The latest data from Mintel’s Global New Products Database (GNPD) presents a stark reality: only 35% of Consumer Packaged Goods (CPG) launches in early 2024 were truly new products—the lowest level of genuine innovation recorded since 1996.

The figure is even more striking in the food and beverage sector, with only 26% of new introductions being entirely novel, a sharp decline from 50% in 2007.

While this might sound discouraging, particularly for SMEs looking to make their mark, there’s a crucial takeaway: innovation isn’t just about invention. It’s about being resourceful, strategic, and responsive to market needs.

Innovation Beyond Invention

The misconception that innovation requires groundbreaking inventions can be a major obstacle for SMEs. True innovation can take many forms, including:

• Product Renovation: Adjusting formulations, improving packaging, or extending product lines can keep offerings fresh and relevant. Many companies are opting for these approaches rather than developing entirely new products due to cost constraints and logistical challenges.
• Process Innovation: Enhancing efficiency in production, supply chain management, or customer service can significantly improve competitiveness.
• Marketing Innovation: Repositioning existing products, leveraging digital marketing strategies, or tapping into new consumer trends can boost engagement and sales.
• Sustainability Initiatives: Innovations in eco-friendly packaging, waste reduction, and sustainable sourcing resonate with modern consumers and can set SMEs apart from competitors.

Turning Challenges into Opportunities

Several factors, including supply chain complexities, inflationary pressures, and shifting consumer behaviours, are making large-scale product innovation more difficult.

However, these challenges also open the door for SMEs to carve out niches through smart, strategic improvements.

For example, private-label brands are gaining traction because consumers seek affordability without sacrificing quality. SMEs can capitalise on this trend by offering high-quality alternatives to mainstream products, emphasising transparency, local sourcing, or unique flavours or versions of their products.

Additionally, while large corporations may hesitate to take risks, SMEs can be more agile, quickly adapting to consumer needs through targeted innovations.

This could mean offering smaller portion sizes, introducing new dietary options, and -perhaps most importantly- leveraging technology for a better customer experience, optimising processes and internal communication.

Practical Steps for SMEs to Innovate Effectively

1. Analyse Consumer Trends – Stay informed about shifts in consumer preferences and tailor offerings accordingly.
2. Leverage Data – Use feedback, sales trends, and competitor analysis to refine existing products or develop strategic extensions.
3. Optimise Operations – Streamline production, reduce waste, and explore partnerships that can enhance efficiency and cost-effectiveness.
4. Embrace Digital Tools – From e-commerce platforms to exploring solutions created for SMEs, digital innovation can enhance reach and engagement without major investment.
5. Collaborate and Experiment – Partnering with suppliers, retailers, or even other SMEs can lead to creative solutions and shared resources.
6. Invest in Learning – Staying ahead in innovation requires continuous learning. Our Innovation+Strategy course series is designed specifically for SMEs, offering six micro-courses with ten lessons each. These courses guide business owners, managers, and professionals on how to foster innovation, rethink strategies, and implement real-world solutions to stay competitive.

The Future of Innovation for SMEs

The decline in brand new product launches does not mean innovation is dead—it means it’s evolving.

For SMEs, this presents an opportunity to redefine what innovation looks like, focusing on incremental yet impactful changes.

By embracing a broader view of innovation, SMEs can stay competitive, meet consumer expectations, and drive growth in a challenging market.

In the end, innovation is not about inventing something entirely new—it’s about staying relevant, improving consistently, and delivering value in smarter ways.

For SMEs, that’s not just a survival strategy; it’s a road map for long-term success.