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Beyond Chips & Salsa
Food companies increase ad spend to target Latinos but knowing what works is tricky when appealing to new clientele
July 18, 2005
By Kevin Downey
Marvin Spira learned early on that not just any food popular with Latinos abroad will become a hit in the exploding U.S. Hispanic food market.
Shortly after giving a speech to a roomful of food manufacturers in Argentina in 1997, the San Diego-based consultant was asked by colleagues to find out if there was a market in the United States for dulce de leche, a caramelized condensed milk treat often eaten straight out of the can throughout South America. After returning to the U.S., Spira sought advice from food manufacturers, distributors and consumers and quickly discovered there was little interest in the dessert. "It didn't set the world on fire," says Spira, who is president of Marketing Consultants International and also serves as chairman of the Food Policy Institute at New Jersey's Rutgers University.
But well aware of America's fast-growing Hispanic population and the general market's increasing interest in Hispanic foods such as salsa and tortilla chips, Spira didn't drop the idea of bringing dulce de leche to market.
"I did some preliminary work and suggested [the Argentine food manufacturers] introduce it not in the exact same way [it's eaten in South America], but to introduce it as a flavor. When they did that, it found its way into ice cream and cake."
Dulce de leche hasn't become a widespread phenomenon, but the introduction of a distinctly Hispanic product underscores perhaps the hottest trend in the domestic food market.
Though some analysts and marketers differ on the exact definition of Hispanic foods, ultimately the segment includes traditional fare marketed to Latinos from established companies such as Goya. Then there are foods targeted to Hispanics that are also marketed, or at least have significant crossover appeal, to non-Hispanics. In 2002, snack food company Frito-Lay, for example, worked in tandem with its Mexican-based sister company Sabritas to develop chips with flavors popular among Latinos, including its Lays Limón potato chips.
"We have learned that authentic taste is essential for the success of our Hispanic products since these products often serve as a reminder of home for many consumers," says Jared Dougherty, a spokesman for Frito-Lay. And to help make sure the company's products are authentic, he says, it works closely with members of Adelante, the Frito-Lay network for Hispanic employees.
While for obvious reasons it's not counted as Hispanic food, a related segment is general-market foods such as milk, cereal and meats that are increasingly being marketed separately to non-Hispanics and Latinos.
Whatever the definition, the industry is taking off, with marketing efforts often in the experimental phase of discovering what works and what doesn't work in both developing products for Hispanics and effectively advertising food to Latinos.
A Multi-BILLION-DOLLAR INDUSTRY
Perhaps most telling of the growing strength of this food segment is that conferences have emerged where nothing but Hispanic food and beverages are discussed. Among them is Expo Comida Latina, a trade show and expo launched in 2002 that now holds three such annual events, including one in New York City on Sept. 12-13.
In November, Rockville, Md.-based Packaged Facts reported that sales of Hispanic foods and beverages grew an average 9.2 percent each year from 1999 through 2004, when the market hit $4.4 billion. Moreover, the research company expects sales to grow an average 9.9 percent each year through 2009, when Hispanic foods will be a $7 billion industry (see chart, page 46).
"That statistic is extremely conservative," Spira says. "If you were to combine all the foods that have a Latino root, I think you'd find it's [currently] closer to $12 billion or $15 billion."
Within this growing market, there are certain Hispanic foods that become successful and others that falter. Much of it has to do with knowing how best to target the Hispanic consumer — and, for that matter, any consumer interested in Hispanic foods — as well as how to market and advertise to both Hispanic and non-Hispanic shoppers.
Lynn Dornblaser, director of consulting services for marketing research company Mintel's global new products database, says that foods with flavors inspired by Hispanic culture are doing well now among all consumers.
"This applies to Hispanic and other types of foods, where there are increased flavor profiles, which could be spicy or simply stronger," she says. "We're seeing more products with higher flavor profiles and unusual ingredients like corn in salsa and fruit in salsa. Where you may have seen salsa a couple of years ago with a hint of cilantro, now you see salsa with a much stronger cilantro taste."
Among emerging food products that are becoming more popular, according to Mintel, is chimichurri, a parsley-based sauce often found in Argentine restaurants.
Dornblaser says Hispanic foods that are faltering outside the Latino community include authentic products well established in Hispanic homes and throughout Mexico, Central America and South America.
"One group of products that is not taking off very well with mainstream consumers is some of the Hispanic beverages that are common in the Hispanic market like horchata," she says, referring to the popular milk and rice-based Mexican beverage. "Another thing you don't see much is agua fresca, essentially a diluted fruit juice, which seems like a product that would have unbelievable potential with a broad group of consumers."
CEREAL, YES, BUT HOLD THE CHIPS
Analysts say there is an opportunity for manufacturers to tap into the Hispanic market with a wide range of foods. In 2002, Mintel, in conjunction with the Simmons Hispanic Consumer Survey, found that Hispanics tend to use many foods to the same degree as the overall population. Among foods used more often by Hispanics are sweetened breakfast cereals, rice, spaghetti sauce with meat, fish and various meat selections.
Hispanics are as likely as the overall population to use other foods like cold cuts and potato chips, while usage falls well below average for certain types of food like flour, hot cereals, frozen vegetables, potatoes, nuts and, perhaps ironically, tortilla chips.
As with any product introduction, the success of Hispanic foods and general-market items targeted to Hispanics has a lot to do with luck and timing. But most analysts, marketers and media buyers say there are four basic tenets to better ensure success, specifically when marketing and advertising to Hispanics. These include promoting products with messages that are culturally relevant, respectful, aspirational and, especially for general-market products, educational.
Jeff Manning, executive director of the California Milk Processor Board, conducted extensive consumer research early in the "Got Milk?" campaign, which kicked off in December 1993. The data suggested its general-market strategy wasn't going to be effective for targeting Hispanic consumers.
"The 'Got Milk?' strategy is what we affectionately say is the milk deprivation strategy, where someone has a mouthful of food but they're out of milk," he says. "But the idea of running out of milk to women in traditional Hispanic families isn't funny. And if you literally translate 'Got Milk?' there is a possibility it could be translated as 'Are You Lactating?,' which is obviously not what we intended."
The California Milk Processor Board began targeting Hispanics one month after launching "Got Milk?" in the general market. By August 2000, the organization developed its current Hispanic-targeted tagline, "Familia, Amor y Leche" (Family, Love and Milk).
Abel Barrón, creative director at Dallas-based Spanish Marketing, Inc., says advertising food to Hispanics breaks down into two areas: the respectful "usted" and the informal "tú."
"When it comes to food, that is in the formal because it's a necessity," he says. "For the young crowd, you have to be hip. For the last several years, African-American hip-hop and now reggaeton, which is all the rage, is what has been driving the marketing for products."
Loretta Adams, president of research company TNS Market Development, agrees. "Hispanics are usually much more formal. We always have to advertise [in the formal] to an adult population, but being informal with kids is fine. Cereal comes to mind. The parents need to be informed of the benefits of the cereal, so there is a more formal tone. In the general market, they appeal to kids and it's fun."
Tony Stanol, senior vice president and director of client services at Los Angeles-based La Agencia de Orcí, says that foods should in most cases be marketed to Hispanics in a respectful manner, with messages that to varying degrees are educational and aspirational. (Orcí handles the creative for sweetener substitute Splenda and lactose-free milk Lactaid, both from McNeil Nutritionals, a division of Johnson & Johnson.) "Food is another signal that you've made it in the U.S. The Latino culture tends to hold onto their behaviors more strenuously than other ethnic groups," he says. "While they may have a hamburger or some regional American food, they will also revert to cuisine from their native country."
Stanol says food ads targeting Hispanics should be culturally relevant. "I happen to have a lot of food experience on other accounts, ranging from Nabisco, Cadbury and Frito-Lay over the past 10 years or so. I found that culturally, people want to see people of their own kind eating the food and relating to it."
AD SPENDING SOARS
Advertising spending trends point to the significant growth in food products specifically aimed at Latinos.
Ad expenditures for packaged foods in Spanish-language media in first quarter grew 50 percent from a year earlier, to $36.4 million, according to tracking firm TNS Media Intelligence. (See chart, page 44) Among the top spenders were products from traditional Hispanic food companies, including Goya (packaged foods) and Juanita's (primarily canned products), and established American companies targeting Hispanics such as Kellogg's and Tyson Foods.
Ad spending by food companies targeting Hispanics is expected to accelerate for primarily two reasons. The Hispanic population — and the affluence of Latinos — is growing far faster than most demographers have projected, with the average Hispanic family typically consisting of more mouths to feed than in non-Hispanic families. Second, supermarkets and food manufacturers are looking for additional revenue streams, and the burgeoning Hispanic population is increasingly key to continued growth.
"They are looking for growth out of the Hispanic market to supplement what they are doing in the general market," says Orcí's Stanol.
Regarding population growth, the Census Bureau in June reported that the Hispanic population in America hit 41.3 million people, up 3.6 percent in the past 12 months.
"There is demand and opportunity, and the demand [for Hispanic food] is now being noticed," says TNS' Adams. "If you go to larger populated areas, you can't ignore that in places like Miami and Los Angeles [about] half the population is Hispanic. And in states like North Carolina and Georgia, Atlanta specifically, there is huge growth. Even in New York there has been an influx of Mexicans, maybe half a million."
While Hispanic food has been around in one way or the other for decades, findings from the 2000 census prompted many food manufacturers to aggressively begin targeting Latinos.
Food consultant Spira points out that as the Latino population grows, Hispanic food is becoming easier to find, prompting the current and projected sales surge.
Earlier this year, the Food Marketing Institute (FMI) reported that 94 percent of Hispanics shop at a supermarket at least once a month, compared to 60 percent who shop at bodegas or neighborhood stores. Moreover, Hispanics spend $133 per week on groceries, compared to an average $91 for all shoppers.
FMI also found that 91 percent of Latinos find it important that supermarkets sell Hispanic products, including 80 percent of acculturated Hispanics.
"Supermarkets are very sensitive to attracting more customers, and Hispanics are shopping more at supermarkets now than they ever were before," Spira says. "Hispanics used to go to ethnic, neighborhood markets. But supermarkets saw this [population] trend and started to stock more Hispanic foods, changing the Hispanic specialty shopper into a supermarket shopper."
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