(Published in the April Issue)

Hispanic Foods Assimilate Into Market and Culture
Understanding the target audience for these products increases sales
By Scott and Ann Springer

Traditionally in the United States the population migrated west, but as immigrants are more likely coming from south of the border migratory patterns are now reversing.

As the Hispanic population grows and migrates northeast, so does Hispanic culture and food. Hispanics make up half of the foreign-born population which is at an all time high, according to an AC Nielsen study on Hispanic consumers.

No Siesta In Sight
The first fact about the Hispanic population worth noting is that it is increasing exponentially. And that is not likely to cease in the future.

“Growth of the cuisine will almost certainly continue regardless of what Congress does about immigration,” says Mona Doyle, editor of The Shopper Report.

While Italian cuisine is still a larger market, Mexican is the fastest growing ethnic food, Doyle says.

“Hispanic foods will continue to grow at a good rate and will outpace other categories,” says Roberto Orci, vp marketing of Juanita’s Foods, Wilmington, Calif.

One of the reasons for the projected growth is that Hispanic food has taken hold in American culture. “More of the growing popularity is attributable to tastes that Americans of all ethnic backgrounds have come to love,” Doyle says. “Mexican foods are becoming as American as lasagna, wontons, and bagels.”

According to the IRI, the Hispanic foods category has experienced 4 percent growth.

This data doesn’t include Wal-Mart, club stores, or independent retailers which are large consumer markets for Hispanic shoppers, Orci says.

Orci believes these numbers would at least double if the other outlets were included in the figures. Regardless, some manufacturers have experienced three times the growth in their own product lines.

“We’ve consistently delivered double-digit growth for the past seven to eight years,” says Bryce Ruiz, president and COO of Ruiz Foods, Dinuba, Calif. “I believe it all ties back to convenience, value, and quality. Plus, more people are becoming familiar with Mexican foods.”

A refrigerated product line is “on the radar,” according to Ruiz, but the company’s top sellers remain their El Monterey brand frozen items: chimichangas, burritos, and taquitos. All of these products hold top spots in the frozen Mexican food and taquito categories.

“We’re in the infancy of frozen Mexican foods,” Ruiz says.

Refrigerated products continue to see growth in all categories but especially in Mexican foods. “The next five years of sales of these items is going to be dramatic,” Orci says.

Knowing the Customers
The first step to increasing sales of Hispanic foods is to understand the shopping habits of customers who purchase these items.

“From observation, we know that smart retailers know the geographic origin of the Hispanics in their area and their level of acculturation,” Orci says.

Orci breaks down his top three consumer markets as first-generation Hispanics shopping for authentic items with which to cook, second-generation Hispanics in search of convenient but authentic foods, and non-Hispanics who enjoy flavors from south of the border.

“As Hispanics assimilate into the culture, they realize that they have the same time restraints as others and convenience items become more of a necessity,” Orci says.

Seeking Convenience
In the next 15 years, the second generation consumers are projected to dominate the growth of Hispanic populations in the U.S., according to the study. As this growth continues the demand for convenient and authentic products will continue to increase.

The study also shows that as Hispanics become more acculturated the more they lean towards convenience items, like prepackaged meals, and frozen items.

Second generation Hispanics, or acculturated Hispanics shop more frequently in traditional supermarket chains than do unacculturated, or first-generation Hispanic.

Non-Hispanic consumers make up a large market in refrigerated sales. “If you look at our demographics, our customer base is mostly white, middle-aged women looking for convenience,” says Jay Alley, the vice-president of retail sales for Fresherized Foods which is based in Ft. Worth, Texas.

Fresherized Foods has several lines of complete ready to make meals and avocado and salsa dips sold in the refrigerated case.

Unacculturated Shop More Frequently
Unacculturated shoppers tend to seek out shops that have bilingual employees, and signage, and sell Hispanic products which is why small ethnic markets may be more appealing.

“First generation Hispanics have a strong biased towards fresh food so they go to stores more frequently and they may go to more types of stores to get the items they want,” Orci says. “They may go to several different types of stores a couple of times of week.”

These shoppers also buy non-UPC coded items, so fresh items in the refrigerated sections be more appealing to them than frozen foods, according to the study.

The less-acculturated shoppers take fewer trips to most outlets, but spend more per trip, the study says. “Retailers should target product assortment and in-store promotions to this group to encourage more spending once in the store,” the study suggests.

Retailers must also establish where the country of origin for their Hispanic customers to know which items will sell best. For example, retailers can look at sales of canned beans in order to know what type of customers they are catering to.

“Acculturation is a continuum,” the study concludes. “Understanding the variation in product purchases interest and usage is key to effective in-market and in-store efforts.”

Market Products Accordingly
Sales of these products seem to be mostly steady. “Retailers are in the 30 to 50 percent margin depending on the retailer,” Alley says.

This category may still be new for some customers in certain regions of the country. “Give the product the opportunity to allow customers to raise their eyebrows and say, ‘That is something I’m willing to give a try,’” Ruiz says.

“We caution retailers not to give the product away in terms of margins,” Ruiz says. “We are going to see that as consumers become more familiar with Mexican foods they’re pallet is going to become more refined and they will be saying, ‘I want a more authentic experience.’”

The Word Free Is Profitable
Free is always a powerful word to consumers. Fresherized recently ran a promotion offering consumers a reimbursement for their first trial of their ready to make meals.

“We had a good return on it,” Alley says. “Our attempt was to expose first-time buyers to get them hooked on it.”
This method can be more cost-effective and easier than demos, Alley says.

Promotions like ‘10-For-10,’ and Two-For-Five are always easy ways to move inventory, Ruiz suggests.

Cross-promotion of these products may be tricky because different products appeal to different consumers, Ruiz says.

Advertising these products in your weekly ad will give you the most bang for your buck, Alley says. “Shoppers guide and flyers and other signage draw people over to the brand.”

Use Hispanic holidays, like Cinco de Mayo, and other events to highlight sales and promotions.

Displaying Your Cuisine
Vertical upright or spring-fed merchandisers display the product best, Alley says. “It shows the product off better and it looks full even if there is just one left.”

Having a second location also bolsters sales, Ruiz says. “The second location display has been very affective especially during the holidays,” he says. “It serves as a reminder to loyal customers and grabs those new to the category.”

Some manufacturers offer display ready pallets to call customers’ attention to a wide variety of choices without stocking a large inventory.

New item tags can also help improve the bottom line. “Consumers are always looking for something new to the case and are willing to try something new,” Alley says.

One of the biggest challenges in this category is this category is outpacing itself. “Retailers should dedicate more space to these products as the category sees double-digit growth,” Orci says.

Scott and Ann Springer are freelance writers based in Southern California.