The growing Hispanic population has become the focus
of beverage marketers appealing to minorities
America is traditionally
known as a melting pot due to the multicultural population. As the
“minority” population is soon set
to outpace that of the “majority” population, beverage
marketers are turning their attention to the groups whose buying power,
family size and acculturation rates are rising.
“There is no single most important group; it
really depends on the product,” says David W. Stewart, professor of
marketing at the University of Southern California and co-author of the
book “Marketing Champions.” “Some products have specific
appeal to particular ethnic groups while others have broad markets that cut
across ethnic groups.”
The term “ethnic marketing” does not
intrinsically include or exclude any group, but with 58 percent growth from
1990 to 2000, and continually increasing, the burgeoning Hispanic
population steals the focus from other groups. With minimal percentages
allotted for ethnic marketing, the emerging Hispanic population and its
increasing buying power has attracted companies from energy drink startups
to multi-million-dollar breweries.
“I think what is happening now is the growth
rate is expanding in ethnic groups, the most from Hispanic,” says
Staci Covkin, executive vice president of Hispanic trends in the United
States for Information Resources Inc., Chicago. “By 2020 there is
projected 45 percent growth for Hispanics and Asians, while African
Americans have a 21 percent growth. Savvy retailers and manufacturers are
paying more attention to these growing consumer segments.”
The statistics keep going, according to Roberto Ruiz,
managing director of accounts for Hispanic advertising agency, La Agencia
de Orci & Asociados. The Hispanic median age is 25 years old vs. the
general population’s 35 years old. Current global Hispanic buying
power is $763 billion, which is expected to reach $1 trillion in 10 years.
More than 90 percent of Hispanics still speak Spanish at home. And the
United States is now the second-largest Spanish-speaking country in the
world, after Mexico.
“Hispanic is the fastest-growing segment today
and for the future,” Covkin explains. “Right now the majority
of the numbers are from those migrating to the United States and over the
next few years the numbers will increase from Hispanics born in the United
States, and the Hispanic birth rate is twice that of the general
population. No matter how you cut it, what the spending is now vs. the
potential is huge.”
Las preferencias de los hispanos (Hispanic preferences)
With the growing population, companies are now
conducting surveys and studies to begin to understand the shopping habits
of the Hispanic consumer. The parent company of Lipton, Unilever,
Englewood, N.J., recently released the results of its survey on Hispanic
shopping habits. Its “Winning the Hispanic Shopping Trip”
offers many insights for retailers looking to attract the Hispanic shopper,
who tends to be female and responds to Spanish-language signage, circulars
and specials, according to Unilever’s data.
The results of IRI’s extensive survey of
Hispanic shopping habits and preferences on new products and flavors give
an important glimpse into the category. The study found refrigerated
juice/beverages, bottled water and beer/ale are growing significantly
faster among Hispanics than the general population. Carbonated soft drinks,
aseptic juices and sports drinks also show an increased purchase rate. It
also revealed a preference for fruit flavors including lemon-lime, tropical
fruits and other flavors reflective of Hispanic consumers’ native
The country of origin is of particular importance as
Hispanics in the United States can come from one of 20 different countries,
all with different cultures and habits. As Ruiz of La Agencia de Orci &
Asociados points out, Latin products overall have a sweeter taste, but the
similarities end there.
“There is a propensity for colored colas and
Goya nectars from a Latin market perspective, but it’s not
homogenous,” Ruiz explains. “In some countries they prefer
aguas frescas to nectars, it depends on the cultures of origin. Typically,
aguas frescas are consumed freshly made. Beverages have to address the
country of origin. If you’re from the Caribbean, you’re going
to prefer nectars, if you’re from Mexico or Latin America, it’s
ACNielsen, Schaumburg, Ill., published the results of
its Hispanic shopping study in the Consumer Insight publication. Authors
Kylee Hall and Chris Hammer set out five simple rules for understanding
Hispanic purchasing behavior such as “learn about the consumer”
and “verify results to justify investment.” The results of
“The Hispanic Consumer’s Shopping
List” research also indicated preferences for berries, lemon, lime,
orange and berry/lime flavor combinations.
“Carbonated beverages have traditionally been a
strong category among Hispanic consumers, with several brands leading the
charge,” Hall says. “Now we are seeing some growth in non-cola,
fruit-flavored beverages as well as sports and energy drinks.”
Energy drinks have a
strong showing among Hispanics. So much so that some companies are
targeting the group, such as Caballo Negro energy drink by
California’s Distribuidores De La Energia. According to Stewart,
Hispanic respondents are more likely than Caucasians to participate in the
energy drinks category, by a margin of 22 percent to 9 percent.
Lealtad por la marca(Brand
The IRI study, in addition to one by Quepasa Corp., a
Scottsdale, Ariz.-based Hispanic and Latino online community, shows that
Hispanics tend to be more brand loyal than the general population. The
Quepasa survey showed that Hispanic consumers had a preference for Red Bull
over Vault in drinks, by an 82 percent to 18 percent margin.
“Hispanics also tend to be more brand
loyal,” IRI’s Covkin says. “They are more loyal to
certain names and the brand name is more important to them. PepsiCo has
taken advantage of this while skewing to the general public with its Frito
Lay tortilla chips.”
This could be because, as Ruiz points out, “a
brand is a brand across different segments.” He says it’s
important to pinpoint what is Hispanic within the brand or category and
market from that standpoint. At the same time, Quepasa’s Chairman and
Chief Executive Officer Robert Stearns cautions that Hispanics do not want
to be stereotyped.
Las historias de éxito (Success stories)
The mainstream acceptance of Hispanic-inspired flavors
can be seen in other categories, such as Häagen-Dasz’s Dulce de
Leche (translated it means milk candy, a caramel-esque flavor) ice cream or
the fact that salsa is selling more than ketchup, Ruiz points out.
Beverages are following along the same path.
Miller, Coors and Beck’s have all launched
integrated Hispanic marketing campaigns. And Chicago’s Tampico
Beverages has always been popular among Hispanics and continues to extend
an influence. The traditional juice company recently launched a line of
flavored waters with a decidedly Latin twist. The water varieties include
Piña Colada, Mamey-Mango and Grapefruit-Tangerine.
Tampico also completed its largest sponsorship in
company history for a Hispanic non-profit, PADRES Contra El Cáncer,
whose spokeswoman is “Desperate Housewives’” Eva
Longoria. The company sponsored the Dream of Hope Sweepstakes and El
Sueño de Esperanza Gala, which was held on the set of the hit
television show, for the organization committed to improving the quality of
life for Latino children with cancer and their families.
“In addition to being the No. 1 brand of
refrigerated fruit juice in the United States among all consumers,
[Tampico] has the highest frequency of use in non-alcohol, non-carbonated
beverages among Hispanics,” Stewart reports.
Para la futura (In
With statistics demonstrating impressive growth in the
Hispanic population for the next few years, this is a group that companies
cannot afford to ignore. Recommend-ations for manufacturers and retailers
are plentiful. IRI’s Covkin suggests retailers
include Spanish signage or private label products to increase shopping
trips by Hispanics.
“I think the ones that will be successful are
the ones that focus in with specific marketing,” Covkin says.
“Novartis has done it with a line of Gerber baby products with
Spanish language packaging. Hispanic campaigns with focused efforts will be
successful, and with the growth rate of the population, you can’t ignore it.”
Yet current habits may change as the population grows.
During the next 10 years, the majority of growth will come from
second-generation, not immigration, Ruiz says. The advertising executive
points out that the habits of the U.S.-born second generation may differ
from their immigrant parents.
“What makes Hispanics Hispanic will become more
important,” he says. “Taste will be a bigger factor and
language will be less relevant, which will be tougher for marketers to
understand. Language is a shallow variable, understanding taste preferences
and how things are done will be more important. The competition also will
increase as companies from Latin America will come to the U.S.”
It’s clear that ethnic marketing may be an
option for now and a necessity in the future.
Beverage Industry’s November issue highlights the 100-year advocacy of the American Beverage Association and what’s next for CEO Katherine Lugar and a new plastics initiative, Every Bottle Back. This issue includes a special report on craft beer, an Up Close With feature on PRESS hard cider and what is sparking innovation in natural colors. Read more about how protein is powering up beverages and how warehouses are using WMS and WCS systems to streamline operations. As usual, the latest trends in new products, packaging and ingredients are highlighted.
Check back throughout the month for additional content.