In 2025, novelty won’t drive innovation impact in the CPG industry; instead, the realignment and integration of maturing technologies will move the innovation needle forward. Novelty drove investment and innovation in the early 2020s, but as funding plummeted from 2023 through 2024, these innovations failed to create new business. The result was that many highly funded startups closed their doors. At the end of 2024, the industry turned to strategic partnerships that balance capabilities, cost, and impact of innovation; this strategy will carry forward into 2025 as we enter a highly uncertain regulatory period for novel ingredients and increased scrutiny of product claims. In 2025, maturing tech like AI, which demonstrated early value, will be used more widely for the discovery, formulation, and prototyping of ingredients. Activity in biosynthesis will remain high but primarily target supply chain resilience.
With predictions for 2025 finalized, the Lux team shares a few of its favorites from each of the Lux Client Priorities for Consumer Innovation Leaders to monitor in the coming year.
- Several precision-fermentation players will pivot to other fermentation routes and target new molecules to get to market faster. Given the lackluster funding outlook, startups will adopt strategic shifts to circumvent the technical and regulatory hurdles that come with precision fermentation. Companies will also diversify product pipelines, targeting higher-value molecules rather than trying to reach cost parity with commodity ingredients.
- Many companies will realign sustainability targets as they won’t hit their 2030 goals. The groundwork for emissions tracking has strengthened companies’ ties to the supply chain. Expect companies to pivot from solely reducing Scope 3 emissions to building resilience in their supply chains with programs that incentivize land managers to practice water and carbon stewardship.
- Generative AI will integrate into wearables to enhance user engagement and provide personalized insights. We expect more integration of genAI in wearables than in 2024. These devices gather and analyze complex data — such as fitness metrics, physiological signals, and behavioral patterns — to provide personalized health insights, predict potential issues, and recommend preventive measures.
- Recycled plastics and recyclability will be the safest bet for sustainable packaging. Given that plastic will continue to play a substantial role in packaging, driven by policy, CPG brands will prioritize packaging recyclability in their strategies to ensure long-term viability and compliance with regulations set to take effect by 2030. Advances in monomaterials — such as functional coatings to replace multilayer packaging — will be critical to achieving these goals.
- With the European Food Safety Authority acting as a stubborn gatekeeper, ingredients developers will shift to cosmetics applications or explore alternative launch markets. By late 2025, alternative fats, oils, and ingredients for cell-based meat applications will target cosmetics markets. Similarly, for microbiome modulation, the lack of standardized definitions for food applications will drive ingredients developers to pivot to more accepting markets like pet food.
- More countries will announce policies to spur domestic biomanufacturing capabilities. Countries will adopt policies with tax incentives and subsidies to expand public and private investments to build biomanufacturing infrastructure. APAC countries will lead this effort to leverage the region’s vast feedstock availability and cheap labor costs to grow domestic bioeconomies.
Innovators have learned a lot in the past several years about the pace of technology disruption (slow), the challenge of sustainability reporting (difficult), and the need to remain grounded in a world where poor-quality information obscures key insights (critical). In 2025, expect innovators to prioritize the application of existing technology to new markets. While disruptive technologies are always of interest, these needle-in-the-haystack opportunities also get in the way of identifying incremental options that actually move the needle. Expect companies to integrate technology through M&A and partnerships, particularly when it comes to formulation strategy, supply chain monitoring, biosynthesis, and health and wellness. Lastly, costs associated with tariffs will be passed on to consumers. Therefore, for consumers to spend money on products or higher-value goods, claims must be strongly backed by transparent results. This is particularly important for innovations. Weak claims should be a red flag rather than an opportunity to confirm them.
Join the Lux team on January 30 for our webinar “Tech Innovation in 2025: Themes and Technologies to Monitor” as we examine the trends and developments across Lux’s industry verticals to highlight themes and insights that will inform your priorities and hone your decision-making in 2025.