• by Sarah Mahoney  @mahoney_sarah, July 16, 2008

It's no secret that ethnic foods--now a $75 billion market--are among the fastest-growing segments in the industry. What is a little more mysterious, says Steven Frissora--a partner in Arcanna, Inc., a specialty food-branding firm--is precisely how these new flavors are influencing America's eating habits.

Increasingly, he says, mainstream Americans are flocking to tastes and products popularized by adventurous minority and ethnic consumers, often second-generation Americans--a phenomenon he calls "salad bowl branding. The U.S. isn't a melting pot, and hasn't been for years. It's more like a salad bowl of diverse ethnicities, with ingredients that get tossed together but retain their individuality. And these flavors are influencing everything else."

First, these tastemakers put new flavors and products--from yellow rice to wasabi peas to San Marzano tomatoes--on the map. Then mainstream Americans, already familiar with concepts like Tex-Mex and Pan-Asian, are eager to try them too. Ethnic and specialty foods now account for one out of every seven grocery dollars, and 73% of consumers reported purchasing specialty foods in 2007, compared to 64% in 2006, he says. And in the last two years, sales of specialty foods have risen 17%, far outpacing other food sales.

"These niche markets are becoming America's taste trendsetters," he says, adding that many companies that start out serving these micromarkets quickly realize their broader appeal. "People want to try new flavors." Client Buenos Dias, which makes Hispanic bread products, quickly noticed that as many as 80 to 90% of its sales came from non-Hispanics.

Of course, some mass marketers, he says, are also figuring out how to profit from the trend--pointing to the success of Campbell's V8 fruit and vegetable juices, which have combined "ethnic" flavors, like pineapple, guava and pomegranate, into a mainstream hit.

But for the most part, the trend is fueled by consumers bypassing established mass brands in favor of something that seems more authentic. Part of that, he says, is that consumers perceive these products as healthier, "and less processed than mass brands."