Commentary

Hispanics And The Grocery Industry

There’s been a lot of recent M&A activity among Hispanic supermarkets.

Bodega Latina recently announced a deal to purchase Fiesta Mart, a Texas-based grocery chain, making it the largest grocer in the United States focused specifically on Hispanic audiences. Last year, California-based grocer Cardenas merged with Mi Pueblo, another grocery chain with multiple branches in the Golden State; its subsequent purchase of Los Altos Ranch Market has made Cardenas another major player among Hispanic grocers.

For an outsider, these deals might not seem distinct from what many other companies are doing. Amazon, for instance, is now the proud owner of Whole Foods, and other major chains like Kroger and Albertsons are continuing to buy up smaller grocers throughout the country.

But unlike those acquisitions, the consolidations within the Hispanic grocery sector are not meant to widen their appeal to the general market. Instead, they remain firmly focused on Hispanic audiences.

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According to Nielsen, Hispanics spend a larger portion of their income on groceries than non-Hispanics. This difference is not only the result of lower median incomes among Hispanics. Nielsen also found that Hispanics spend on average $175 more on fresh foods per year than any other demographic. Consequently, it’s important for supermarkets to figure out how best to appeal to this profitable group.

First off, what makes a Hispanic consumer more likely to shop at a Hispanic-focused grocer as opposed to a “traditional” retailer? The answer is simple: The former is most likely to have the ingredients needed to create authentic dishes, such as fresh-made tortillas, guava, and other products unlikely to be found in most grocery stores.

According to WInsight Grocery Business, nearly half of Hispanic shoppers say that they buy “grocery brands that are authentic to their ethnic heritage.”

Even grocery shopping can be a cultural enterprise. People’s loyalties to certain supermarkets are based on many factors, including geographic proximity and whether they stock the products needed, but there’s also another element: the general experience of shopping in the store. Hispanic supermarkets are often described as “sensory experiences,” with music playing, butchers carving meat right in front of you, and the smell of freshly made tortillas wafting through the aisles. For anyone looking for a connection to their heritage, visiting a Hispanic grocery store is a quick, easy way to get a dose of home.  

Food is an important cultural signifier for any group, but it is particularly important to Hispanics, not only when cooking a dish, but also going to the store to shop for the ingredients for said dish.

For Hispanics, more than any other demographic, grocery shopping is a social and familial enterprise: According to WInsight Grocery Business, 79% say they routinely shop with someone else, most often their spouses or children, who often influence their purchase decisions.

For millennials in particular, this cultural connection has become something to seek out. Nielsen data shows that 61% of Hispanic millennials say that they have purchased something from a Hispanic grocery store at least once over the past year, although this number goes up in places with high concentrations of Hispanics and Hispanic grocery stores (for example, Los Angeles).

Perhaps the biggest sign of the importance of appealing to Hispanic shoppers is the simple fact that products that might previously have only been available in specialty shops have now made their way to more mainstream retailers.

Depending on your location, your local Walmart might now stock Mexican soft drinks, cans of Goya beans and bottles of salsa. Other chains have remodeled their stores to resemble Hispanic-focused chains, offering tropical fruit, freshly prepared food, and a Latin-style butcher area to entice consumers.

And as Hispanics continue to grow as a demographic, it’s likely more retailers will attempt to win them over. That being said, Hispanics are loyal consumers — and might not make the switch so easily.

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