The Impact of Brand-Centric Hispanics on CPG Shopping Trends

Feb 12, 13 The Impact of Brand-Centric Hispanics on CPG Shopping Trends

Allocating advertising budget money is a complicated task, but one thing is simple: spending a portion of that money on the Hispanic market is a must for CPG companies to increase sales and solidify their brand as a staple in their shopping carts.

In 2010, Hispanics spent over $125 billion on CPG products: 11.8 percent of total U.S. CPG annual spending.1 Though Hispanics have historically been overlooked in CPG branding, $125 billion is a reason to take a second look! Hispanic consumers are proportionally the largest segment of CPG consumers. They spend eight percent more on CPG products than any other population and this group shows no signs of slowing down.2 Hispanics spend over 50 percent more on CPG products over their lifetimes than non-Hispanic whites and over-index in a number of categories.3

If marketers have been convinced the Hispanic market is not worth a segment of their budget, they should reevaluate that decision or risk falling behind their competitors. Recent market studies reveal Hispanic consumers have a large impact on the CPG market and company revenue. Assigning funds to target the Hispanic market will drive a 35 percent revenue increase in just five years for CPG companies.4 The possibility of such a drastic revenue increase by targeting just one group is impractical to ignore. The market’s history highlights a correlation between Hispanic budget share and organic revenue growth rates: a decline in Hispanic spending by CPG companies also means a decline in revenue growth.4 The numbers don’t lie!

Hispanic food at home purchases are estimated to increase annually at a rate of 5.7 percent.4 Non-Hispanics are only expected to increase those same purchases by 2.5 percent annually.4

CPG brands, take note: not only do Hispanics consistently spend more money on these products, but they are also significantly more brand-centric than other demographics. Therefore, the Hispanic market is one of the most effective market segments to target. Hispanics are markedly partial to strong branding, often choosing brands because they are “hot” or because they believe they are solid indicators of quality (in comparison to generic brands).4 In these cases, Hispanics are willing to pay more for their preferred brands.4 If marketers establish their clients as one of these preferred brands, it could also ensure the brand’s longevity, as the Hispanic segment will only continue to grow in the future.

“To Hispanics, generic brands offer nothing. They’re boring, they’re generic, they’re blah,” said George L. San Jose, president and chief creative officer of The San Jose Group. “Our experience with multicultural markets and CPG companies is that success comes when brands emotionally connect their uniqueness to their consumers’ aspirational desires.  Brands need to deliver on their promise to understand what their consumers want.”

Hispanics also over-index certain product categories in comparison to the general market. Wal-Mart reported that their top Hispanic categories (listed in order) are fresh eggs, bottled juices, refrigerated juices, soap and Mexican Foods.5 They are proportionally more interested in products that are low-sugar, high-fiber and reduced-calorie than the general market.6 Hispanics also over-index in dried fruits and grains, fresh fruits and vegetables, beef, pork and poultry.7, 8 Therefore, as a marketer, if your brand falls into one of these categories, it is more essential to place your focus onto the Hispanic consumer.

A brand’s image is a key component to reaching the Hispanic market. While ad campaigns and coupons are always important, 55 percent of Hispanics buy a product in the store without researching it first.5 This is often based on the brand’s image and their impression on the consumer. If you have strong brand recognition within the Hispanic market, they will be more likely to choose your product than your competitor’s even if there is a significant price difference. This demonstrates the power of Hispanic brand loyalty and recognition.

After seeing an ad for the product online, 54 percent of Hispanics made an in-store purchase. This makes online ad spending across various platforms (TV channels, social media, mobile) a must for any competitive CPG brand.9 Allocating advertising funds into this avenue will be most effective if you have a tight budget; funding an online ad is significantly less expensive than a national television commercial.

If marketers want to increase revenue for their CPG brands, they need to dedicate a portion of the advertising/ marketing budget to this high-spending and brand-centric market segment.



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