Companies Target U.S. Hispanics
{{#rendered}} {{/rendered}}Carlos Andrade has a secret formula for competing in the cutthroat U.S. beverage market: rice water and tamarind juice.
It might not sound all that spectacular, but Andrade, like other Mexican entrepreneurs, has found a niche in the growing number of U.S. Hispanics craving things from south of the border.
With an estimated annual buying power of $450 billion, Mexicans and other Hispanics living in the United States have become one of the most sought-after consumer groups for Mexican and U.S. businesses, sparking fierce competition between everything from small juice manufacturers to giant entertainment conglomerates.
{{#rendered}} {{/rendered}}Many Mexican companies, which often complain they can't compete with U.S. manufacturers, believe they have an advantage when it comes to the 20.6 million Mexicans living in the United States. Their products are reminders of home and bear names many Hispanics grew up with and trust.
``They are waiting for brands they know and love,'' said Marco Espinosa, North American promotion director for the Mexican Bank for Foreign Trade.
Building on its powerful brand name in Latin America, Mexico-based Grupo Bimbo, the world's third-largest bread-maker, has focused on acquiring bakeries in states with growing Hispanic populations, including Mrs. Baird's Bakeries in Texas and Four-S Bakeries in California.
{{#rendered}} {{/rendered}}Andrade, unable to market small bottles of fruit drinks in the saturated U.S. juice market, found a niche with little competition: horchata, a rice-based drink; tamarind juice; and agua de jamaica, an infusion of hibiscus flowers.
His family's factory on the outskirts of Mexico City already produces the three traditional Mexican drinks for the national market. Now he's selling them in the eastern United States.
His goal this year is to increase his roughly $1 million in annual U.S. sales by 20 percent.
{{#rendered}} {{/rendered}}``They have money. And they want to buy Mexican products, even if the quality isn't as good or the price is higher,'' he said of Hispanics in the United States.
Recent census reports show Hispanics make up 12.5 percent of the U.S. population, a 60 percent increase in a decade. That figure, along with marketing data showing the U.S. Hispanic market is largely underserved, has ignited a bidding war for its attention.
``It's a great opportunity for one simple reason: The U.S. Hispanic market is hot,'' said Gene Bryan, chief executive officer of the online trade journal HispanicAd.com.
{{#rendered}} {{/rendered}}Perhaps the most competitive race is for the Spanish-speaking television and radio markets, which have grown despite an overall downturn in advertising that worsened after the Sept. 11 terrorist attacks. A spate of recent deals have been aimed at capturing more of the U.S. Hispanic market.
Spain's largest media group, Grupo Prisa, recently agreed to buy a 50 percent stake in a radio network from Grupo Televisa, the world's largest Spanish-language media conglomerate, which provides programming to U.S. stations.
In addition, Mexico's second-largest broadcaster, TV Azteca, created Azteca Americas Network to form revenue-sharing associations with groups of stations that broadcast TV Azteca programming in the United States.
{{#rendered}} {{/rendered}}Still, Latin American companies face fierce competition from U.S. counterparts.
In October, NBC announced it was buying Telemundo Communications Group Inc., the No. 2 Spanish-language broadcaster in the United States, for about $2 billion - a deal NBC chairman Bob Wright described as expensive but worth it.
In Atlanta, Randy Page became a broker in Atlanta for Mexican goods after discovering that Hispanics who brought back suitcases filled with everything from chile paste to Mexican beef jerky and selling them.
{{#rendered}} {{/rendered}}``It turned out Latinos were purchasing those items brought in second-or-third hand,'' he said.
Mexican products now are even finding their way into non-Hispanic neighborhoods. Grocery stores in Minnesota sell several types of Mexican cream to middle-class suburbanites, while women in the northern Mexican town of Zacatecas ship embroidered shirts to California.
Still, Andrade and Page said most Mexican companies consider the mainstream market a bonus, but are still focusing their efforts on their transplanted compatriots.
{{#rendered}} {{/rendered}}``If others want to buy our products, that's great,'' Andrade said.