The Innovation Advantage

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Design and execute to expand

Innovation still sits at the heart of FMCG growth, but the conversation around how to innovate successfully feels like it has become stale. The tropes abound of why it is hard — the shelf is crowded, budgets are tighter, retailers are less forgiving, etc. Yet the fundamental truths remain intact: categories expand when brands introduce new value, and almost every major brand once began as a single idea that turned an unmet need into a repeatable habit.

The innovation advantage starts with a distinction that matters commercially. Advantage is created when new products strengthen routines, bringing new buyers into the brand, widening the moments in which they are chosen, and increasing the value a category can hold.

The reason this needs saying is that surface-level innovation measures often mislead. What do we mean by that? At an aggregated level, the relationship between “how much NPD a brand does” and “how much a brand grows” is weak. That has encouraged some organisations to treat innovation success as unpredictable, a mixture of luck, timing, and retailer support.

When we go deeper, into real shopper behaviour across multiple launches, innovation success is far less random. The evidence we examined across 400 launches shows repeatable patterns that separate value-creating launches from the rest, and a critical threshold in that evidence is that the incremental category impact is greater than 5% of NPD sales. When launches clear that bar, they are much more likely to strengthen long-term brand direction and support retailer category value at the same time.

The north star is incrementality

Many organisations still talk about innovation as though the only job is to get an initial high rate of sales. Yes, this matters but it is typically far from the main point. Categories grow when brands create new value.

The evidence shows that category-incremental innovation is the metric that aligns brand benefits with retailer benefits. This is a big deal. When a launch genuinely grows category spend, it strengthens a brand’s position in routine in a way that is harder to copy and easier to defend; when it simply rearranges existing spend, the brand may still win volume, but the advantage is thinner.

A premium architecture that still feels accessible

The strongest pattern in the launch evidence comes with pricing and pack design. The most incremental launches tend to command a meaningful price premium, typically 50–80% higher £/volume than the category norm, while keeping pack-level value legible for shoppers.

Accessibility is achieved through pack architecture, not flattening premium pricing. The evidence points to sizes that are typically 15–25% smaller, allowing shoppers to trial or trade up without feeling they have crossed into a different price world altogether. That combination, a clear premium with a manageable pack entry point, consistently supports incrementality.

This matters because premium positioning usually enables margin improvement, but it also changes what the product means to buyers. They help a launch earn a place in routine by creating a reason to choose it that survives beyond introductory excitement.

Promotion that protects value

That said, the playbook is not anti-promotion, but it needs to be laser-focused on avoiding value erosion.

Incremental launches often run materially more volume on deal, typically 40–70% higher than the average   for its competitive set, which helps with discoverability and trial at the point of choice. The crucial point is that this does not require extreme discount depth. The most effective pattern is disciplined: promotions that help shoppers notice and try, without training them to wait for a deal or to treat the product as a budget substitute.

Creating a direct link between innovation planning and revenue quality should help brands and retailers distinguish between trial mechanics and price re-anchoring.

Tuning in

Where a product launches also shapes how shoppers read it.

The evidence shows that incremental launches over-index in supermarkets and specialist retail environments. Those channels support perceived value and give premium cues room to work. Discounters, by contrast, tend to neutralise premium signals through the way they frame choice, which can make it harder for a launch to hold its intended position. For that reason, few new branded launches are undertaken with discounters.

This is not a judgment about channels, as much as a behavioural reality: channels shape value perception, and value perception determines whether a premium proposition can become habitual. Visibility should be at the core of the strategy.

Penetration creates scale

Launches do not become big because existing buyers buy them more often. Rather, they grow because more households buy them. The mathematics are very clear on this.

This aligns with established marketing science and appears clearly in the shopper evidence: penetration is the scale driver. Advantage is built by entering more baskets. Squeezing more frequency out of a narrow base is rarely a long-term growth pathway. That is not to say repeat purchasing doesn’t matter. It does. But repeat tends to follow penetration at scale rather than preceding it.

That also places a premium on distinctiveness at shelf and online. Strong design that gives visibility, pack cues, and clear signals of what the product is for should be considered critical penetration mechanics.

A real-world example

The drinks market makes this tangible because the category is being reshaped by need. Functional drinks are a clear example of innovation building advantage by earning new routine roles, rather than relying on novelty alone.

The category is now worth £223m, up 86% since 2021. Trip frequency has increased by 23%, and there are 1 million more shoppers than 4 years ago; 29% of shoppers now buy a functional drink, such as a protein shake. These are the hallmarks of routine expansion: more households, more trips, more embedded occasions.

The value story reinforces the point about premium architecture. The average soft drink sells for £1.07 per litre, while 51% of shoppers say they would pay £5 per litre for a functional drink. Premium holds when the role is understood and when the proposition earns a place in the day.

Health orientation strengthens that foundation. The share of food and drink chosen for health reasons is at its highest level in 5 years, and 46% of people say they want retailers and manufacturers to increase healthy new product development to support wellbeing. This needs to be viewed as a demand-side permission structure for innovation that creates new routine value. Dismissing emerging need states as “fads” is too easy and potentially dangerous territory that enables brand drift in a category.

What this means

The evidence points to a clear roadmap: premium cues that are strong enough to be meaningful, pack sizes that keep trial accessible, promotions that improve discovery without eroding value, high visibility channel choices that support perceived worth, and penetration-first execution that puts the product into more baskets.

Innovation is still the engine. The advantage comes with the discipline that determines whether the engine produces durable forward motion.

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