Innovation, Innovation, Innovation
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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