This study was based on the relationship between innovation and profitability levels of industries using century bottling company as a case study. The objectives of the study were; to establish innovation taking place in Century Bottling Company, to find out challenges affecting innovation in century bottling company and to find out whether there is a relationship between innovation and profitability levels in century bottling company.

The research provided back ground of the study which laid a foundation for the problem statement. The study also gave the significance of the study and literature on the study variables was also presented to enable the researcher explore more on the topic under the study.Data was collected using questionnaires and key informants were used like managers from 51 respondents who were selected at random from the study population which

comprised of the top managers, operational managers, supervisors, sales persons, operational workers and retailers of century bottling company Mbarara branch. The data was collected, edited, coded analyzed and presented both qualitatively and quantitatively where by frequencies were used to generate tables and charts and qualitatively thematic presentation was used.The study concluded that there was a relationship between innovation and profitability levels in industries. This study went ahead to recommend the recognition of innovation through different types and to all departments of the organization to maximize smooth running of the company and efficiency of the capital input which registers the return on it.