Too Many SKUs: The New Case for Product Innovation and Renovation
Key Takeaways
Product innovation should not just mean adding more SKUs. Innovation teams need to know how to edit as well, deciding where to create, renovate, simplify, retire, or reinvest.
Portfolio complexity can become a growth constraint. Too many products can dilute investment, create operational friction, and make it harder for brands to focus on the ideas with the strongest growth potential.
Renovation deserves a larger role in CPG growth strategy. Updating formulas, packaging, claims, formats, price-pack architecture, and positioning can unlock growth without always requiring a net-new launch.
SKU rationalization and product innovation should be connected. Brands should not prune the portfolio in one conversation and build the innovation pipeline in another. Both decisions should ladder to the same growth strategy.
The strongest teams choose better, not more. Better innovation outcomes come from clear decision criteria, portfolio visibility, and a disciplined understanding of where the brand can win.
When the Pipeline (and Portfolio) Gets Too Full
A full innovation pipeline can look like progress when there are ideas in development, launches in motion, retailer asks to satisfy, and teams working across formats, flavors, claims, pack sizes, and channels.
But a full pipeline can hide hard questions: Are these the right products to move forward with, and do we need to ‘make room’ for these new joiners by shedding some of our existing portfolio?
When teams just keep adding new products, the portfolio can become increasingly difficult to manage. Resources get spread across too many initiatives. Stronger opportunities may not receive enough support. Smaller SKUs may remain in the system even when they add limited strategic or economic value. Teams may spend more time managing complexity than building momentum.
This is especially relevant now, as many food and beverage companies are facing slower category growth, more selective consumers, higher cost pressure, changing consumer health behaviors, retailer demands, and leaner teams. In that environment, a brand’s ability to discern across products matters as much as its ability to create new ones.
Why the Conagra Story Matters
Food Dive recently reported that Conagra’s new CEO, John Brase, is preparing to make “bold decisions” to improve performance, with portfolio complexity cited as one of the issues slowing the company. The article notes that Conagra has strong positions in snacks and frozen, two categories with relevance for today’s consumer, but has also faced challenges from complexity and insufficient investment in on-trend offerings in these spaces.
The company has taken steps that point toward simplification. Conagra eliminated its COO role as part of a leadership restructuring, and Brase has previously said the company would move aggressively to simplify its portfolio, potentially including divestitures. Food Dive also reported that Conagra’s operational simplification plans include reevaluating 5,500 SKUs across the portfolio. Reuters similarly reported that Conagra is reviewing non-core assets after a weak profit forecast, with Brase saying the portfolio has been too large and too complex for too long.
Not every company needs to follow Conagra’s path. But what this story tells us is that portfolio complexity is becoming harder to ignore.
If a company has too many SKUs, too many under-supported brands, or too many initiatives competing for attention, the issue is not only operational, but strategic. The business may have real innovation opportunities, but lack the focus required to fund, develop, commercialize, and scale them well.
Product Innovation and Renovation Should Work Together
One of the missed opportunities in many CPG organizations is treating product innovation and product renovation as separate conversations.
Innovation becomes the new stuff: new platforms, new claims, new formats, new occasions, new products. Renovation becomes the maintenance work: packaging refreshes, formula improvements, claim updates, cost adjustments, size changes, line pruning, or modernization of existing products. But in practice, these decisions are deeply connected.
A brand may not need a new SKU if an existing product can be renovated to better meet the consumer need. A portfolio may not need another flavor if the real opportunity is clearer packaging, stronger claims, better price-pack architecture, or improved sensory delivery. A declining product may not need to be discontinued if the underlying job is still relevant but the execution is no longer competitive.
Likewise, a new innovation may only succeed if the portfolio has been simplified enough to give it room. In summary:
Product innovation asks: what should we create?
Product renovation asks: what should we improve?
Portfolio discipline asks: what deserves resources?
These three questions should be answered together.
More SKUs Can Make Growth Harder
SKU complexity can affect the business in ways that are easy to underestimate. It can complicate manufacturing, forecasting, procurement, inventory management, trade planning, sales materials, retailer presentations, supply chain decisions, and quality control. It can also fragment marketing dollars and make it harder for consumers to understand what the brand stands for.
Inside the organization, complexity can create a different kind of cost. Teams spend time maintaining products that no longer have a clear strategic role. Meetings focus on managing edge cases instead of making more valuable growth choices. Innovation conversations get pulled into defending legacy items, satisfying short-term retailer requests, or preserving internal preferences.
The portfolio keeps moving, but the strategy gets blurry.
This is where SKU rationalization becomes more than a finance or operations exercise. Done well, it creates capacity for better innovation. The goal is not to cut for the sake of cutting. The goal is to create a portfolio that is easier to support, easier to explain, and better aligned with where the brand can win.
The Case for Renovation
Renovation can be one of the most powerful forms of product innovation because it starts with an existing asset. An established product will already have distribution, consumer awareness, manufacturing infrastructure, retail presence, and brand permission. If the core consumer job still matters, renovation can help the brand meet that job better without starting from zero.
Renovation can take many forms. A brand may update the formula to improve taste, nutrition, or texture. It may refresh packaging so the benefit is clearer. It may adjust pack size to improve value perception. It may add or sharpen claims around protein, fiber, lower sugar, convenience, or ingredient quality. It may modernize the visual system, simplify the line, improve shelf blocking, or reposition the product against a more relevant consumer occasion.
Renovation is especially important in categories where consumers still buy the product type, but expectations have changed. Frozen meals may need better nutrition, smaller or more satisfying portions, higher protein, cleaner ingredient cues, or more contemporary flavors. Snacks may need stronger satiety, better-for-you cues, bolder sensory experiences, or more controlled formats. Pantry staples may need clearer value, convenience, or health relevance. Beverages may need updated flavor systems, lower sugar, functional benefits, or more intuitive shelf communication.
The strategic question is not whether the product is old. The question is whether the product can still win if it is made more relevant.
When to Create, Renovate, or Retire
Portfolio decisions become clearer when teams evaluate products through a shared lens:
A brand should consider creating something new when there is a meaningful consumer need the current portfolio cannot credibly solve, when the brand has permission to stretch, and when the opportunity is large enough to justify new investment.
A brand should consider renovating when the consumer job still matters, but the current product is losing relevance, clarity, competitiveness, or value. In those cases, the brand may already have a base to build from.
A brand should consider retiring or pruning when a SKU no longer plays a clear strategic role, consumes disproportionate resources, creates operational drag, lacks consumer momentum, or distracts from stronger growth opportunities.
The key is that these are not separate decisions. A team cannot make good innovation choices without understanding what the current portfolio is doing. And it cannot make good pruning decisions without knowing where future growth should come from. Innovation and rationalization are part of the same portfolio conversation.
Why Decision Criteria is Non-Negotiable
Let’s talk about another reality: product discussions can become emotional. People may have attachments to certain products. Sales may want to preserve items that matter to a specific customer. Brand teams may believe a SKU still has potential. Operations may want simplification. Finance may prioritize margin. Retailers may have their own views on what should stay or go.
Each perspective can be valid, which is exactly why teams need decision criteria. The strongest criteria connect consumer relevance, brand fit, strategic role, financial performance, operational complexity, retail support, growth potential, and feasibility. They help teams compare products and ideas against the same standard, instead of debating each decision as a one-off.
Decision criteria also help distinguish between a product that needs support and a product that needs to exit.
A SKU with weak performance but strong strategic relevance may deserve renovation. A SKU with weak performance and limited strategic role may deserve pruning. A new idea with high consumer relevance but unclear feasibility may need more pressure-testing. A new idea with weak differentiation may not deserve further investment, even if it looks interesting. The objective is to make judgment more transparent.
What CPG Teams Should Build Into the Portfolio Process
A stronger portfolio process should bring product innovation, renovation, and rationalization into one view. Teams should begin by clarifying the brand’s growth priorities. Where does the business need to grow? Which consumer needs matter most? Which categories, occasions, channels, or benefit spaces are strategically important? What role should the portfolio play over the next one to three years?
From there, teams can map the current portfolio against those priorities. Which products are driving growth? Which are defending the core? Which are under-supported but strategically relevant? Which are operationally complex without enough upside? Which products are no longer aligned with where the brand is headed?
This approach creates a more useful innovation pipeline. New ideas are not evaluated in isolation. They are evaluated against what the portfolio already has, where it is overextended, and where the brand needs stronger options. That is how teams avoid adding complexity in the name of growth.
The Role of an Innovation Partner
For internal teams, portfolio decisions can be difficult to navigate alone. The work touches strategy, consumer insight, brand equity, sales, operations, finance, manufacturing, commercialization, and retailer relationships. It can also be politically sensitive, especially when legacy products, pet projects, or long-standing assumptions are involved.
An external innovation partner can help bring structure and objectivity to the process. The right partner can help teams clarify the portfolio’s role, assess where the current lineup is creating or constraining growth, identify which consumer jobs deserve more focus, and determine where product innovation or renovation can create the most value.
A focused partner can do the heavy lift between key touchpoints: mapping the opportunity, evaluating the current portfolio, generating better options, pressure-testing tradeoffs, and helping leadership choose where to focus. The outcome is not a bigger list; It is a better one.
Final Thought
Product innovation is not just about adding to the pipeline. Sometimes the more strategic move is to make the pipeline clearer, cleaner, and focused.
That means knowing which products deserve new investment, which should be renovated, which should be simplified, and which should leave the portfolio entirely. For CPG teams, this is not a retreat from innovation. It is a more disciplined version of it.
A portfolio with fewer distractions can create more room for the ideas that matter. It can focus resources on the categories, products, and consumer jobs where the brand has the strongest right to win.
The next case for product innovation is not to drive more choices, but better ones that are supported by a portfolio that is primed to grow.
People Also Ask
What is product innovation in CPG?
Product innovation in CPG is the process of creating new products, improving existing products, or developing new formats, benefits, claims, packaging, or occasions that help a brand meet consumer needs and drive growth.
What is the difference between product innovation and product renovation?
Product innovation often refers to creating something new, while product renovation focuses on improving an existing product. Renovation may include formula updates, packaging changes, claim improvements, pack-size changes, sensory upgrades, or repositioning.
Why do too many SKUs create challenges for CPG brands?
Too many SKUs can create operational complexity, dilute marketing and sales investment, complicate forecasting and manufacturing, confuse consumers, and make it harder for teams to focus on the products with the strongest growth potential.
How should brands decide which SKUs to keep?
Brands should evaluate SKUs based on consumer relevance, strategic role, brand fit, financial performance, growth potential, operational complexity, retail support, and feasibility. The goal is to understand which products deserve investment, renovation, simplification, or retirement.
Why is SKU rationalization connected to innovation?
SKU rationalization frees resources, attention, and operational capacity for stronger innovation. It should be connected to innovation strategy because brands need to decide not only what to remove, but where to reinvest.
When should a brand renovate a product instead of launching something new?
A brand should consider renovation when the product still serves a meaningful consumer need but needs improvement in taste, packaging, claims, nutrition, format, value, or positioning. Renovation can be a strong option when existing brand equity and distribution still have value.
