Your next target market

Aug. 15, 2003
They have billions to spend, visit grocery stores five times a week and consider home cooking a cornerstone of their culture. Question is, how to do you appeal to America's growing Hispanic market?
Hispanic consumers mean more to U.S. food companies than a bridge to Latin flavors. Much more. They are the largest-growing segment of the nation's population, and wield billions in purchasing power. They also present an enigmatic marketing challenge that many food companies have yet to fully unravel. Current census figures indicate that U.S. Hispanics now account for 13 to 14 percent of the nation's population. More significantly, their growth rate outpaces that of the general population by a ratio of ten to one. As a result, Hispanics will comprise 18 percent of the U.S. population by 2015, according to The Selig Center for Economic Growth. Some experts believe this number is conservative. What's more, Hispanics over-index in food purchases; they have larger families than general market America and regard family-invested home cooking as a cornerstone of their culture. They are also more brand loyal than the general market, visit grocery stores  more -- up to five times a week , and, once there, spend $50 billion on groceries annually. Needless to say, these cultural attributes translate into a wealth of opportunities for food companies. "If U.S. Hispanics were to form their own independent country, it would be the world's largest Hispanic buying power," says Richard Ross, brand manager for Tampico Fruit Punches, a top-selling U.S. fruit drink whose success owes much to the strength of the Hispanic market. "It nets out to about 1.5 the size of Mexico in terms of  buying power.""It's a huge opportunity," agrees Gustavo de Mello, vice president of Lapiz, the Hispanic marketing arm of the Chicago-based ad agency Leo Burnett. Importantly, Hispanic households tend be larger than those of the general market, he points out. "If you control one household in the general market you're reaching and average 2 to 3 people. If you reach a Hispanic household you can affect twice that number."Hispanic America's growing influence on U.S. culture could extend that reach further, resulting in products that not only serve traditional and acculturated Hispanic markets, but also cross over. Yet the marketing dollars devoted to the Hispanic sector have been meager relative to its size. Other than a select few leading the way, "most companies weren't doing a great job [of focusing on this market] before the 2000 census," says Ross. "The amount of money spent on promotions to the Hispanic community weren't [proportional] to its size. Ad budgets then were one to two percent." They're not much larger now. Although larger companies such as Kraft Foods, Pepsico and Coca-Cola now have marketing divisions to focus on the Hispanic market, most suchbudgets have remained static, according to recent figures reported by the Chicago Tribune. Companies that are investing more aggressively have learned that the road to this treasure trove of spending power can twist and turn in unexpected ways. Latin culture is unique, both from the American mainstream and other ethnic groups, such as African-Americans. As a result, some "basic mistakes" have been made, says de Mello. "Mostly cultural issues.""You have to begin with a fundamental understanding of your consumer," Karl Williams, marketing manager, Latino Marketing, Pepsi Cola North America told attendees of  Foods & Beverages for the Hispanic Consumer, a July conference presented by the World Research Group in Chicago.One problem is that the Hispanic American market isn't as homogenous as it appears. In fact, it may be less a market than a continuum, which begins with the intermingling of country of origin values and traditional U.S. customs and practices. The next step is interaction with both U.S. customs and those of other minority groups, which over time creates something unique and varied: the American-Latino consumer. But acculturation isn't unidirectional, as evidenced by Mainstream America's new affinity for Hispanic flavor profiles and dishes, as well as Latin entertainers such as Ricky Martin and Jennifer Lopez. "For a half century, Hispanics were quiet about themselves," says Ross. "Now, it is trendy and hip; there is a new pride in being Latino."Faster growth, slower tablesEven as the two cultures co-mingle, there are still fundamental differences in the way Mainstream and Hispanic America approach both food and life. As food companies scurry to create microwaveable, handheld products that mirror the quickened pace of American life, they would do well to remember that the Hispanic culture is slower --  and by design. Accordingly, Hispanic family spends considerably more time preparing food , on average about 45 minutes , as well as eating it. Hispanics also prefer fresh food items, one of the reasons they make more trips to market."In Latino families, cooking at home is an activity everyone participates in , at least the women," says Pilar Sanchez, chef de cuisine at The Wine Spectator, Greystone restaurant at the Culinary Institute of America, St. Helena Calif. "Often they make a family project out of it.""The bond between Hispanics and food is huge and the bond between the meals and what it means to family is key," observes Ross. "It is more than food; it is family time and time together."More than three-quarters of both U.S. Hispanics and Spanish-dominant Hispanics believe that traditional meal preparation is important, which helps explain why their weekly grocery expenses are about 40 percent greater than the general shopper's. And because Hispanic mothers receive great personal satisfaction from cooking, they believe that freshness is a requisite for food preparation.Not surprisingly then, recent data suggest that Hispanic shoppers have negative impressions of convenience. Despite their budding acculturation, it's important to speak to these consumers in a way that's relevant to their traditions.Language & culturePhonetics, linguistics, and language structure play an important role in reaching both traditional and acculturated Hispanics. Years ago, Chevrolet learned this lesson the hard way with its now infamous launch of the Nova automobile in South America. To the embarrassment of the car manufacturer, "no va" roughly translated to "does not go.""If you want to talk to them you have to [do it ways that are] relevant to their culture," says de Mello. "Language is a very important aspect of the Hispanic culture, but only one aspect. There is also religion, sports and tastes (food, music, clothes). You need people who understand the cultures behind the stereotypes." A recent article published by University of Pennsylvania's Wharton School of Business noted that the U.S. Dairy Association's  "Got Milk" campaign was misinterpreted by  Spanish-speaking consumers as "are you lactating?"  The article explained that milk plays a vital role in Hispanic nutrition; it doesn't adapt well to mirth or puns.The lesson? "If you simply translate a message, it may not convey the same sentiment," says Ross. "You need a language expert looking at brand names , at all of your communication." But there is more to selling product than correctly matching words with meanings, notably brand recognition. Though Hispanics often wish to communicate in their adopted language, the pride they associate with their native tongue typically remains with them throughout the acculturation process. Thus, brand names that resonate with their heritage may perform better than those that don't. "It's big," says Ross. "You do need to think about brand names. There are many American Hispanics who become acculturated, and either speak Spanish or bilingually. You need to be careful with that transition. Are they going to make that [linguistic] connection in the store?  If you market a product in Mexico, they may say "col ga tay" for the Colgate brand. When they arrive in the U.S., it's "col gate." Ten years later, when they are comfortable with English you'll want that first name to resonate." Equally important, say the experts, are the precise cultural and geographic origins of various Hispanic groups. Currently, two-thirds of U.S. Hispanics are from Mexico, where cultures vary from region to region, much as those in the U.S. do. "When you address the Hispanic consumer, find ways to be relevant to his particular background," advises de Mello. "It can be done in the same way [general market] companies find ways to be relevant to consumers on the East Coast, West Coast or Midwest." "To really understand Latino consumers, you have to understand them psychographically, not just demographically." says Victor Melendez, marketing director, Mexican brands, Labatt USA. Labatt handles Tecate, Dos Equis, Sol, Carta Blanca and Bohemia. "What are their life motivators and drivers? How do Latino groups differ in terms of culture, language, food, values and beliefs, behaviors or aspirations?"Same yet differentDespite their cultural differences, "there are more similarities than differences," among Hispanics, says Ross. "Marketers must find out where the cross over is.""Hispanics have a strong sense of community, are highly adaptable, have strong family bonds, are generally impulsive and very passionate," Melendez noted at the Chicago conference. "Targeting Latinos is much more complex than just translating general market strategies. A marketing plan needs to be developed rather than adapted and has to be culturally relevant and integrated," he continued. "It's critical to develop campaigns that are based on strong strategies, unique insights and originality, and to ensure they are measurable in ways that track the results back to the advertising," adds Anita Santiago, president of Anita Santiago Advertising in Santa Monica, Calif.  "A lot of companies bring products from Latin America to the U.S.  , products that are very successful," says de Mello. "Sometimes you don't need to start from scratch."Tecate Beer is a good example of a brand that expanded into the U.S. with its original image intact: sports and music, elements that easily cross borders.Other companies are trying to reach the low-hanging dietary habits of the Hispanic consumer "Cereal companies are exploring fruits," says de Mello. It could be a solid match, since Hispanics rely heavily on fruits in their diets and spend 20 percent more on cereals than the general market.Yet the fact remains that the more acculturated Hispanic consumers are eating out more often and combining the traditional Hispanic and American dishes"When they cross the border, Hispanics go through a process of North Americanization.  They don't want to give up what they like from their own countries," says de Mello. A lot of products are using the Hispanic factor and leveraging that against the general market consumer. The gains are not just with the Hispanics, but those curious about the Hispanic lifestyle."SidebarsHispanic Shoppers:  What They LikeUS $Sales     *Hispanic CDI   *Non-Hispanic CDIMexican Foods            $1,041             257                  72Spirits                           $2,446             163                  75RFG Meat/Poultry        $690                152                  85Wine                            $4,211             145                  90Bottled Water               $2,742             150                  97Isotonics                       $1,141             144                  94Beer                             $8,463             131                  85Rice                             $1,055             138                  96Canned Juices              $675                128                  88Aseptic Juices               $977                122                  103Source: IRIThe Hispanic Consumer52 percent at 18 to 49Median age 26.6Purchasing power estimated $562 to $581 billion annuallyMexican-Americans represent about 66 percent of Hispanic populationHighly adaptableRadio is the top influencerMexican music is the most popular in the U.S.The Hispanic cookAverage time spent on meal preparation: 45 minutes to 1 hourInterested in learning new recipesStrong family bonds means more value on mealtimesHispanics on average spend 17 percent more on food consumed at home

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