Why the Multicultural Market Is a Good Investment

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Why the Multicultural Market Is a Good Investment

By Debby Garbato, Stagnito Business Information - 07/07/2015

DEERFIELD, Ill. — Retail and consumer packaged goods (CPG) companies are paying more attention to the rapidly exploding Hispanic market than any other business sector — and in correlation, they are reaping the most rewards, according to multicultural marketing experts.

Terry Soto and Carlos Santiago headlined a June 23 webcast entitled “America’s Multicultural Explosion: What It Means to Retailers and Suppliers.” The webcast was hosted by Multicultural Retail 360, an event produced by Convenience Store News parent company Stagnito Business Information.

Soto, president and CEO of About Marketing Solutions Inc., will serve as opening day emcee of the inaugural Multicultural Retail 360 Summit, being held Aug. 12-14 in Anaheim, Calif.

Santiago, president and chief strategist for Santiago Solutions Group and research chair for AHAA: The Voice of Hispanic Marketing, will present the full results of AHAA’s new CPG Retailer Ad Spend Study at the Summit. Excerpts from the study were presented during the webcast.

Dubbed “Super Consumers” in a recent Nielsen report, multicultural shoppers drive at least 30 percent of sales, 40 percent of growth and 50 percent of profits across all product categories.

What drives these Super Consumers is that they are young, sophisticated and multi-dimensional. Unlike some of their parents and grandparents, they speak fluent English. Many are also better educated and have more disposable income. But what distinguishes them the most is that they embrace American culture while holding on to their Hispanic traditions and values.

“This isn’t the Hispanic market we thought about 10, 20 years ago,” said Soto. “They have morphed into multi-dimensional hybrid consumers who act on their ethnic identifications and general influences.”

At retail, the coming of age of the Hispanic segments of generations Y and Z is having the biggest impact. According to Soto, 45 percent of millennials are multicultural and two-thirds are U.S.-born. Generation Z is the most multicultural generation ever, with just 53 percent being non-Hispanic white and 23 percent being Hispanic. It is the last generation in which non-Hispanic whites are the majority, Soto added.

Many of these Hispanics are third or fourth generation, but they still have strong ties to their traditions, with 75 percent identifying themselves by country of heritage.

“Only one in four identify as ‘American,’” Soto explained. “You think they’d be less influenced by their culture, but it’s not fading among the younger generations.”

She believes retailers need to make sure they are not just targeting the “old Hispanic consumer” when it comes to assortment, merchandise and shopping experience.

“Generations Y and Z have different needs,” she said. “We need to accept that big is no longer better among younger consumers. We need to reinvent brands to be more culturally responsive. We have to come together now or we’ll miss the next wave of lifetime consumers.”


Retail and CPG companies increased Hispanic media spending by 20 percent between 2006 and 2010, vs. 7 percent in English ad spending, according to the new CPG Retailer Ad Spend Study from AHAA. This study marks the first time research was conducted to quantify Hispanic allocation and its impact on total revenue growth in North America, according to Santiago.

Retail and CPG companies are “leading the explosion” in Hispanic advertising, he said, and have been leading Hispanic ad spending since the 1980s.

The study found a clear correlation between what is spent and what is gained. By allocating an additional 10 percent of a company’s ad resources to Hispanic media over five years, the average increase in organic revenue annual growth rate is 6.8 percent, cited Santiago.

If a company consistently allocates 14.2 percent of its advertisement budget on the Hispanic market, the company is expected to have a growth rate of 0.67 percent. For each additional percentage point beyond 14.2 percent, a marketer can expect growth of 0.67 percent. While this may sound miniscule, it is significant considering that the mature CPG segment averages just 3 points of growth annually.

While the telecommunications, technology and entertainment industries have made substantial investments in the Latino market, they have not done so “to the same strength” as CPG and retail entities, added Santiago. The retail and CPG companies that are reaping the biggest rewards and are in the top-30 percentile include Walgreens, Coca-Cola, General Mills, Nestle, Dannon and Walmart.

For more information on the Multicultural Retail 360 Summit or to register to attend, go to www.multiculturalretail360.com.

Stagnito Business Information is the only complete provider of retail industry information, insights and strategic communication programs for CPG retailers and suppliers. Stagnito’s brand portfolio includes Convenience Store News, Progressive Grocer, Store Brands and Retail Leader.