As the Hispanic market continues to expand and more service providers or CPG manufacturers want to get their fair share of growth, I often find myself telling clients “this is a little like the export business.” I say this in particular because many times I have the opportunity to work with underdeveloped categories or brands. The situation is pretty typical: low penetration, low brand awareness, low distribution, low know-how, low, low, and all of a sudden, lo and behold, we find ourselves marketing to Hispanics.
With CPG brands in particular, just like in the export business, you need to make sure you first have the right product and the right distribution before you enter a market. And the right product doesn’t necessarily mean a new product, in many cases it just means looking across your portfolio and determining whether you have a particular SKU that maybe more appealing to this target (this maybe as simple as different package size, flavor re-alignment or kid-friendly SKUs). Take something as simple as rice. If you were a low-penetration brand that wanted to gain share in a highly developed category, you may want to focus on a larger SKU that serves two purposes: appeals to the larger Hispanic households and higher consumption frequency.
The next step in the export business is distribution. If you were to enter a market in another country, typically this starts with a joint venture (JV) between your company and a local distributor. What is analogous to the Hispanic market about this aspect is that in many cases brands lack distribution in key Hispanic pockets and stores. Even large national brands with robust and established distribution infrastructures (broker, DSD, etc.) many times miss the mark.
Yes, you may have checked the box with Walmart and Target but what is your “capillarity” like? Are you really reaching deep into some of these pockets? Many times your existing distribution infrastructure is overstretched and under-resourced to take on a very fragmented retail landscape. It’s in situations like these that you need to think like an exporter and ask yourself what brands are doing a good job? Who is their dealer broker? It may well behoove you to cut a separate deal with another distribution solution to get your product into the right pockets.
There is also the issue of packaging. Should you consider Spanish/bilingual packaging? If you are a large manufacturer, it’s very challenging and economically unfeasible to run two different packaging inventories for the same brand/SKU. So if Spanish on packaging is important to your consumer, you may need to make some changes. Depending on the category, this will fluctuate. When I worked on a national orange juice brand, we saw no effect when we switched from bilingual to English-only packaging. However, in other categories like baby care or laundry, bilingual packaging is an imperative.
And like many exporters, you didn’t necessarily have to make all these packaging changes on the line; it’s okay to be a little scrappy. Think neck hangers, on-pack stickers, shelf talkers or other tactical solves that don’t necessarily involve a lot of retooling and can leverage the distribution solution you already worked on. In many cases, I have seen brands get away with more universal communication (i.e. icons) or just translating key words on packages. Perfection is the enemy of good so just be practical.
So going back to the export mindset, if instead of marketing to Hispanics, reframe your incursion into the marketplace and pretend you were trying to sell in Germany, in China. You may ask yourself some fundamental questions that you may not have asked yourself before. And, in trying to make those key decisions “where the rubber meets the road” with limited budgets, ask yourself “If I were exporting to Germany, what would I do first?”