More NPD in Europe - but it's struggling for 'breakthrough', says Nielsen

New product innovation is on the rise across Europe but just one in every 500 launches is managing ‘breakthrough’ success, according to a Nielsen report.

The data provider analysed 8,650 fmcg product launches from six European countries - the UK, France, Germany, Italy, Spain and Turkey - for its 2015 Breakthrough Innovation Report. It found that just 18 - 0.2% - had met its criteria of achieving first-year sales of at least £10m or €10m, and maintaining at least 90% of first-year sales in year two, in at least one of the six markets.

Despite this low hit rate, the rate of NPD appears to be increasing. The report looked at 17 categories in the UK, France, Italy and Spain and identified 18,958 new SKUs in 2014 - up from 17,080 in 2011.

Half of Nielsen’s Breakthrough Innovation Winners are household or health and personal care products, such as Unilever’s compressed deodorant technology, which covers the Sure, Dove, Lynx and Vaseline brands. Of the nine food and drink products, six are soft drinks, alcohol or coffee, leaving just three food products.

Seven of the 18 products were included because they met the criteria in the UK: the compressed deodorants, Garnier Ultimate Blends, L’Oréal Paris Elvive Fibrology, Vanish Gold Oxi Action, Robinsons Squash’d, Strongbow Dark Fruit and Cadbury Dairy Milk Marvellous Creations.

Marcin Penconek, VP of Nielsen’s innovation practice in Europe, and co-author of the report, said that the success and failure of innovations could be understood using ‘Jobs Theory’.

“Three out of four new SKUs fail to generate even £100,000 sales in their first year of trading and are often delisted by retailers,” said Penconek. “Breakthrough innovation is extremely rare but, despite perceptions amongst some, it’s neither random, nor down to luck, nor magic. There are clear patterns behind why consumers pull some products and not others into their lives.

“Jobs Theory is the idea that people don’t so much buy products as hire them to perform jobs in their lives. Successful innovators display empathy - they clearly identify the circumstance where consumers struggle or have unmet aspirations and innovate around these. Breakthrough innovations are products that solve these issues in a distinctive and compelling way.”