CPG Companies Target Hispanics For Growth

MCLEAN, Va.Hispanics make up 17% of the U.S. population, wield $1.2 trillion buying power and are more brand loyal with a lesser emphasis on price-point compared to the national average, according to new market research commissioned by the Association of Hispanic Advertising Agencies (AHAA). The findings suggest consumer packaged goods brands that focus on Hispanic marketing are most likely to see more rapid topline revenue growth than those who are not as focused on the market.

Not only do Hispanics represent 56% of the U.S. population growth between 2000 and 2010, but they spend more time and money per trip to the grocery store than the national average, they bring more family members with them to shop. Data showed a significant difference in the revenue growth rate attained by CPG companies that designate a higher focus to the Hispanic market than those corporations who focus less.

"This new information is compelling because the data indicates that the Hispanic market can be a big determinant in corporate success," said Roberto Orci, chair of AHAA and CEO of Acento Advertising. "CPG companies not only want to gain market share among their competitors but they also want to provide growth and stability for their investorsinvesting in Hispanic marketing is a clear strategy in achieving that twofold objective."

The study analyzed the top 500 overall U.S. advertisers between 2006 and 2010 and foundwith a 95% confidence levelthat among CPG brands, the share of overall marketing resources dedicated to the booming Hispanic segment explains about one-third of their overall revenue growth. Effective growth leaders consistently put higher focus on creating solid relationships with the valuable Hispanic consumer base. Conversely, CPG underperformers tend to overlook Hispanic growth opportunities resulting typically in sluggish growth, and by consequence, slower value creation to their shareholders.

Approximately 39 CPG companies and retailers were included in the study, and seven companies, including Coca-Cola, General Mills, Ralcorp, Groupe Danone, Nestlé, Walmart, and Walgreens, were named best in class" for  driving the highest overall organic revenue growth from their consistent leading efforts in the Hispanic market. Other companies analyzed included Unilever, Hormel, PepsiCo, Kellogg's, Diageo, Pernod Ricard, Sara Lee, ConAgra, Campbell's and Hershey's, among others.

The survey also found Hispanic households' food at home expenditures are estimated to grow at a 5.7% average annual rate over the next 10 years compared to just 2.5% for non-Hispanic households. This makes Hispanic marketing a strategic imperative for CPG companies and their retail counterparts.

"Hispanic media spend across all disciplines should be more broadly defined as corporate-wide holistic investment in this growth segment, reflecting the most appropriate cultural insights and developing integrated marketing strategies from product innovation to customer experience in order to leap-frog corporate revenues into an accelerated growth rate," said Carlos Santiago of Santiago Solutions Group, who conducted the study for AHAA.