch is failing at a higher rate. The instinct is to blame risk aversion, shrinking R&D budgets, or post-pandemic defensive posturing. Those are contributing factors. But they’re not the root cause.
The real problem is structural, not cultural
The dominant narrative around CPG stagnation blames big company bureaucracy, slow decision-making, and a lack of entrepreneurial courage. There’s truth in that. But it obscures something more fundamental: the scientific infrastructure required to develop genuinely new consumer products has atrophied inside most major CPG companies, and the industry has no clear model for replacing it.
Consider what it actually takes to bring a genuinely new product to market. Not a flavor extension or a repackage of a product with new functional claims, novel ingredient science, reformulated stability profiles, or a meaningfully different delivery mechanism. That requires food scientists, nutritional biochemists, sensory scientists, materials researchers, and regulatory specialists. It requires lab infrastructure, access to novel ingredients, and the time to run formulation iterations that may take months or years to get right.
The CPG industry accounts for only 2.9% of global R&D spending, compared to 23.1% for computing and electronics. That gap has widened, not narrowed, as companies cut costs and focused R&D resources on defending existing lines rather than creating new ones. As Mintel’s food and drink director Jonny Forsyth has noted, most CPG companies have spent the past two decades leaning on line extensions and packaging as a substitute for genuine product innovation — and the bill is now coming due.
By the numbers: the scale of the stagnation
35% of CPG launches in 2024 were genuinely new products, the lowest rate since 1996 (Mintel)
26% of food and drink launches were truly new, down from 50% in 2007 (Mintel)
76% of yearly CPG product launches fail (BCG)
65% of new product launches are renovations rather than innovations, the highest point in 30 years (BCG)
2.9% of global R&D spending comes from the CPG industry, compared to 23.1% for computing and electronics
$282.8B in U.S. private label sales in 2025 a record, growing at nearly 3x the rate of national brand growth (Circana/PLMA)
Who’s filling the gap — and how
The market hasn’t stopped rewarding genuine innovation. It’s just stopped finding it from legacy players.
McKinsey’s analysis of CPG disruptor brands shows that in categories like bath and body, performance nutrition, and pest control, disruptors are now responsible for 50% or more of total category growth. Brands like OLIPOP, Fairlife, Dr. Squatch, and Alani Nu didn’t win through marketing creativity alone — they won by building products with distinct formulation science and functional claims that incumbents hadn’t developed. In pest and insect control, just two brands — Zevo and STEM — account for roughly 70% of total growth.
Private label is accelerating the pressure further. U.S. private label sales hit a record $282.8 billion in 2025, growing at 3.3% versus national brand growth of just 1.2%. Over five years, private label dollar sales have jumped 30%. Sixty percent of consumers now believe store brands offer equal or better quality than national brands. Private label used to compete on price alone. Now it competes on quality, sustainability, and increasingly, innovation, Aldi is already fielding functional soda alternatives that directly challenge brands like Poppi.
The window for legacy CPG companies to differentiate on brand equity alone is closing. What remains is product science.
Why internal R&D alone can’t close the gap
The honest reality for most large CPG companies is that internal R&D teams, already stretched across portfolio maintenance and reformulation work, are not structured to generate the kind of breakthrough product science that produces genuine category-creating innovation.
This isn’t a knock on CPG scientists, who are often excellent. It’s a structural observation. University food science, nutritional biochemistry, and agricultural research departments work on exactly the kinds of problems CPG companies need solved, novel fiber delivery systems, bioavailability of functional ingredients, natural preservation science, sustainable packaging materials, plant-based protein functionality but at a depth and over a timeline that internal commercial teams rarely have the runway to match.
The disconnect has always been there. What’s new is the urgency. As BCG notes, small players, those under $500 million in annual U.S. retail sales now account for all branded share growth in CPG. Large incumbents are losing ground not because they lack distribution or marketing budgets, but because they are losing on the product itself.
The companies reversing that trend share a pattern: they are reaching outside their internal labs. They are working with university researchers who have spent years on the specific technical problems that stand between them and a genuinely new product. Functional ingredient stability. Protein-fiber co-formulation. Microbiome-friendly food design. Natural color and preservation systems. These are research problems, not creative briefs and they belong in labs with the equipment and expertise to solve them.
What this looks like in practice
The CPG companies making meaningful progress on genuine product innovation aren’t doing it solely through internal venture studios or M&A, though both have their place. They are also building deliberate research partnerships with academic institutions.
A food brand trying to develop a high-fiber, protein-dense snack that can meet GLP-1-adjacent consumer needs without over-processed ingredients isn’t going to solve that in a commercial kitchen. It needs nutritional biochemists who understand the interaction between specific fiber types, protein digestibility, and gut microbiome response. A personal care brand trying to develop a genuinely preservative-free formulation isn’t going to crack that with a reformulation checklist. It needs antimicrobial scientists who have spent years studying natural preservation systems.
University labs have this expertise. Food science departments, agricultural schools, nutritional sciences programs, and materials science labs are working on the upstream research that CPG product developers need downstream. The barrier has never been a lack of relevant academic work. It has been the friction of finding the right researcher, establishing a workable collaboration framework, and moving fast enough to matter commercially.
The bottom line
The CPG innovation drought isn’t a creativity problem, a courage problem, or a process problem. It’s a research access problem. The scientific expertise required to build genuinely differentiated products exists, it just doesn’t live exclusively inside CPG companies anymore. It lives in food science departments at land-grant universities, in nutritional biochemistry labs, in agricultural research programs that have spent decades on exactly the ingredient, formulation, and functional science challenges that are now commercially urgent.
The brands that close the gap between where internal R&D ends and where breakthrough product science begins will be the ones that define the next decade of CPG growth. The ones that don’t will keep launching renovations and watching the market share numbers move in the wrong direction.
That’s the problem NotedSource was built to solve connecting CPG companies directly to the academic researchers working on the specific formulation, ingredient, and food science challenges that matter most to their innovation pipeline. Fast, targeted, and built for the pace that commercial product development actually requires.
Visit notedsource.io to learn more or request a demo.
Sources
Mintel — The Role of Innovation in the Future of the CPG Industry
BCG — Rising Stakes of Innovation in the Consumer Sector
McKinsey — How Disruptor Brands Are Reshaping Growth in CPG
Circana/PLMA — Private Label Beverages Pour on Growth as Innovation Accelerates
Bakery & Snacks — Private Label Trends 2026: Innovation, Pricing and Trust
Dig Insights — The Challenge of Developing an Effective Innovation Strategy in CPG
Deloitte — 2026 Consumer Products Industry Outlook