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Hispanic Shoppers Embrace Store Brands

January 4, 2010
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A new report from the Food Marketing Institute finds Hispanic shoppers are buying more private label products than ever, a trend likely to continue well into the future.

A new report from the Food Marketing Institute (FMI), Arlington, Va., finds Hispanic shoppers are buying more private label products than ever, a trend likely to continue well into the future as retailers tailor their store brand assortments to a fast-growing demographic group whose buying power is expected to double over the next decade to a whopping $2.2 trillion.

According to the report, “Se Habla Isn't Enough: Private Brands Among Hispanics 2009,” 37 percent of Hispanic shoppers said they're purchasing more private label products this year than last, with 25 percent reporting plans to buy even more in 2010.

"Hispanic people are discovering the value and quality of private brands," said Patrick Walsh, FMI's vice president of industry relations and collaboration. "This is a welcome finding, since food plays a central role in their culture."

However, Hispanics' affinity for store brands tends to vary from group to group. Although household income does not appear to significantly affect spending on store brands - both higher- and lower-income Hispanic households reported similar increases in private label spending over the past year - factors such as age and acculturation do play a role.

For example, the report said, 50 percent of "fully acculturated" Hispanic shoppers, defined as those who have spent their entire lives in the United States and speak primarily English, reported buying store brands either "every time" they shop their primary store or "fairly often." But so-called "less-acculturated" Hispanic shoppers, who have lived in the United States less than half their lives and speak primarily Spanish, do so only about a third of the time.

In terms of dollars, the report said, fully acculturated Hispanic shoppers spend an average of $66.51 on store brands at their primary store every two weeks - or about 36 percent of their total grocery dollars. Less-acculturated Hispanic shoppers, meanwhile, spend only $54.60 - or 31 percent of their total - on store brands.

Similarly, the report noted, although Hispanic shoppers of all ages spend an average of $85.94 on private label products every two weeks across outlets, 18- to 24-year-olds spend significantly more than other age groups. Interestingly, although Hispanic shoppers aged 65 and older spend the least on store brands ($73.71 across outlets), they spend a higher percentage of their total grocery dollars on private label products (41 percent) than any other group, creating an age-related barbell effect.

Beyond actual expenditures on store brands, age and acculturation also impact how Hispanic consumers view private label quality, the report said. First-generation Hispanic shoppers feel less positive about serving store brands to their families (3.93 on a five-point scale), while third-generation Hispanic shoppers feel much more comfortable (4.23).

The report also cited differences in private label consumption by category. Store brand dairy products are most popular, purchased by 54 percent of Hispanic consumers either "every time" or "fairly often." Paper products (41 percent), carbonated beverages/soda and bottled water (35 percent), cleaning supplies (34 percent) and hot or cold cereals and other breakfast products (34 percent) round out the top five. Private label product categories shopped least by Hispanic shoppers include baby needs and accessories, vitamins and nutritional products, and ready-to-eat frozen products.

Although older and less-acculturated Hispanic consumers, in particular, appreciate signage, ads and labels written in Spanish, the report said such steps do less to incent Hispanic shoppers to buy store brands than other factors.

"It is vital for retailers and manufacturers to address three concerns Hispanics have before purchasing new store brands: quality of ingredients, price compared to national brands and the opportunity to use coupons or capitalize on sales," Walsh told PL Buyer, noting that more than 50 percent of survey respondents called each of those factors "very influential" to the private label buying decision.

He added that almost half of Hispanic shoppers FMI polled also cited community involvement as a motivating factor, pointing to the possibility of donating a portion of store brand sales to the community.

The report also noted that although Hispanic consumers are more likely than other shoppers to go into a store knowing which brand they are going to purchase (because they are not in the same hurry to get in and out as their Anglo counterparts), they also are much more open to in-store price reductions and ads, creating additional opportunities for retailers to pitch private label products.

For more information or to purchase a copy of the report, visit http://www.fmi.org. - Denise Leathers

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