KANSAS CITY — The U.S. is no doubt a hodgepodge of ethnic and cultural diversity, and that is best represented in the Hispanic population. Despite the fact that Latin American immigration appears to have stagnated, the U.S. Census Bureau expects this demographic to reach 106 million by the year 2050 — a 57% increase from 2015 — and that’s after the bureau actually lowered its projections.
There are two sides to this coin: A group this big, with so much growth potential, Hispanic consumers represent a large segment of purchasing power for a number of products. And at the same time, they are driving food trends that can be seen in product development ranging from flavor fusion to food mashups that represent multiculturalism in often surprising ways.
What it means to be Hispanic is a tricky proposition, and it can mean different things to different people, especially in specific regions of the U.S. So, how are people purchasing Hispanic products, and how is this culture affecting what baked foods and snacks Americans of all ethnicities are eating?
It’s not just the demographic that’s growing. Hispanic consumers’ pocketbooks are growing, too, according to research from Mintel, Chicago. From 2010 to 2014, the Selig Center for Economic Growth estimated that their purchasing power grew from $1 trillion to $1.25 trillion and projected it to hit almost $1.7 trillion by 2019, thanks to improving labor market conditions that lead to increased disposable income.
In 2013, A.H.A.A.: The Voice of Hispanic Marketing, a research firm dedicated to Hispanic-specialized marketing, identified a consumer segment it called Upscale Latino, which accounted for 29% of the U.S. Hispanic population and 40% of the group’s spending power.
Partnering with Nielson, A.H.A.A. conducted a comprehensive study of Hispanic households that earn $50,000 to $100,000 per year and discovered that this group is on average 33 years old, lives active lifestyles and often has young families — 85% have a household of three or more — falling in line with the target shopper for many bakeries and snack food manufacturers.
Breaking border barriers
The growth of Hispanic spending is happening at a time when Mexican brands are also experiencing growth in the U.S.
In October, Milling & Baking News reported that Grupo Bimbo, Mexico City, is gaining a foothold with its Mexican brands such as Takis, a corn chip produced by Grupo Bimbo subsidiary Barcel USA. During an October call with analysts, Fred Penny, president of Bimbo Bakeries USA, said that Bimbo and Marinela are two Mexican brands that account for “a significant portion of our sweet goods business.” Chairman and chief executive officer Daniel Servitje noted that the company’s sweet goods portfolio made a smooth transition to the U.S. market from Mexico, and the salty snacks like Takis are following suit.
“We have a separate team working on these categories with synergies also with the Bimbo Bakeries’ business in many regions in the country, and we’re very pleased with the growth,” Mr. Servitje said. “We have a plant in the U.S. focused on basically producing these salty snacks items, and we also do a lot of export from the Mexico zone. So that’s a growing business.”
More than Mexican
With proximity on its side, it’s not only easy for Mexican foods and flavors to quickly gain popularity in U.S. markets, especially in large border states such as Texas and California, but it’s also easy for American consumers and marketers to assume that “Hispanic” directly translates to “Mexican.”
“In terms of the Hispanic population in South Florida, we don’t have the same situation as California or Texas with Mexicans, where there’s one particular ethnicity,” said Luis Lacal, general manager of Bakery Corp. in Miami. “In South Florida, you have about 20 different nationalities, so any product you want to bring to the market doesn’t go to just one.”
Some products gaining popularity, Mr. Lacal said, include Colombian pan de queso, Cuban or Argentinian empanadas and Mexican bolillo. However, Bakery Corp. actually faced challenges in creating Hispanic products in an area with high Hispanic multiculturalism.
“In Miami, you’ve got about 70% Cubans, and the other 30% to 40% is divided between 15 or 20 different nationalities,” he said. “Quite a few years ago, we got into the Latin flavors, especially with muffins and pastries, using mango, guava, dulce de leche, pineapple — tropical flavors from the Caribbean — and it did work for a while, but you have so many Hispanic bakeries — Mexican, Cuban, Colombian — you have a lot of bakeries already taking care of that.”
In the end, Bakery Corp. chose to concentrate on the American food service business, including hotels, restaurants and cruise lines, making French breads and dinner rolls. Interestingly, the bakery also produces a ready-to-eat Cuban sandwich made with French bread.
Millennials and multiculturalism
It’s not just multicultural Hispanic consumers who have diversity of palate. Non-Hispanic millennials, according to Mintel, are also branching out into non-Mexican Hispanic foods. Forty-eight per cent of millennials have eaten Central or South American foods, including arroz con pollo and pupusas, in the past three months, which will likely fuel interest in broader Hispanic cuisines, according to Mintel's Defining Ethnic Food report.
On the flip side, a bakery such as Pan Pepin, located in Bayamon, P.R., doesn’t have a Hispanic demographic per se because its consumer base is 100% Latino but can still be influenced by outside cultures such as Mexican.
“We are a totally Latino market — but we are Caribbean Latinos, not Mexican or Central American — yet tortillas have really started growing here,” said Mario Somoza, president and chief executive officer of Pan Pepin. “We got into the tortilla business about six years ago. We saw it as a growing category. It was a small market, but it has kept growing on average at a double-digit, year-over-year rate.”
After using a co-packer and seeing how well tortillas would do, the bakery recently installed its first tortilla line in-house.
Mr. Somoza said Puerto Rican consumers are drawn to a more Americanized type of tortilla. In fact, tortillas, while a seemingly universal product, carry their own Hispanic individualism, especially when it comes to geography.
“A big seller here [in Puerto Rico] is the wheat flour tortilla, which is a little bit softer. Not so much as in Mexico and other Central American countries where corn is preferred,” Mr. Somoza said.
Mr. Lacal had a similar observation.
“In every single country from Guatemala, Costa Rica, El Salvador, Honduras, even though they use and eat tortillas, each one of them have a different kind of tortilla than Mexico,” he said.
Rather than lumping everything into one type of Hispanic food, knowing what types of flavors are born out of specific ethnicities can help bakers and snack makers tweak their product development and fuse flavors for new and interesting products.
“Caribbean Hispanics — Puerto Ricans, Dominicans, Cubans — we’re about using spices to highlight the flavor of the food,” Mr. Somoza said. “We do put a lot of spices in our food, but it’s not hot spice like you would find in Mexico or Central America.”
In those locales, spices and chilis are used more for heat when it comes to flavors.
Brands have an opportunity to “mine the interest in Mexican foods,” Mintel said in the Defining Ethnic Food report. Focusing on flavors specific to certain regions of Mexico, as well as other Latin and South American cuisines, is a great starting point for fusion concepts.
Mintel also noted that non-Hispanics are seeking savory, tangy and sweet options in their food choices. However, hotter flavors have been driving product innovation, specifically in snack foods, over the past five years.
A healthy halo
Hispanic consumers have very specific ideas when it comes to what constitutes healthy foods. In fact, Hispanic consumers put a heavy emphasis on how they perceive themselves when it comes to being healthy, according to Mintel. However, the majority of Hispanics perceive themselves as being healthy, with a third claiming themselves to be very healthy.
Then again, Mintel said, the more acculturated Hispanics become, the lower the likelihood that they will self-identify as healthy. Part of the reason is that such individuals place more value on convenience than health. Hispanic consumers identify healthy foods as those that are prepared from scratch, and that has nothing to do with calorie counts. In other words, the fresher, the better.
“The Hispanic community is used to fruits,” Mr. Lacal said, mentioning fruits ranging from guava to pineapple to bananas.
Mr. Somosa added, “In the Caribbean, plantains are very popular in all our food.”
Mintel also pointed out that non-acculturated and bicultural Hispanics are more likely to eat desserts; they just do it in a cautious way. The Mintel report Hispanic Consumers and Dining Out indicated that this group will find more interest in lower-calorie and mini-size dessert offerings.
Using these types of fruits in products such as desserts, muffins and Danishes, especially when the ingredients are fresh, can confer the halo of health as a selling point.
Developing and marketing Hispanic products — whether inside or outside the core demographic group — is a much more complex notion than one might anticipate, right down to identifying who the Hispanic consumers are. Whether it’s traditional Hispanic products, inspired twists on Latino mainstays or mashing up flavor fusions from a variety of Hispanic cultures, bakers should get to know core demographic groups. And at the rate it’s growing, bakers and snack food manufacturers need only look in their own backyards.