NEW YORK — With $1.3 trillion in spending power — and growing — Hispanic consumers are a vital component to retail success. But it takes more than stocking shelves with Latino-inspired products to keep them coming back for more; retailers and marketers must get adept at spotting and leveraging opportunities.
While retailers and marketers tend to place all Hispanic consumers into one bucket, they are not a homogenous group of shoppers, explained Sherry Frey, vice president of the Nielsen Perishables Group. For example, 65 percent of U.S. Hispanics are of Mexican heritage, 9 percent are of Puerto Rican heritage and 4 percent are of Cuban heritage.
In addition, 64 percent of Hispanics in this country are U.S. born, and 75 percent of those consumers are younger than 35 years old. Notably with this Millennial segment, "they are ambicultural and proud of it," she explained. "At Nielsen, we call this the 200-percent population. They are 100-percent American and 100-percent Hispanic."
Frey's insights came Tuesday afternoon during a Nielsen webinar entitled "Fresh Foods Are CPG's Gateway to the Hispanic Opportunity."
The U.S. Hispanic population growth is projected to outpace other ethnic groups over the next 40 years. Nielsen puts the growth rate between 2010 and 2050 at a whopping 168 percent. The increase is not only being seen in New York, Los Angeles and Miami. It's occurring in all areas of the country, with Charlotte, N.C., being the market with the fastest-growing Hispanic population. Also seeing a notable increase are markets like Seattle, Minneapolis, Denver and Raleigh, N.C.
Frey points to this population map to drive home a key takeaway for all retailers: You don't need to be in major cities like New York and Miami to see the Hispanic opportunity.
"Hispanic consumers and their influence are all across the United States," she said.
While all these statistics are important to grasp the power behind the Hispanic consumer, food retailers should especially take note of this: Hispanics allocate more money to food, and more to food to take and prepare at home.
"This is a great opportunity for the grocery industry," Frey added.
Looking at specific retail channels, Hispanics' spending habits are not "drastically different" than non-Hispanics. Like their non-Hispanic counterparts, Hispanics shop more at mass-merchandise and warehouse stores, and less at grocery and convenience outlets, she said.
Grocery and convenience may be able to reverse this trend by focusing on fresh. According to Frey, the average Hispanic shopper spends $452 more per year on food — with 41 percent of that coming from fresh food.
Not all fresh products are created equal, though, she cautioned. For example, Hispanic consumers look for less-processed fresh foods such as fresh produce and fresh pork.
Taking a look inside the overall basket, Nielsen finds that Hispanic consumers are buying all the ingredients to make meals at home — a combination of fresh foods such as meat and produce, plus center-store staples like pasta, ready-to-eat cereals, and mayonnaise and spreads. On occasion, they are also adding "basket builders" like specialty fruits, cactus leaves, guava and ethnic dairy.
Buying the ingredients to assemble at home is a constant across the Hispanic segment; however, Millennial consumers are also looking for convenience, according to Frey. For example, Baby Boomers are buying instant coffee, while Millennials prefer ready-to-drink coffee and energy drinks.
"With Millennials, there is a growing opportunity for more convenience and more shortcuts," she said. "Sixty-five percent of Hispanics fall into Millennial segment so the opportunity will continue to grow."
Turning the focus to Hispanic consumers and their tastes open doors to other opportunities as well. Hispanic influence has stretched beyond cultural lines as non-Hispanics are now adding traditional Hispanic flavors and dishes to their at-home meals.
"By reaching Hispanics, you can create a halo effect to reach non-Hispanics," Frey noted.
In fact non-Hispanic stores are driving the growth of mainstream Hispanic products, partly due to more retailers carrying such products. However, limiting these products to their own specialty aisles or sections could be detrimental to the overall strategy.