UK leads Europe in innovation despite 28% sales decline, reports Circana

Innovation across Europe’s consumer packaged goods (CPG) sector is slowing, but shoppers remain eager for products that excite, inspire and support their lifestyle goals. This is according to Europe’s Innovation Pacesetters 2025 report, published today by Circana. The report reviews CPG innovation across Circana’s largest European markets (EU6) – the UK, France, Germany, Italy, Spain and the Netherlands – and highlights how challenger brands, heritage reinventions and shifting categories are reshaping the future of innovation.

The report, which tracked more than 75,000 new product launches in 2024, shows a sharp slowdown in new product development. Across Europe, the number of innovations fell by -20% compared with 2023, while sales from new products dropped by -17%, declining from €28.9bn in 2023 to €24.1bn in 2024. Only 5.2% of all CPG products were innovations last year, one of the lowest levels Circana has ever recorded.

In the UK, the impact of inflation on innovation was particularly evident. Value sales of edible innovations declined by -28% between 2023 and 2024, one of the steepest drops in Europe, while the Netherlands plunged -43% over the same period. Yet the UK continues to stand out as Europe’s most innovation-driven market, with 7% of total CPG sales generated by new product launches – ahead of all other European markets.

Ananda Roy, Senior Vice President and Industry Advisor, Consumer Goods, Circana, said: “The UK is experiencing one of the sharpest declines in innovation sales across Europe, yet it continues to generate a higher share of sales from new products than any other market. Shoppers are telling us loud and clear – they notice new products, and they will reward those that deliver versatility, relevance and lifestyle benefits. For brand owners and marketers, the message is simple: don’t hold back. Back your winners beyond the first year, reimagine categories with fresh thinking, and work closely with retail partners to turn innovation into long-term growth.”

British consumers also remain highly engaged with innovation, with nearly four out of five (78%) saying they notice new products on shelves. More importantly, shoppers are prepared to pay for launches that deliver versatility, relevance and lifestyle benefits rather than simply the lowest price.

The report points to several standout examples of how innovation is playing out in the UK. WHSmith successfully reinvented itself with the launch of its Smith’s Family Kitchen food-to-go range, which has already achieved €29m (£24m) in value sales. While Glen’s Vodka has disrupted the market by extending into ready-to-drink cocktails, using its local provenance and sustainability credentials to appeal to new audiences. Other smaller brands, such as Trüfrü, prove that innovation doesn’t need to be complicated with its frozen chocolate-coated strawberries generating more than €5m (£4m) in sales, capturing shoppers’ attention.

Categories such as milk-based drinks, sports and energy drinks, and frozen foods are also proving fertile ground for innovation as consumers seek convenience, value and functional benefits. Meanwhile, private label innovation is making shopping more fun and experiential again, adding pressure on established brands to stay relevant.

Despite the slowdown, Circana’s analysis shows that innovation can still succeed. Many Superstars – products achieving over €1m (£836,000) per SKU in annual sales – and Rising Stars, which deliver between €500,000 and €1m (£418,000 – £836,000) per SKU, are continuing to cut through transcend the UK market. In fact, some of the strongest growth is seen in year two of a launch, once distribution and pricing have stabilised, highlighting the importance of brands continuing to back successful innovations beyond the first year.