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Consumer Packaged Goods Growth Depends on Hispanic Consumers

The Association of Hispanic Advertising Agencies (AHAA) recently released a new study proving what we’ve known for a long time: there is a positive and direct connection between targeted Hispanic marketing and revenue growth among consumer packaged goods (CPG) and CPG-based retail companies.

Approximately 39 CPG companies and retailers that consistently advertised in Hispanic media between 2006 and 2010 were included in the study.  The findings showed that the share of overall marketing resources offered to Hispanic consumers showed significant revenue growth. In fact, the estimated buying power of the Hispanic market will reach $1.2 trillion this year, according to the Selig Center at the University of Georgia.

Why? The Latino population has soared to over 50 million people. The growth is so robust, that Hispanics accounted for over half of the country’s population increase from 2000 to 2010. It’s also showing no signs of slowing.  The Census reports that through 2020, Hispanics are projected to account for 100 percent of all growth for adults 18 to 49 years old in the U.S.

The economic downturn has challenged companies overall, especially those exclusively clinging to English-language advertising. Hispanic consumers, however, offer a continuous new growth pattern that captures a fair share of revenue by CPG companies that have a higher focus on Hispanic marketing.

Some of the CPG brands and retailers in the AHAA study taking full advantage of the Hispanic opportunity include Clorox, Coca-Cola, Estée Lauder, General Mills, Kellogg’s, L’Oréal, Kimberly-Clark and Unilever.

For consumer packaged goods and their retailers, Hispanic allocation accounts to about 34 percent of CPG change in top line revenue growth, according to the study. Organic revenue growth rates decline sharply as Hispanic share of budgets decrease and vice-versa.

Hispanic consumers are driving the highest consumer spending potential due to younger age and a larger household size – there are 3.8 persons per Latino household compared to 2.5 persons in a non-Latino household, according to the U.S. Census. Hispanic households also spend more for food at home: expenditures will grow 5.7 percent annually, more than twice the rate for non-Hispanic households at 2.5 percent.

Other interesting data points to keep in mind: Hispanic food at home cumulative lifetime spending is over 50 percent higher than that of the general population, and Hispanic personal care cumulative lifetime spending is about 33 percent higher than that of the general population.

Hispanics are valuable customers for consumer packaged goods and are more influenced by strong brands. According to the study, Hispanic consumers say “I am more influenced by what seems hot and what’s not,” “A brand name is the best indication of quality,” and “I only buy food items that are name brands, not generic brands.”

Directly targeting Hispanic consumers has moved from opportunity to requirement for top line revenue growth. Experience indicates that critical success principles include consistent outreach, responding to the most appropriate cultural insights, corporate-wide integration and investment. Follow these key points and sustainable growth can be attributed to your brand.

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