Many Hispanic shoppers are buying more private brand products, a trend expected to continue in the future based on research by the Food Marketing Institute (FMI) Private Brands Group presented in the report Se Habla Isn’t Enough: Private Brands Among Hispanics 2009, which was released here today.
In fact, the research found that 37 percent of Hispanic shoppers are purchasing more private brand products this year and 25 percent plan to buy more in 2010.
“Hispanic people are discovering the value and quality of private brands. This is a welcome finding since food plays a central role in their culture,” said Patrick Walsh, FMI vice president of industry relations and collaboration.
More than seven in 10 Hispanics (73 percent) agree that “store brands are a great value for the money,” including over half (52 percent) who “strongly agree,” according to the report. Nearly as many (64 percent) agree that “store brands are just as good as national or international brands,” with more than four in 10 (42 percent) holding this view strongly.
“This emerging trend has tremendous sales potential for food retailers,” Walsh said.
The report found that private brands account for 31 percent of household grocery expenses among Hispanics, averaging $85.94 every two weeks out of a total of $266.63.
Hispanics at All Income Levels Buying Private Brands
Household income does not affect the amount spent. In fact, Hispanics earning $50,000 or more per year spend the most at $92.67. Retailers that offer multiple tiers of products, from basic to premium, can effectively market private brands to Hispanics at all income levels, according to the research.
Other findings bode well for the future of private brands, notably that the youngest shoppers, 18-24, spend more than any other age group at $99.41 every two weeks. In addition, 42 percent of Hispanics entering their prime earning years, 25-39, have increased spending on these products this year.
Contributing to the positive outlook is that the current U.S. Hispanic population is 45 million, a number projected to grow to 64 million — one in five Americans — by 2020, according to the market research firm Synovate. Their buying power is expected to double over that time span to $2.2 trillion.
The most popular private brands among Hispanics, defined as items bought when shopping “every time” or “fairly often”:
- Dairy products, 54 percent.
- Paper products, 41 percent.
- Carbonated beverages or soda or bottled water, 35 percent.
- Cleaning supplies, 34 percent.
- Hot or cold cereals and other breakfast products, 34 percent.
How to Increase Private Brand Sales Among Hispanic Shoppers
The report found opportunities for retailers to increase sales of private brand products among Hispanics. Among all Hispanic shoppers, 10 percent never buy these products and another 48 percent do so sometimes or rarely. This is especially the case among the less acculturated, defined as Hispanics who have resided in the U.S. less than half their lives and speak Spanish as their dominant language.
The study explored how retailers can encourage Hispanics to buy new private brands. The top five factors rated “very influential” in moving them to try out a new product:
- Quality and healthy ingredients, 64 percent.
- Price lower than the alternative national brand, 63 percent.
- Discount coupons and sales, 59 percent.
- Same ingredients and characteristics of the alternative national brand, 49 percent.
- The store would donate a percentage of private brand sales to the community, 48 percent.
Although it is well recognized that having Spanish signs, labels, ads and bilingual employees is essential to reach out to Hispanic shoppers, these factors rated much lower in influencing them to buy new store brands.
Methodology and Purchasing Information
The data for this report are based on telephone surveys by New American Dimensions of shoppers in the top 10 Hispanic markets — Chicago, Dallas, Houston, Los Angeles, Miami, New York City, Phoenix, San Antonio, San Diego and San Francisco — which together account for about 60 percent of the Hispanic population.
To purchase the full report, contact the FMI Store at (202) 220-0723 or visit www.fmi.org/store/.