Hispanics: 'The Customers of the Future'

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While many companies are ramping up their marketing efforts to appeal to Hispanics, the fastest growing ethnic cohort, many are struggling to reach them.

The Hispanic market accounted for $700 billion in consumer spending last year, which represents nearly 9 percent of the total U.S. disposable personal income (valued at $8.02 trillion), according to the Department of Commerce, Bureau of Economic Analysis.

As the influx of Hispanic immigrants coming into the U.S. continues to grow, so will this cohort's consumption levels. Already, with Hispanic Americans' disposable income growing in 2003 at a compounded annual growth rate (CAGR) of 7.5 percent, it is outpacing the overall U.S. disposable income, which only grew 2.8 percent CAGR last year. By 2010, the consumer spending among the U.S. Hispanic population is expected to reach $1 trillion, according to Deborah Scruggs, product development manager at Chain Store Guide, a market research consultancy for the retail and foodservice industries.

Yet, while the Hispanic market already represents a significant and growing portion of the U.S. consumer market, marketers need help reaching them. "There are big companies out there that are jumping on the Hispanic bandwagon," Scruggs says. "They know they are the customers of the future, but they have absolutely no idea about how to reach these people."

That's why Chain Store Guide publicly announced last month the upcoming release of its yearlong study on the Hispanic market. The report, dubbed "The Top 50 Hispanic Markets Report: Your Retail & Foodservice Guide to Hispanic Marketing," maintains it is not enough to identify members of this cohort merely as Hispanics. Instead, it aims to prove that sub-ethnic categories are forming, based largely on country of origin.

Scruggs, author of the Chain Store Guide report, maintains, "Retailers and companies in general are being very creative. They're realizing they have to go beyond signage and music and they really have to provide what this population is looking for. They're looking for quality goods, good prices and products that come from their country of origin."

Country of origin plays a significant role in buying behavior among this diverse ethnic cohort, the report concludes. "Brands that come from different countries of origin are completely different and [Hispanics] want those brands that make them feel closer to home," Scruggs offers. So, to help marketers create more relevant targeted marketing campaigns, the report provides a breakdown within the U.S. of Hispanics by country of origin.

In the Atlanta metropolitan area, for example, Mexican Americans dominate the region's Hispanic market with 61 percent. In Boston, however, the leading sub-ethnic cohort comes from Puerto Rico, representing 28 percent of the city's overall Hispanic population. Yet, Mexican Americans in Bean Town only represent 7.1 percent of the overall Hispanic population. And in Miami, Cuban-born Americans represent the largest sub-ethnic cohort with 44 percent of the city's overall Hispanic population, whereas Puerto Ricans represent only 9 percent.

This information comes in handy for companies in the foodservice industry where, for example, certain ingredients, such as black beans versus red beans and corn tortillas versus flower tortillas, are indigenous to certain Hispanic countries. More specifically, Cubans prefer rice, beans, garlic, coconut milk and adobos, whereas Mexicans prefer corn, beans, chile-based sauces, heartier stews and moles, Scruggs says.

But the value of this sub-ethnic intelligence is not limited to the foodservices and restaurant industries. Hispanic music such as Mexican, tejano, romantica and salsa also have regional ties. So companies in the music industry or companies that provide music for retailers or elevators can benefit from this information, as well.

Other research firms have recently released studies uncovering the diversity among the U.S. Hispanic market. And the findings have analysts in agreement. "You hear the Hispanic market talked about as being one monolithic group of consumers, but it's actually a diverse group of consumers," says Brad Fay, managing director of NOP World Consumer. (An NOP World Consumer survey released last month uncovers the health and dieting views of American-born versus foreign-born Hispanics. The survey concludes that 60 percent of foreign-born Hispanics tend to be focused on nutrition and food ingredients, while U.S.-born Hispanics are more worried about lifestyle factors such as smoking and stress.)

The Chain Store Guide report, which includes a breakout of Hispanics by country of origin for the top 50 Hispanic U.S. markets, will be available on September 28, 2004. For more information on the more than 600-page report, visit

Chain Store Guide's

Web site.

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