A China-Sized Market Here in America

Hispanics are brand-loyal, at-home cooks with big households -- in many ways, they are ideal customers.

By John L. Stanton, Contributing Editor

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The cover story a recent issue of Newsweek was on the "China Century." Like virtually every other article of its ilk, it discusses the huge business potential of China.

Food companies, like companies in every other category of business, are trying to get a foothold in China with brand building and production. And why not. There are a billion Chinese.

Of course they are quite a bit further away from home (our home), they eat quite a bit differently, they have very definite attitudes about a variety of things in life and generally they are not familiar with our brands. But what the heck, there are a billion of them!

What if there was a market that is even bigger in terms of gross product comparisons and growing faster? While everyone sees China as a big economy (about $1.1 trillion), an often overlooked market is even bigger ($1.2 trillion). Actually, in terms of spending, this group is the sixth largest economy in the world, according to the Selig Center at the University of Georgia.

Their raw numbers aren't as large as China, but they are growing faster and they are growing more than twice as fast as the U.S. population. This group is larger than the population of Canada, and about the same size as most of the South American countries (other than Brazil) and they are expected to reach almost 60 million people by 2010.

They are not as far away as China, and they are very familiar with most of our food and beverage brands. More than 50 percent of them speak English either fluently or some of the time in daily life, and while they might prefer seeing labels and advertising in their native language they don't mind English.

This group gets even more attractive when you consider that they have multi-generation households, that the average number of children in each household is much larger and, on average, they are quite a bit younger than the U.S. population. As food marketers, you know these demographics mean better grocery shoppers. And younger means longer brand loyalty.

Also just like the Chinese consumers, this group makes more meals from scratch and more meals at home than the average American shopper, meaning more grocery versus foodservice customers. They also are very brand loyal, as in the Asian concept of loyalty, and relationships really mean something. They are one of the lowest users of coupons when they are available to them.

Who are these super food consumers? What is this demographic that could be the traditional American grocery store's salvation, replacing the shoppers who are eating out more than ever, buying more at discount stores, switching stores and brands for a 50-cent coupon and quietly aging and leaving this world?

No, you don't have to go to China to get a trillion dollar market. You can find them in your own backyard. It is the Hispanic American food shopper. Hidden from view (your view) is the sixth largest "spending power nation" in the world, bigger than China. While everyone is running to find the new source of business, they are running past the diamonds in their own backyard. If you asked a food processor or food retailer to close their eyes and describe the "ideal" food consumer, these traits would describe the Hispanic American consumer. They have everything … but our attention.

I have written about the Hispanic market before, but I can't understand how it still gets such limited attention from traditional American food companies. There are some exceptions, and these companies are doing a very good job. Just watch TV show "Sabado Gigante" and you will see some traditional companies doing a great job of delighting Hispanic consumers. This is one of the most watched TV shows in the Hispanic community, and it is tougher to buy air time here than on the Super Bowl.

One caution now that you are drooling to get into this market. There are now thousands of advertising agencies, research agencies, design agencies and consulting agencies who are experts in the Hispanic market. For many, their primary and only asset is that they are Hispanic and speak Spanish. Many Gringos are quickly impressed by a presentation made by people who have a Spanish accent and who take you to a Mexican restaurant and order for you in Spanish.

Second, you can't just turn your business over to someone else to run. Don't make the same mistake many food retailers made using Goya. Goya came in and said, "Look, you know nothing about serving your Hispanic customers. Just give us an aisle or two, and we'll take care of it for you." Kudos to Goya. It saw the future and aggressively pursued it, much to the company's benefit.

Supermarkets don't do a great job, in general. An exception is the new Publix format Sabor, which is targeted to Hispanics. HEB is going one step further and moving stores into Mexico. Why wait for the Hispanic consumer to come to the U.S. to learn about the store?

This article is most likely not the first time you are reading about Hispanic Americans. You have likely been barraged with seminars, courses, consultants and trade magazines on the Hispanic consumer. While the food industry's efforts improve every year, they still fall far short of the potential.

There really are diamonds in your own backyard. You don't have to go to China to find growth and profit.



John L. Stanton is a professor of food marketing at St. Joseph's University, Philadelphia. He can be contacted at 610-660-1607; e-mail him at jstanton@sju.edu.

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