Innovation, Innovation, Innovation

Posted by Oliver Koll on May 19, 2017

For a brand, the launch of new products can have many benefits, such as exciting consumers, outplaying competitors, keeping brand image dynamic, satisfying retailers and/or defending/growing market share.

Innovation therefore is essential for FMCG brands to stay relevant in the eyes of the consumer.

For this reason, we will focus today on sharing 3 of our key BG20 insights on Innovation.
Here innovation is defined as any SKU which is less than 12 months old.

For the average brand we find that:

  • 1 in 10 choices is an innovation.
    New SKUs capture about 10% of a brand’s total volume sales and a slightly higher share for value sales. Innovations sell at a premium and help to defend price erosion – probably even more than prices paid in year 1 show because aggressive price promotions often support the launch.
  • Size matters, but only number-wise.
    While big brands launch more new SKUs, they still get a similar value share from new SKUs as small brands do. Therefore the ratio coming from innovation is not dependent on the size of the brand.
  • Frequency matters.
    Brands in frequently purchased categories (>10 times a year) launch twice as many new SKUs as brands in less frequently purchased categories (< 5 times a year). But this is only a reflection of their larger assortments, as the share resulting from innovations is the same for brands in either frequency range.

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