Hispanics Buying More Private Brands: Study

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Hispanics Buying More Private Brands: Study

Hispanic shoppers are buying more private brand products, a trend expected to continue increasing in the future, according to a new study by the Food Marketing Institute (FMI) Private Brands Group.

The study, “Se Habla Isn’t Enough: Private Brands Among Hispanics 2009,” found that 37 percent of Hispanic shoppers are purchasing more private brand products this year, and 25 percent plan to buy more in 2010.

“Hispanic people are discovering the value and quality of private brands,” said Patrick Walsh, VP of industry relations and collaboration at Arlington, Va.-based FMI. “This is a welcome finding, since food plays a central role in their culture.”

More than seven in 10 Hispanics (73 percent) agree that “store brands are a great value for the money,” including over half (52 percent) who “strongly agree,” according to the report. Nearly as many (64 percent) agree that “store brands are just as good as national or international brands,” with more than four in 10 (42 percent) holding this view strongly. “This emerging trend has tremendous sales potential for food retailers,” said Walsh.

The report found that private brands account for 31 percent of household grocery expenses among Hispanics, averaging $85.94 every two weeks out of a total of $266.63. And household income doesn’t affect the amount spent. In fact, Hispanics earning $50,000 or more per year spend the most, at $92.67. Retailers that offer multiple tiers of products, from basic to premium, can effectively market private brands to Hispanics at all income levels, according to the research.

Other findings bode well for the future of private brands, notably that the youngest shoppers, ages 18 to 24, spend more than any other age group, at $99.41 every two weeks. In addition, 42 percent of Hispanics entering their prime earning years, ages 25 to 39, have increased spending on these products this year.

Contributing to this positive outlook is the fact that the current U.S. Hispanic population of 45 million is projected to grow to 64 million — and represent one in five Americans — by 2020, according to the New York-based global market research firm Synovate. Hispanics’ buying power is expected to double over that time span, to $2.2 trillion.

The most popular private brands among Hispanics, defined as items bought when shopping “every time” or “fairly often,” are:

—Dairy products: 54 percent
—Paper products: 41 percent
—Carbonated beverages or soda, or bottled water: 35 percent
—Cleaning supplies: 34 percent
—Hot or cold cereals and other breakfast products: 34 percent

The study explored how retailers can encourage Hispanics to buy new private brands. The top five factors rated “very influential” in moving them to try out a new product:

—Quality and healthy ingredients: 64 percent
—Price lower than the alternative national brand: 63 percent
—Discount coupons and sales: 59 percent
—Same ingredients and characteristics of the alternative national brand: 49 percent
—The store would donate a percentage of private brand sales to the community: 48 percent

Although it’s well recognized that having Spanish-language signs, labels, ads and bilingual employees is essential to reach out to Hispanic shoppers, these factors rated much lower in influencing them to buy new store brands.

The data for this report is based on telephone surveys by Los Angeles-based New American Dimensions of shoppers in the top 10 Hispanic markets — Chicago, Dallas, Houston, Los Angeles, Miami, New York City, Phoenix, San Antonio, San Diego and San Francisco — which together account for about 60 percent of the Hispanic population, according to FMI.

To purchase the full report, contact the FMI Store at (202) 220-0723 or visit www.fmi.org/store/.

FMI’s 1,500 member companies include food retailers and wholesalers in the United States and around the world.