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September 29, 09

NEWS / U.S. Businesses Court Increasingly Affluent Hispanic Consumers

Companies aim products and services at growing Hispanic population

By Katherine Lewis
Special Correspondent

Washington — AT&T, Wal-Mart Stores and other large companies are reaching out to Hispanic consumers, attracted by the youth and growing affluence of the population.

Hispanics control more disposable personal income than any other minority group in the United States, estimated at $951 billion in 2008 by the Selig Center for Economic Growth at the University of Georgia. That’s 349 percent greater than the dollar value of Hispanic buying power in 1990. Meanwhile, non-Hispanics’ buying power also grew during the same time period, but at the slower pace of 141 percent.

Increasingly, businesses are making Hispanic consumers a core part of their marketing and product development.

“We’re very committed to the Hispanic market, and it’s a very important part of our business,” said Cristina Vilella, director of Hispanic marketing for McDonald’s Corporation. “From the moment we start developing and testing products, we’re considering whether they’re relevant to Hispanics.”

For instance, McDonald’s saw an opportunity to connect with Hispanic consumers around the launch of high-quality coffee under the McCafe brand. “Hispanics have a unique relationship with coffee. It’s part of our birthright,” Vilella said.

About 47 million Americans, 15 percent of the U.S. population, are Hispanic — of Mexican, Cuban or other Latino culture or origin. That makes them the second-largest Hispanic population in the world, after Mexico. Hispanic is an ethnic category, rather than a race, with the Spanish language being the unifying factor.

Compared to the overall U.S. population, Hispanics are younger and have lower average incomes — meaning there’s more room to build wealth — said Jeffrey Passel, a senior demographer for the Pew Hispanic Center. The U.S. Hispanic population has an average age of 27.7 years compared with 36.8 years for the entire country, according to the U.S. Census Bureau.

“The second generation, the U.S.-born children of immigrants, is really the fastest growing piece of the Hispanic population,” Passel said. “Over the next five to 10 years, the second generation is going to be moving into the home-buying ages.”

The Department of Labor’s Survey of Consumer Expenditures shows Hispanics spend more than non-Hispanics on groceries, telephone services, clothing and gas. The median value of Hispanic-owned homes is $208,100, compared with $183,700 for the non-Hispanic population, according to the Selig Center.

“Immigrants are becoming more affluent than they used to be,” said Vivek Wadhwa, a professor at Duke University and a researcher at Harvard Law School. “They’re confident; they’re assertive; they have buying power. The complexion of America is changing.”


Because the fastest-growing segment of the U.S. Hispanic population grew up speaking English, reaching consumers isn’t just about translating ads into Spanish. Instead, companies are offering products tailored to Hispanic tastes and becoming a visible presence at Hispanic-oriented events.

McDonald’s, for instance, directs philanthropy to causes that are important to the Hispanic community: education, music and sports. Consumer products maker Procter & Gamble Company will donate $1.5 million over four years to the Hispanic Scholarship Fund for college students in the science, technology, engineering and mathematics fields.

In August 2009 in Houston, Sam’s Club opened the first warehouse store, called Más Club, to carry a wide assortment of Hispanic products. Más Club offers 4,000 items including household goods, fresh and packaged food and beverages, as well as having an on-site money center, health clinic and café serving traditional Hispanic dishes.

“This is a warehouse club unlike any other,” said Más Club General Manager David Galvan. “We are going to be able to offer an expanded assortment of Hispanic products at a great value.”

Más Club will strengthen the supply chain for Hispanic-oriented goods because the most successful Más Club products will be offered in the 47-million-members Sam’s Clubs across the country, spokeswoman Kristy Reed said.

Hispanic consumers are comfortable with technology and more likely than the general population to use wireless services such as text messaging or customized ring tones. They send pictures and download full songs using cell phones more frequently than non-Hispanics, according to research cited by AT&T. The company has provided Spanish-language customer service through its call centers for more than 25 years and offers a full Web site in Spanish at att.com/espanol.

“We have converted more than 700 of our retail stores nationwide to bilingual locations,” said Susan I. Santana, an AT&T assistant vice president. “By increasing access to important technologies, AT&T is reaching more people in more places.”

When it comes to nonmobile technology, Latinos lag behind other segments of the U.S. population. That is especially the case for Latinos fluent only in Spanish when it comes to their adoption of the Internet and computers, according to a Pew study.

In 2008, Microsoft Corporation offered free computer literacy classes to Hispanics on both coasts, as part of the Vida Digital Latina program to improve technology education.

“You have pockets that have not felt as comfortable with technology,” Jose Pinero, director of multicultural marketing at Microsoft, said. But, acknowledging the possibility of a strong market, he said that “among Hispanics that are already online, they’re ahead of the general market in their adoption of chat and downloading music, video and ring tones.”


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