Article for Candy & Snack TODAY

By Bessie Ramírez

Principal, Santiago Solutions Group

IS THERE TRUE REVENUE GROWTH POTENTIAL IN THE HISPANIC MARKET?

Much has been said about the growth of the Hispanic population. But how is that translating at the

sweet and salty booth? Is the promise of the Hispanic market growth real? Is this market truly different

from the general population?

Focused efforts toward the Hispanic market boomed with the release of the Census 2000, when

corporate America opened its eyes to untapped possibilities and the Hispanic population was projected

to sport a 3.5% compounded annual growth (CAGR) and reach 49.7M in 10 years. The excitement began

to lose steam in 2007 coming into the recession, only to pick up again last year with the release of

Census 2010, which reported a population of 50.5M with more growth to come. So, to quote Steve

Moya, contributor to Win! The Hispanic Market; Strategies for Business Growth, “the future is herei” and

waiting to see how things go is no longer an option.

Let’s look at different set of numbers that begin to set the stage of what this means for retailers and

food manufacturers:

6x Hispanic households are growing at a rate six times faster than Non-Hispanic households. Even more importantly, Hispanic households are 52% larger than Non-Hispanic householdsii

3x Hispanics average 26 grocery trips per month, three times the frequency of the general U.S. populationiii

2x During the next decade, Hispanic household spending on food is expected to grow over twice as fast than Non-Hispanic spending (5.7% v. 2.5% respectively)iv

Retailers need to ensure they serve the needs of these households and brands need to concern

themselves with potential per capita gaps that arise from a traditionally narrow household view.

GETTING TO KNOW MAMÁ

Mothers are largely responsible for the lions’ share of food purchases. Reports show that Latina moms

account for the birth of about one in four babies.v These mothers differ significantly from Non-Hispanic

mothers, with about 60% of them born outside of the United States. However their children were born

here. Hispanics today account for 23% of the kids 17 years of age and younger. This creates an

interesting dynamic between the un-acculturated mothers and the acculturated children they are

responsible to raise.

Household Dynamic

I like to shower my loved ones

with gifts

My children have a significant impact on brands I choose

Chicoismo

Children have a right to be spoiled

Marianismo

Needs / Wants

I tend to make impulse

purchases

Often, I eat meals on the run

I indulge my cravings for sweet

Replace Meals

Self Indulge

Impulse Driven

Familismo

Familismo, Marianismo and Chicoísmo are three

imperatives of the Hispanic culture with great

implications at the cash register. Familismo

speaks to a heightened sense of family.

The Hispanic family extends beyond the

immediate family unit to include

aunts/uncles, cousins, neighbors

and close friends. Family

members are held accountable

for each other’s well-being,

including keeping them

happy. Hispanics are therefore

more likely than Non-Hispanics to

gift each other. They are very

appreciative of gifts, even as small

tokens, something retailers and

manufacturers can leverage through

promotional activity. Retailers who

make them feel at home can become part of

their virtual family.

Hispanics are also more likely than Non-Hispanics to

spoil the children. Mamá’s responsibilities do not stop

with nurturing and ensuring her children’s safety.

Marianismo includes keeping the family together and

preserving the joy of childhood, therefore Mamá will always

sacrifice her own self-interests for the benefit of her children.

She is determined to provide for her children all of the things she

didn’t get to enjoy while she was a child.

Lastly, Chicoísmo is of paramount importance in the Hispanic circle of life. There is much hope and

aspiration for the children who, having been born in the U.S., know English well and are better suited to

figure out how everything works. Parents will evolve to trust their children almost blindly in all matters

related to technology, regulations and the modern way of life. Retailers need to secure an environment

that’s welcoming to children and acknowledges their importance in making purchase decisions.

Hispanic children exert a greater influence on their parents’ purchase decision than Non-Hispanic

children.

Hispanics are more likely than Non-Hispanics to eat meals on the run, indulge their sweet cravings and

make impulse purchases. These insights point toward fertile ground for the confections and snacks

category.

IS THE HISPANIC “CART” HALF FULL OR HALF EMPTY?

According to MRIvi, and its tracking of 85 chocolate and confections brands, Hispanics account for 14% of

the category’s adult users. Given that Hispanics also represent 14% of the total adult population in the

U.S., this seems reasonable. But this “fair share” comparison is really just a back-of-the-envelope

calculation that offers no real insight into the market. An analysis of the top 20 brands for heavy users

shows that Hispanic heavy users carry more than their fair share of the volume for all but 1 of the

brands (see Figure 1).

Figure 1 Top 20 Confections & Snacks Brands among Heavy Users

Also, a closer look at the top 20 brands consumed by adults in the last week, Hispanics show

considerably deeper penetration levels than Non-Hispanics (Figure 2). This chart shows that Hispanics

significantly over index Non-Hispanic penetration for giants such as Snickers (32% penetration higher

18

24

18

8

16

38

15

25

17

15

22

20

16

16

20

29

19

17

21

15

0 20 40

PayDay

Starburst Fruit Chews

Baby Ruth

York Peppermint Pattie

Dove Chocolate

M & M's Almond

Twizzlers

Skittles

Milky Way

3 Musketeers

Twix

Almond Joy

M & M’s Milk Chocolate

Butterfinger

Kit Kat

Hershey's-Almond

M & M's Peanut

Hershey's Milk Chocolate

Snickers

Reese's Peanut Butter Cup

Hispanic % of Heavy Users

14%

than Non-Hispanics) and more modest brands like Nerds (82% higher penetration). It also shows

patterns, such as Hispanic’s preference for products with almonds and dark chocolate.

Hispanics are in fact heavy users of the category; albeit with a reduced consideration set. It is important

to understand that, while it is not rocket science, assessing the market landscape and the opportunity

the Hispanic market brings requires a deeper knowledge of the market and more detailed analytics.

Manufacturers and retailers alike must arm themselves with the right market intelligence and

wherewithal to assess their true Hispanic market potential and devise strategies and tactics that will

allow them to capture incremental growth opportunities.

TO CAPITALIZE ON THE HISPANIC MARKET OPPORTUNITY…

Understand their eating behavior and food preferences

Hispanics’ purchase and consumption drivers are deeply rooted in culture and tradition. Hispanics tend

to have larger, full meals and less snacks (sweet, salty or otherwise). According to the USDA, the

proportion of Hispanics who have one snack or less is higher than that of Non-Hispanic Whites, who are

more likely to have two or more snacks per day. However, Hispanics are more likely than Non-Hispanic

Whites to have two meals accompanied by two or more snacks in one day (27% of Hispanics v. 23% of

Non-Hispanic Whites), suggesting that Hispanics are more likely to use snacks as meal replacement.

Manufacturers and retailers alike can focus on growing consumption by expanding Hispanic’s eating

occasions. One of the ways this can be done is by educating this market on the benefits of consuming

smaller, more frequent meals and snacks.

Hispanics often gravitate toward crunchy textures and nutty products. Citric, salty and sour snacks are

especially popular among Mexicans, as well as flavor combinations unusual for the Non-Hispanic market.

Who would have thought that cooking chicken on a chocolate/peanut sauce would make such tasty

“mole”? I am not suggesting that introducing new items specifically suited to the Hispanic palate is a

magic bullet for increased sales, but it is an important consideration. Hispanic density and the consumer

profile of Hispanics across different geographies need to be assessed before knowing what mainstream

brands are better suited for the flavor profile of Latinos in a particular neighborhood and what imported

brands, if any, could complement the mainstream offering.

Another consideration is pack size. Hispanics have big families, either related by blood or related by

friendships that transcend generations. Their larger households makes family and value packs especially

attractive, as are formats that, while individually packed, can easily be shared (i.e., King size).

Understand their shopping behavior

Food is central passion point to the Hispanic lifestyle, not just for nourishment, but for nurturing, loving,

spoiling, entertaining and, of course, indulging. Keeping the pantry properly stocked is very important

so most food shopping trips are planned routine trips. This is very different for Non-Hispanics, who plan

less and engage in more last minute, immediate trips. Conversely, immediate trips for Hispanics tend to

focus more on household items or items for the children. This presents an interesting opportunity to

place confections and snacks aisles on the pathway to purchase routine items and to find alternate

placements that promote impulse purchases. Since Hispanics know what they are looking for, they are

often blind to unfamiliar products that are sitting on the same shelf as the product they always buy.

They will literally not see them!

Loyalty programs for this market cannot be defined by club cards, primarily because most less-

acculturated and many bilingual Hispanics are skeptical about handing out their contact information to

big corporate America and because many popular independent grocery chains do not yet offer such

programs. In this market, loyalty is achieved largely through customer experience. Not to be confused

with one time spin-a-wheel bilingual promotions, customer experience involves building a consistent,

positive brand image. Manufacturers need to ensure they embed cultural relevancy across consumer

touch-points, from packaging design to online presence, from cause-related marketing to advertising,

promotions and public relations.

On the other hand, retailers need to create a welcoming environment for Hispanics. Hispanics will

proactively seek feeling welcomed, so much so that they will arrange their shopping schedule to visit a

store only on days or times when they know they will find the friendly attendant they’ve grown to trust.

There is an opportunity to enhance the in-store experience, not only through a relevant assortment of

products, but also through imagery and sound.

To understand this, I suggest you step into a Hispanic-dedicated retailer, such as La Curacao in Los

Angeles (furniture and appliances) or Sedanos in Miami (supermarket), and you’ll know you’ve been

welcomed into a Hispanic retailer. I’m not suggesting that general market retailers solely focus on their

Hispanic consumers, but that you take the time to figure out how to make your store welcoming to a

more diverse audience. Visit the Home Depot in Huntington Park (Los Angeles) and you’ll see how this

can be achieved. Rest assured that Hispanics will notice if you are only playing classical music, your

signage is barely bilingual, only the stocking crew speaks Spanish, and the rest your staff seems annoyed

when they hear Hispanics speak in Spanish amongst themselves. Stocking up on cultural competence is

just as important as the SKUs you carry.

Finally, Hispanics will also notice if you are genuinely concerned about the community around you.

Outfit the local park and sponsor its teams; help them deal with health ailments that disproportionately

affect them; help educate or train its youth; figure out a way to demonstrate that you actually care

about their well-being.

It has been reported that Hispanics are more loyal than Non-Hispanic consumers. I propose that this is

due in great part to their ability to trust a smaller number of brands and only a select group of retailers.

Hispanics are 27% more likely than Non-Hispanics to recommend a product they likeiii; this endorsement

is very important for the more than 90% of Hispanic moms who consider the recommendation of a

family member or a friend as a primary influence in their purchasing decisions (Edelman Consumer

Marketing’s 12on12, Feb. 2012). With that in mind, winning the heart of Hispanic consumers seems like

a pretty sweet deal!

CONTRIBUTOR INFO

Bessie Ramirez is Principal at Santiago Solutions Group. She began her marketing career at Nestlé USA,

where she focused on brand management and new product development for the Confections & Snacks

Division. She has since specialized in the development and implementation of multicultural strategies

and tactics for sustainable growth. She can be reached at Bessie@SantiagoSolutionsGroup.com.

Santiago Solutions Group, Inc. (SSG) is the leading growth strategy consultancy focused on aligning

business strategy and marketing across multicultural and generational segments. You can read about

SSG’s capabilities and thought leadership at SantiagoSolutionsGroup.com. Their most recent publication,

Hispanic Allocation Impact on Revenue Growth, reveals a direct & positive relationship between CPG’s

Hispanic ad allocation and their topline revenue growth.

Bio:

Bessie Ramírez, Principal, is an expert in the development and implementation of multicultural

strategies and tactics. She leverages her unique background in management consulting, brand

management and communications in the distribution, pricing and implementation arena. She ensures

strategies can be operationalized, promoting change management, integrating new capabilities and

aligning efforts to deliver results and generate overall business growth.

After four years as management and systems consultant for manufacturing and distribution companies,

Bessie began her marketing career at Nestlé USA. Aside from having full P&L responsibility, she

specialized on new product development and seasonal executions. In 2001 she chose to focus on the

Hispanic market and has since worked for various agencies including Casanova Pendril Publicidad,

leading account teams for clients such as The Home Depot, Wells Fargo, Ferrero Rocher and Foster

Farms. Since 2003 Bessie has been with SSG, playing an instrumental role in the development and

implementation of growth strategies for Quaker, J&J, Papa Johns, Health Net and Swiss Colony

Companies, among others.

Bessie holds an MBA with concentrations in Marketing and Finance from the Kennan Flagler Business

School at the University of North Carolina.

i Win! The Hispanic Market; Strategies for Business Growth, M. Isabel Valdés, Paramount Market Publishing, Inc., 2012 ii CAGR based on US Census,Data Set: 2008-2010 American Community Survey 1-Year Estimates, as analyzed by

Santiago Solutions Group, Inc. iii New FMI Report Examines Purchasing Preferences and Behaviors of U.S. Hispanic Grocery Shoppers, FMI, May

2005 iv Hispanic Consumers: An 'Emerging Market' in the US, The Motley Fool, March 2012

v The New Demography of American Motherhood, A Social & Demographic Trends Report, Pew Research Center,

rel. May 2010, rev. August 2010 vi

2011 Doublebase GfK MRI weighted to Population (000) - Base: All