Hispanics Drive U.S. Food, Beverage Sales

NEW YORKHispanics have become the most important U.S. demographic growth driver in the food, beverage and restaurant sectors, according to new data from Latinum Network. The U.S. Hispanic segment made up more than 50-percent of real growth in the midst of a stagnant U.S. consumer economy between 2005 and 2008, with $52 billion of new inflation-adjusted Hispanic spending outpacing $40 billion of new spending by non-Hispanics.

The growth is attributed to an increase in the number of U.S. Hispanic households and an increase in consumer spending among U.S. Hispanics. In the food, beverage and restaurant business, this new spending offset 84-percent of the real decline in demand across the entire $1 trillion sector. The divergence in demand is driven mainly by differences in ethnic preferences, economic and cultural integration and demographics.

Other findings include:

· More than $9 billion of new value in Food and Beverage was created by Hispanics in otherwise dormant or declining categories such as fish and seafood, fresh fruit juice and dairy products between 2005 and 2008.

· $5.9 billion of new value was created by Hispanics in growing categories where they represent approximately 20 percent of the growth such as vegetable juices and fruit drinks, meats including pork, ham and mutton and frozen meals, which represent the highest-growth food category among Hispanics. Busy Hispanic professionals are increasingly turning to frozen meals to feed their children.

· While health and wellness trends reduced non-Hispanic consumption of beef, ethnic preferences buoyed Hispanic buying of beef.

· Hispanics are eating out more while others are cutting back, driving growth in fast food and full-service. Hispanics are increasingly likely to eat out during the work day, driving new sales in fast-food breakfasts and full-service lunches.

· The increasing rate of Hispanic home ownership is driving growth in household goods, while non-Hispanics are doing the oppositereducing real estate holdings and their purchase of household goods.

· Hispanic teens are driving the majority of new growth in deodorant and feminine hygiene and at least 20 percent of growth in cosmetics and shaving needs.

With total U.S. Hispanic household spending expected to top $1 trillion by 2013, and emerging markets around the world (such as China or India) fraught with political risk and hidden costs, institutional investors have a unique opportunity to look homeward, said Alexia Howard, senior research Analyst-US Foods at Sanford C. Bernstein. We see the growth in food, beverage and restaurants here as a particularly interesting opportunity for our investors. Especially with the relative stability of Hispanic demographics, this growth can be reliably predicted through 2050."