LOS ANGELES – During a typical trip to the grocery store, Maria Lugo likes to pick up flan, pan dulce and fresh fruits that remind her of her favorite Hispanic foods.
Daisy Hodges, a 30-year-old Latino shopper, heads to the grocery store for similar reasons: she seeks the sights, smells and tastes that take her back to the rich and vibrant dishes she grew up around.
“I definitely prefer shopping at Latino grocery stores over the others,” Hodges says, highlighting the pull of the culture as the primary reason, as she walks down the aisles of her neighborhood Hispanic food store with her husband.
Lugo and Hodges represent a segment of the U.S. consumer group that is active, on the rise, and very much of interest to the food retail industry.
That’s why an increasing number of marketing studies are aiming to understand the in-home dining behaviors of the Latino population. And as they take a close look at the Hispanic shopper, an ever-clearer picture emerges: Dried chile and tortilla bread may be found at any store in the country – as more markets put a focus on the Hispanic food section of their stores.
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But regular grocery stores, experts say, miss the mark on some key factors that are only available to customers at Latino grocery stores: a sense of culture and connection.
Experts say its makes financial sense for supermarkets to cater to Hispanics. The main reason has to do with sheer size. Over 17 percent of the current U.S. population is Hispanic and, according to the U.S. Census Bureau, that number will go up to around 24 percent by 2040.
And, according to the National Council of La Raza, Hispanics also spend a larger share of their income on food than other ethnic groups. While Hispanic household income averages about $47,580 a year – about $20,000 a year less than Hispanic whites, they spend about the same on food than non-Hispanics, $6,570 vs. $6,924 for white households, according to NCLR.
No wonder why non-Hispanic food retailers have bumped up their offerings and started to establish “diversity programs” that support consumers of various ethnicities.
“The Hispanic customer base is growing as the second, third and fourth generations expand,” said Mike Hendry, Vice President of Marketing at Northgate Gonzalez Market, the largest Hispanic grocery store chain in California
Mainstream retailers have gone beyond merely assigning sections of their stores to Hispanic foods to putting a greater focus on the market – like Walmart, which invested upwards of $60 million both in 2011 and 2012, as well as opened up Hispanic-focused grocery stores (Walmart Supermercados) in 2009.
And although this increased focus on Hispanic foods has led to a slight decline of small Hispanic grocery stores, between 2013-2014 two emerging groups of consumers continues to drive the demand back up – millenials and the over 50 age group.
While Hispanic members of the Baby Boomer generation are seen as the cultural stewards of their families who uphold their traditions, especially when it comes to meal time, Hispanic millenials also value and desire cultural connection around food.
According to a recent Nielsen study, the older group of shoppers prefers in-home dinning and is fiercely brand loyal, likely due to a “strong affinity and familiarity with brands from their native countries.”
All these points are easily satisfied at Latino grocery stores, as are the needs of the millenial group, even though their shopping patterns are different.
“Younger ‘fusionistas’ (our term for a Hispanic millenial) don’t often have the time or the kitchen skills that their mothers or grandmothers have,” Hendry said, “They rely more on prepared food options or foods that are more ready to cook.”
With the Hispanic millenial population making up the largest millenial group in the U.S. overall, and the strong affinity for their background, the demand for these stores will continue to hold steady.
A recent study by Packaged Facts predicts expenditures by the segment will reach $86 billion dollars in 2018, translating to a cumulative growth of more than 28 percent and a CGAR of 5 percent.
“When it comes to grocery, Latino millenials are true to their heritage, attracted by cultural touch stones of smell, taste and familiarity. At the national level, 61 percent of Hispanic millenials say they’ve shopped at Hispanic supermarkets at least once over the past year,” a recent Nielsen study says.
Moreover, a Nielsen survey showed that “51 percent of Hispanic millenials are drawn to Hispanic grocers because they have a panadería (Hispanic bakery) or tortilla shop,” speaking again, to the cultural experience only Hispanic stores can authentically provide and pointing to a continued boom in the prevalence of such stores in the near future.
Mariam Jehangir is a freelance reporter living in Los Angeles.