KANSAS CITY — A key component of the consumer packaged goods “playbook” is news about a brand — the introduction of a “new” stock keeping unit (SKU), perhaps a new flavor or package size — that is noticed by the media, generates attention and helps drive awareness among new and lapsed consumers. The practice slowed during and after the pandemic as CPG companies focused on keeping their fastest turning SKUs on store shelves, but it is now back even as genuine food and beverage innovation lags.

It was common during and after the pandemic for CPG companies to implement SKU rationalization programs. In 2022, Nestle SA embarked on Project Tasty, a program focused on cutting thousands of SKUs that were not performing at acceptable levels.

In 2022, Laurent Freixe, chief executive officer of Nestle’s Latin America Zone, estimated that the company produces more than 100,000 SKUs globally, and roughly one-third accounted for 1% of sales while 11% of the SKUs accounted for 80%.

“Addressing the tail brings a lot of benefits because those SKUs are mobilizing resources that are not justified,” he said in 2022.

Research conducted by Food Business News earlier this year shows that SKU tail is growing back. The research was conducted in March and April and included survey responses from 224 industry participants. The goal of the project was to identify the product development priorities of companies over the next 12 to 18 months.

In one portion of the survey, participants were asked what types of product development projects they were working on. “Innovation” was defined as new products within existing brands and categories (line extensions); “renovation” was described as product reformulation within existing brands and categories; and “invention” was defined as breakthrough product development involving the introduction of new brands and/or applications.

Among all respondents, 91% said innovation was “important” or “extremely important,” while 71% said renovation fell into those two categories and 67% said so of invention.

Among the respondents from companies with sales greater than $500 million, the percentage that said innovation was important or extremely important rose to 93%, with 73% saying the same about renovation and 66% identifying invention as a priority.

A few months after Food Business News conducted its survey, the market researcher Mintel released a report showing through the first five months of 2024, 35% of global CPG launches in the food, beverage, household, health, beauty, personal care and pet care categories were “genuinely new” products, while 65% were “renovation” launches such as line extensions, reformulations, new packaging or item relaunches, according to Mintel’s Global New Product Database.

Mintel said the data marked the lowest level of CPG innovation it has recorded since beginning new product tracking in 1996, and, perhaps more concerning, food and beverages experienced the biggest decrease, with brand-new products representing 26% of launches from January through May 2024 versus 50% in 2007.