Why Food Companies Are Going Loco Over Hispanic Marketing

With so many Americans already eating too much (23% more calories per capita than in 1970) and overwhelmed with too many choices (thousands of new products are introduced every year), you have to wonder where food and restaurant companies are going to find new growth in the U.S. The answer is simple: Hispanics.

The Hispanic marketing firm Latinum Network reports that between 2005 and 2008, food, beverage and restaurant sales from non-Hispanic consumers declined by $17.7 billion, or 2.4%, while sales from Hispanics rose by $14.8 billion, or 18%. This means that while other groups are busy cutting back in their food spending, Hispanics are spending more. A lot more. And well above and beyond the pure population growth for Hispanics, which is between 3% and 4% a year.

Why else, after all, would Pepsi (PEP) care whether or not Hispanics fill out their Census forms? Its Yo Somo online campaign, which includes a chance to be in a documentary by actress Eva Longoria Parker (apparently in her directorial debut), asks Hispanics to stand up and be counted. The hidden message: Get your numbers up, so we can sell you more Tostitos and Mountain Dew.

Of course, Hispanic marketing is nothing new, but it's becoming increasingly central to food companies' agendas. As Latinum Network points out, Hispanics are the only growth market for many key food, beverage and restaurant categories. For instance, according to the firm, cracker sales declined overall between 2005 and 2008, but rose 12% among Hispanics. Same with candy and gum — non-Hispanics consumed 1.7% less and Hispanics 8.2% more.

Consider products like Kraft Singles and Kool-Aid. While some eaters have shunned these aged brands as unhealthy and not remotely natural, Kraft (KFT) has decided that its messages about how Singles are made with wholesome milk, not oil and water, would resonate best with Latina moms, who are focused on what Chris McGrath, senior director of Latina cohorts for Kraft Foods, calls "food quality and value." McGrath says the campaign was very successful.

None of this is likely to be music to the ears to anti-obesity advocates, who are trying to get Hispanics, especially children, to eat less, not more. Both blacks and Hispanics already have a significantly higher incidence of obesity than whites. Nobody like to talk about this, but the uncomfortable truth is that if food companies are going to thrive in the US, either prices are going to need to be higher (unlikely scenario) or somebody's going to have to eat more.

Image by Flckr user El Gran Dee

General-Market Shops Snatching Up Hispanic Business

Recent Moves by Home Depot, Wendy's Causing Concern Among Specialty Agencies

NEW YORK (AdAge.com) -- After years of trying to convince the mainstream world of the size and importance of the Hispanic market, Hispanic agencies are finding that one group has started to listen: general-market shops. Pressured by cost-cutting clients, general-market agencies are taking on Hispanic shops for a bigger share of the fast-growing Latino market.

With 2010 Census data likely to show big growth in the Hispanic population, the fight is likely to intensify as general-market agencies poach talent and specialty shops protect their turf.

The ad industry was stunned earlier this month when Home Depot moved its $37 million Hispanic account from incumbent Vidal Partnership to Richards/Lerma, a little-known Hispanic capability at Home Depot's general-market agency, Richards Group.

Separately, Unilever is doing a pitch to consolidate its Hispanic business that doesn't rule out participation by general-market agencies. "The business should go to whoever pitches it best," said Tatiana Hansell, senior brand manager-multicultural at Unilever.

Since then, Wendy's has started a review of its Hispanic business that requires contenders to forward their information to Wendy's general-market agency, Kaplan Thaler Group, according to a critical statement issued by the Association of Hispanic Advertising Agencies about both reviews.

In a reference to the Wendy's review, Joe Zubi, chief operating officer of Zubi Advertising, wrote in the agency's ZubiNation blog: "One RFP was actually sent to us by the person who heads up the account at the general-market agency. The first question was to describe how well we get along with general-market agencies. If that does not send a clear message that the Hispanic shop will follow the footsteps of Big Brother, I don't know what does. Not to mention that Big Brother can then figure out how best to approach the market and tell the client that they can do it just as well for less money ... does the name Home Depot ring a bell?"

Pitch to 'band together'

Javier Palomarez, president-CEO of the Hispanic Chamber of Commerce, said he dispatched a letter April 14 to the CEO of Home Depot "voicing our disappointment and surprise," and sent copies to the Hispanic Chamber's 210 chapters across the country.

"As a community we have not done a good enough job of banding together," said Mr. Palomarez, who in the past headed multicultural marketing for Bank of America and early in his career developed Allstate's first Hispanic advertising. He said the chamber represents about 3 million companies generating more than $4 billion in revenue, with about 21% coming from businesses that work in fields such as construction, renovation and landscaping and are "great customers of Home Depot."

Although Home Depot represents the biggest Hispanic account to go to the least-known agency, other general-market agencies are gaining traction.

Havas Worldwide is hiring a top Hispanic creative director, Vidal Partnership's Mauricio Galvan, and Leo Olper, chief operating officer of Hispanic shop Lapiz, to build a Hispanic agency to serve Euro RSCG Worldwide and Arnold clients, replacing the moribund Euro RSCG Latino.

DraftFCB has assembled about 55 multicultural specialists at the agency's 1,100-person Chicago office, said Simon El Hage, senior VP-multicultural segments. Integrated in the general-market account teams, they work on multicultural business for the agency's general-market clients such as State Farm, Kmart and Taco Bell, whose Latino account it just stole from Hispanic shop Dieste. DraftFCB has even joined the Association of Hispanic Advertising Agencies as an associate member.

"Multicultural audiences are the pop-culture creators," said Ken Muench, who joined DraftFCB in December 2009 as senior VP-director of multicultural planning from leading Hispanic agency Grupo Gallegos. "You can't be a credible general-market agency without considering the multicultural segment."

One of the biggest changes shaping the market is the trend toward what many are calling the total market -- a melding of the general market and the growing multicultural market, partly due to the increasing numbers and influence of Hispanic and black consumers.

"Mainstream culture today is not the general market," Mr. Muench said. "It's a multicultural-inspired total market."

The Mexicanal Network taps into L.A. market

Flipping channels hoping to find highlights of the Mexican rodeo? Want to spend a Sunday evening watching a movie from the golden era of Mexican cinema? Look no further.

The Mexicanal Network made its Los Angeles debut early last month on KBEH (digital channel 24.1/virtual channel 63.3), an MTV Tr3s affiliate that reaches roughly 700,000 Latino households in the Los Angeles television market.

It's part of the network's continued distribution expansion in California, which also includes San Diego (K5OLL) and Palm Springs (KMIR), as well as additional cable distribution with Comcast in San Francisco.

"L.A. is, needless to say, the most important Hispanic market in the United States," said Mexicanal President Luis Torres-Bohl. "It took us a while to get here, but good things take a while."

Mexicanal, a joint venture of Castalia Communications and Cablecom, is a 24-hour Spanish-language channel targeting Mexicans living in the U.S. Launched in 2005, it reaches nearly 5 million Latino homes with a blend of multi-platform distribution through DirecTV, Comcast systems in several markets and digital multicasting.

Using the tagline "Tu Canal Regional," the network's content includes news, sports and culturally significant programs from throughout Mexico, including, Jalisco, Aguascalientes, Oaxaca and other regions that represent the hometowns of the majority of U.S.-based Mexican immigrants. In the last two years, it has introduced kids series, cooking shows and music content into its programming lineup.

"What makes this channel unique is it brings backs a historical and cultural connection to all those Mexicans — recent migrants and second generations — living here," Torres-Bohl said. "It's very important to know where you come from so you can get to where you're going."

As for where he hopes the network is going, Torres-Bohl said the goal is to expand to other heavily Latino markets, including New York and Florida, where the network is not yet available through cable or multicast.

— Yvonne Villarreal