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CHICAGO -- Food retailers have a "much, much bigger" opportunity to increase their share of the ethnic foods market, ethnic marketing expert Terry Soto told a crowd here at the Food Marketing Institute Show during a Close-Up Session called "What's New in Ethnic Trends."
Soto, president of About Marketing Solutions in Burbank, Calif., noted that the ethnic foods market, including Hispanic, Asian, and African-American food and beverage products, currently generates about $75 billion in annual sales, which is equal to $1 out of every $7 spent on groceries. However, while foodservice is bringing in about 65 percent of those sales, retailers trail behind with 35 percent of the market.
Many nonethnic consumers are spending money on ethnic foods, noted Soto. The drivers of this ethnic mainstream appeal include increased exposure to these foods from local neighborhoods or international travel, the extent to which ethnic foods fit into shoppers' points of value (factors such as convenience, health, variety, and adventure), and the extent to which these foods fit mainstream tastes.
Between 2003 and 2004, more than 2,000 ethnic products were introduced, said Soto. Mainstream manufacturers are getting a slice of the market, too, she pointed out. Among the more successful ventures are McCormick's Gourmet Collection line of spices and seasonings, which includes Caribbean and many other ethnic blends, and Coca-Cola's addition of Hispanic beverages.
In related news, FMI released a report yesterday called "El Mercado 2004: A Perspective on U.S. Hispanic Shopping Behavior," with the aim of providing retailers with a blueprint on how to serve the fastest-growing consumer segment in the United States: Hispanic families, who had purchasing power of $686 billion in 2004 -- a figure expected to reach $1 trillion by 2010.
U.S. Hispanic shoppers make an average of 26 grocery trips per month, which is three times greater than the general U.S. population, according to the study. While they frequent supermarkets most often for basic grocery purchases, they're much more likely to visit authentic specialty markets, such as panaderias (independent bakeries), than other shoppers are.
The report explains that U.S. Hispanics' view of the supermarket may have much to do with their level of acculturation, or the adaptation to the new cultural patterns of a dominant culture. The report additionally defines four distinct Hispanic customer segments:
-- Loyalists prefer a bilingual shopping experience, are driven by brands, and stick to their shopping lists. Coupons or bargains don't influence them.
-- Budgeters are known for their detailed meal planning and maintain the lowest spending amount by setting budgets, purchasing groceries in bulk, and sticking to their shopping lists.
-- Impulsives tend to avoid planning their meals and enjoy comparison shopping. They like sales and coupons.
-- Inquirers, as the most acculturated segment, assume a patient, calculated approach in their shopping. They comparison shop, read advertising, and look for bargains whenever possible.
The study finds that Hispanic shoppers are especially interested in supermarkets that respond to their needs by offering a variety of fresh produce, meats, and breads; Hispanic products; bilingual store signs and packages; bilingual employees who are knowledgeable about Hispanic products; and advertisements in Hispanic and Spanish-language media.