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The Hispanic Influence of U.S. Food Retailing

With mangos mainstream and holidays such as Cinco de Mayo celebrated by a growing number of Anglo-Americans, the buying muscle behind the cultural surge of Hispanics and Hispanic products is everywhere.

For the American food industry, the influence is two-fold. The explosion in Hispanic shoppers presents an opportunity for increased sales for markets that cater to their shopping habits and food culture. Plus, the culinary influence of this minority group is dramatically affecting how all Americans, especially specialty food consumers, eat.

Skyrocketing Purchasing Power
According to Census 2000, U.S. Census Bureau, the number of Hispanics in the U.S. increased 58% from 1990 to 2000, surpassing African-Americans as the nation’s largest minority market with 35.3 million people. By 2010, the Hispanic population is projected to be 43.7 million; by 2020, it will reach 55.1 million, accounting for 17% of the U.S. population.

Hispanic purchasing power has increased even more dramatically than the population, skyrocketing 160%, from $208 billion in 1990 to $542 billion in 2001. Strategy Research Corporation, a Miami-based market research company, predicts that by 2050 there will be more Hispanics in the U.S. than Mexico—almost one in three Americans, (this figure is higher than the U.S. Census projections.) As the fasting growing consumer segment in the U.S., with increasing incomes to spend on food, Hispanics and their importance to the U.S. specialty retailer cannot be overlooked.

Traits of the Hispanic Consumer
Not homogenous, but sharing similar needs, Hispanic consumers include the Spanish-speaking people from Spain, Mexico, the Caribbean Islands and Central and South America. The three largest groups, comprising more than three-fourths of the U.S. Hispanic population, are Mexicans, Puerto Ricans and Cubans. These cultures thrive in neighborhoods in Miami, Los Angeles, New York, and Houston. Other Hispanic groups that have been growing since the 1970s include Nicaraguans, Salvadorians, Peruvians and Colombians.

A recent Food Marketing Institute (FMI) Report, U.S. Hispanics: Insights into Grocery Shopping Preferences and Attitudes, 2002, says that Hispanic grocery shoppers spend a significant amount on groceries each week—$117 on average, a substantially higher number than the average spent by all U.S. grocery shoppers—$87 per week.

Supermarkets in Hispanic-oriented cities, such as Fiesta Mart, Inc., with locations throughout Texas, are focused on the interests of this segment. Some stores in Houston offer Taquerias and Salchichonerias (a Mexican-Style Hot Deli), in-store bakeries that provide fresh baked goods daily and an international and specialty foods area which offers products from around the globe. H.E. Butt Grocery Co.’s Central Market stores in Texas house Tortillerias, which supply fresh tortillas daily and supply a variety of products imported from Mexico. This merchandise mix attracts Hispanic shoppers while appealing to the specialty food consumers who want Hispanic products to be a major part of their culinary repertoire.

Hispanic Foods for Specialty Consumers Mynetta Cockerell of Dallas-based Marty’s Fine Food & Wine, Inc. points out that Hispanics in Dallas-Forth Worth are “no longer in the minority,” with their tastes and cooking styles influencing many Texans. “South-western-style and Tex-Mex cuisine always generate a popular response on the Marty’s menu—more so than French or Italian,” says Cockerell. A spicy gazpacho soup is one of the best sellers at The Bistro, Marty’s in-store restaurant.

Although Marty’s doesn’t cater specifically to the Hispanic segment, it does carry popular Mexican cheese items such as The Mozzarella Company’s Queso Fresco and Queso Blanco, and Queso Blanco with Chilies and Epazote, a Mexican herb. Cockerell believes that these products have become staples in many Texas kitchens.

At Epicure Market in the culturally diverse neighborhood of Miami Beach, the Latin American influence and culture impact the product mix. Daily prepared food items that have a Latin flair include gourmet fried plantains, black bean soup, flan caramel and empanadas, according to gourmet/cheese buyer Sara Freedman-Izquierdo. “The Hispanic influence has inspired us to push into other areas of food and has opened the eyes and expanded the palates of all of our customers,” she says. “Manchego, once a very unusual cheese for the American palate, is now mainstream and one of our best sellers.” Every week, Epicure sells approximately 20 cases of Miguel & Valentino’s Olive Oil Tortas, a handmade delicate Spanish puff pastry; customers and employees with Mexican heritage identify this item with a popular pastry called “Disco Chicos.” Jamon Serrano and Chorizo is always in demand.

Tom Hann, general manager of international foods for Ohio-based Jungle Jim’s, views Hispanics and their growing purchasing power as a welcome new force in the food and consumer packaged good market. “Every year for the past five years, we have experienced a 20% growth in sales and volume of Hispanic products,” says Hann. Although southern Ohio is not known for its Hispanic population, Hann keeps on top of the growing trend and particularly the influx of entre- preneurial-type Hispanic stores —such as carnicerías (butchers) and panaderías (bakeries)—to the Cincinnati area. He is expanding his 200-foot Hispanic section another 50 feet and attended, for the first time, Expo Comida Latina in Los Angeles to get ideas for new products.

Other retailers, such as David Bennett from San Francisco area-based Mollie Stone Markets, sees the Hispanic influence on food as more of a staple for his shoppers, not as a trend. The inspiration behind his San Mateo market’s Taco and Burrito Bar was the needs and wants of the Anglo shopper combined with the influence of the many Mexican restaurants in northern California.

Frijoles, Habichuelas, or Plain ol’ Beans Is the Hispanic market making a quantum leap that translates into specialty food retail sales? If so, differing tastes and preferences need to be recognized. Although some foods and flavors may have mass appeal throughout the Hispanic market, each country of origin has distinctive foods. For example, Goya Foods, the largest Hispanic-owned food company in the U.S, which evolved from selling to small, specialty bodega-type stores, now has 1,000 products—including 23 different rice products and 30 types of beans and peas.

The company attributes its success to understanding the different needs of various Hispanic markets and being able to service them. For example, varieties of dried and canned beans for the Hispanic segments in the U.S. are marketed based on the eating preferences of the different Hispanic cultures; i.e. frijoles for Cubans and habichuelas for Puerto Ricans. Goya also markets Adobo—a Hispanic all-purpose seasoning—in different flavors that appeal to Puerto Ricans, Cubans, and Dominicans. And Goya sees a boom in its business from non-Hispanic consumers. “In the past 5-10 years, the growth of Hispanics in the U.S. has helped ‘ethnic’ become mainstream,” says Rafael Toro, director of public relations. Toro says holidays such as Cinco de Mayo are just as much American these days as Hispanic, and offer good opportunities for retailers to appeal to Hispanic and Hispanic food-loving consumers.

Hispanic Shopping Habits
Hispanic consumers will check prices, quality and service and then make a purchasing decision based on predetermined benefits, qualitative preferences, and value.

Family dining, preparing traditional foods from scratch at home, is very common in the Hispanic culture. In addition, Hispanic consumers strive to support neighborhood businesses.

According to FMI, Hispanics rate fresh, high-quality fruits and vegetables, clean, neat stores, courteous, friendly employees, low prices, fresh, high-quality meats and poultry and convenient location as priorities in deciding where to shop. Stores of choice include supermarkets, specialty stores—where they can find fresh bread and produce—and discount stores. When thinking of how to put together a successful marketing and retail strategy aimed at the Hispanic segment, FMI suggests the following: • Identify and understand the segment of the Hispanic market that your store is targeting. Hispanics are often grouped into categories such as Spanish language-preferred (preferring to communicate in their native language), bilingual or English-preferred. The food practices and shopping preferences will vary widely, depending on their level of acculturation—how they are adapting to their new culture and surroundings.
• Increase the availability and selection of fresh produce, high-quality meats and fresh baked items such as bread.
• Increase the availability of Hispanic products.
• Have store employees that are knowledgeable about Hispanic products.
• Hire bilingual employees.
• Create bilingual store signs.
• Advertise with Hispanic media.
• Emphasize low, competitive pricing and money-saving propositions. Many Hispanic shoppers utilize a budget and shopping lists and look for specials when shopping.

Epicure Market’s Freedman-Izquierdo makes sure her staff is versatile in a variety of languages, especially those employees working in the cheese department. “Knowing Spanish is critical for servicing many clients,” she remarks.

Attracting the Hispanic Shopper
According to Hispanic-Market.com, advertising on Spanish-language network television can yield advertisers an average 20% hike in sales among Hispanic consumers. Hispanics, on average, tend to watch more than four and half hours of Spanish-language television a day. Through advertising, Hispanics learn about product options and benefits. Hispanic shoppers tend to be very brand-loyal. The Internet is also becoming a common vehicle of information. The next generation—the children of immigrants—are avid media consumers, comfortable with computers and connected to the Internet. Companies such as MexGrocer.com, a nationwide bilingual online grocery store for hard-to-find, non-perishable authentic Mexican food and food-related items, offers more than 1,000 specialty items of imported and national leading food brands and is capturing a portion of these sales through its e-commerce business. Its target market is middle to upper income Hispanics, primarily Mexican Americans, as well as Anglo consumers who have an appetite for specialty ethnic foods.

“E-commerce is a big part of doing business for both the Hispanic and Anglo shopper,” says Ignacio Hernandez, Jr., co-founder and vice president of MexGrocer.com. “We were surprised to see a trend toward increased sales of Mexican items on the East Coast.” The online company estimates its visitor traffic to be equal between its Spanish language and English sites.

Whether it’s tortilla bars popping up in specialty food stores or 50,000-square-foot supermarkets dedicated to Hispanic products, the cultural appeal and purchasing power of the Hispanic population will transform the food business as their influence grows ever greater.

Nicole Potenza is associate editor of Specialty Food Magazine.