Private label brands are crowding out innovations in the supermarket.

Supermarket shelves in Spain this year have slightly less variety than in previous years. Brands are gradually limiting their launches and new products because their profitability is decreasing every day. And innovation in mass consumption is hitting rock bottom. In 2024, the fewest new products in history were launched—just 75—according to Kantar's Innovation Radar, presented by Promarca, half the number of launches compared to 2010.

Although the decline in innovation in the sector has been gradual, this year marks a downward trend, below 2019, when only 85 products were launched. For César Valencoso, Director of Consumer Insights at Kantar WorldPanel, the "bad news" is that the trend "is deepening." The first time fewer than 100 innovations were launched was in 2019, when the number dropped from 109 to just 85.

Mercadona and Aldi are the ones that display the least new products compared to Carrefour and Alcampo, the ones that display the most.

As a "key element" for the success of food, beverage, drugstore, and beauty companies, Promarca, the association representing leading innovative brands, warns that this lack of launches "represents a serious problem for the sector." "The lack of innovation limits market growth, reduces companies' ability to compete, and ultimately harms consumers," it says.

The main problem with the disappearance of innovation is the lack of distribution, according to Kantar and Promarca. In the last year, only an average of 25% of brand-name innovations have been distributed; that is, only one in four newly created brand-name products have been regularly displayed in supermarkets.

Spain is one of the markets with the most white label consumers

Private label or private label brands occupy a significant portion of the shelves, enjoying absolute success in Spain (one of the markets with the most consumers of these products in Europe), and some chains' strategies favor these items over manufacturer-branded products. Thus, the so-called narrow-range chains, which prefer private label brands, are the ones with the fewest innovative products on their shelves, with Mercadona leading the way. The Valencian company has not introduced any of these launches into its product portfolio in the last two years. Aldi only displays 4% of these innovative products, and Lidl, 7%. At the other extreme, Carrefour (65%), Alcampo (32%), and Dia (22%) are the three supermarket chains with the highest levels of new product introductions on their shelves in 2024, followed by Eroski, with 19%.

Thus, the success rate continues to decline, with only one in five innovations working, which represents 24% by 2024, and two consecutive years where the success rate is at very low levels.

Only 25% of innovations reach the public on a stable basis on sales shelves.

This discouragement due to fierce competition with private label brands is affecting, in Kantar's view, the main drivers of growth for manufacturers. Innovation is falling by 48%, but so is advertising investment (down 26%), product promotion (11% loss in value share over the last ten years), and product assortment reduction (down 9% since 2018), with a further narrowing of the price differential between the two categories. Price reductions without volume increases complicate investment, all of which paves the way for private label brands, which are taking advantage of "those categories where investment is falling to gain market share," Valencoso explained in a presentation last Tuesday of its 2025 Consumer Breakfasts.

“We must innovate to advance society,” notes Promarca President Fernando Fernández Soriano. “At this rate, in 10 years, innovation and novelty will be insignificant and will have a brutal impact. The markets that perform best are those with a balance between the manufacturer's brand and distribution,” Valencoso points out. For Kantar, the current trend leads to a “complex” future with a decline in volumes and a loss of €20 billion in revenue for companies in the next decade, according to the consultancy firm's projections for the next 10 years.

For Valencoso, the only way to break this vicious cycle is through a combination of factors, including increased distribution power (greater presence on shelves), greater visibility outside the home, and, above all, the ability to "open up" the brand by gaining new consumption spaces, new consumers, or new regions.