Hispanic Beverages Going Mainstream.
Ultra Foods in Forest Park, Ill., is not a bodega in a predominantly ethnic neighborhood.
Yet among the featured products pictured on the back page of its late August advertisement were 12-can Fridge Packs of Jumex nectars in Mango/Peach or Guava/Strawberry Banana. Those nectars join Jarritos soft drinks and Mineragua; Goya Mango, Guayaba and Peach nectars, coconut water and coconut soda; Klass Tamarindo and Sandia drink mixes; and mini Fruity King sodas in the store's Mexican food section, while Old Orchard Mango Nectar, Kerns single-can nectars and Looz Mango juice drinks are displayed beside an endcap in the regular juice aisle.
Hispanics Outspend Non-Hispanics on Drinks
Average expenditure by consumer units on non-alcoholic beverages, by Hispanic and non-Hispanic, 2006-2010
Source: Mintel, based on U.S. Bureau of Labor Statistics,
Consumer Expenditure Survey
A few blocks east in Oak Park, an early September endcap at the Jewel Food Store was stocked with 2-liter bottles of Jarritos soft drinks, Topo Chico mineral water and bottles of Goya Malta merchandised with La Preferida frijoles and Jiffy corn muffin mix. A few aisles away, Jumex nectars, Jarritos soft drinks, Topo Chico mineral water, La Preferida canned Pina Colada and Goya coconut water rest on shelves dedicated to Mexican and other Latin food products.
The inventory in these supermarkets shows how Hispanic beverages are making inroads in ethnic food aisles and on mainstream beverage shelves, as consumers embrace the drinks of Mexico and Latin America. Retailers who ignore this trend do so at their own peril, because the category shows no signs of slowing.
Nectars/juices/drinks is one of eight Hispanic food and beverage categories projected to experience double-digit compounded annual growth rates (CAGR) during the 2010-2014 forecast period, according to "Hispanic Food and Beverages in the U.S.: Market and Consumer Trends in Latino Cuisine, 4th Edition," the latest market research study by publisher Packaged Facts. Those beverages are primed for a CAGR of 13 percent, the report predicts.
Traditional Hispanic Beverages
Aguas frescas A genre of soft drinks made by infusing water with various flavorings including tamarind, chia and flor de Jamaica.
Horchata Soft drink prepared by blending water or juice with melon seeds or rice, and with additional ingredients including fruits, coconut, almonds and sugar.
Source: Jim Peyton, Lo Mexicano Consulting ( www.lomexicano.com)
Several factors have contributed to the popularity of nectars, fruit juices, flavored waters known as aguas frescas, and energy and carbonated beverages in flavors traditionally considered the purview of Mexico and Latin American countries.
"A huge shift in population growth is taking place," said Lehlha Ahuile, Mintel's senior analyst of multicultural reports, when asked why Hispanic beverages are showing up in ethnic grocery stores and mainstream supermarkets alike. "The 2010 Census showed that Hispanics are moving to suburban areas, so stores that never offered these kinds of products now have a population they need to serve. It isn't just inner-city bodegas anymore - you're seeing the shift in places like Nashville, Tenn. Retailers have to meet the needs of that demographic."
That demographic, which consists of Hispanic households, over-indexes in its expenditure on non-alcoholic beverages, according to the Mintel report, "Hispanics and Non-alcoholic Drinks - US - March 2012."
Hispanic households considerably over-index in their expenditure on fruit and vegetable juices in comparison to non-Hispanics, and Hispanic household expenditure on carbonated beverages is significantly higher than that of non-Hispanic households, the report says. Other telling statistics: Some 70 percent of Latinas aged 18 to 34 consume non-carbonated bottled spring water (more than any other group of Hispanic adults), and Hispanics are the most likely of all ethnic groups to consume energy drinks.
"Forty-one percent of all consumers drink thirst quenchers and sports/activity drinks, but that number jumps to almost 60 percent when we look at Hispanics," Mintel reports.
The age of U.S. Hispanics is key to beverage growth, now and in the years ahead. As Ahuile noted, almost half of U.S. Hispanic households have children who are key drivers of juice and soda purchases. A large number of Hispanics also fall into the 18- to 34-year-old age group, "which is why energy drinks are a huge category," she said.
Other factors contributing to the surging popularity of Hispanic beverages include the fact that non-Hispanic consumers have become increasingly familiar with authentic Mexican and Latin cuisine - a fact manufacturers and retailers alike are beginning to recognize.
"Not all Mexican brands look to reach less acculturated Hispanics; they basically already have that space," the Mintel report notes. "However, some are looking to reach more acculturated and non-Hispanic consumers."
Case in point: In 2011, the Jarritos brand announced plans to target U.S. non-Hispanic consumers, the Mintel report says.
Flavor and Brand Preferences Vary
For retailers, understanding customer preferences is important in determining the kinds of Hispanic beverages to stock.
"When choosing how to spend their beverage dollars, Hispanics' country of origin is one thing driving purchase decisions," said Ahuile, who noted flavor preferences "vary widely."
Mexicans, for example, typically prefer tamarind, hibiscus and horchata; Puerto Ricans are more likely to prefer fruit-punch-flavored juice; Cubans enjoy apple cider; and consumers from the Caribbean often opt for flavors such as coconut and mango, she said.
How long a consumer has been in the U.S., and how they've adapted to the culture, are also key. "The Hispanic shopper of non-alcoholic beverages looks for different product attributes and retailers based on his or her level of acculturation," the Mintel report explains.
Understanding what resonates with those who are unacculturated (15 percent to 20 percent of the U.S. Hispanic population), bicultural (60 percent to 70 percent) and acculturated (15 percent to 20 percent) "is of the utmost importance to a brand's success with this consumer group," Mintel says.
According to the study, Spanish-dominant shoppers are more likely to drink brands such as Jarritos, Barrilitos and Penafiel - popular in Latin American and particularly in Mexico - because they are more familiar with them than are more acculturated Hispanics. Spanish-dominant consumers also are more likely than their English-dominant counterparts to look for beverages that provide additional vitamins, minerals, nutrients and energy.
English-dominant Hispanics, however, are more likely to consume diet/sugar-free carbonated beverages than Spanish-dominant consumers.
"Hispanics are not big on diet drinks. To them, anything that says 'diet' or 'low-fat' or 'low-something' means less flavor, less good," Ahuile explained.
Changing the product makeup and message can help counter that objection. "As natural sweeteners become more widespread and the marketing messages change from 'less' of something to 'more' of something such as flavor, these beverages will likely find a more receptive audience among Spanish-dominants," the report notes.
Goya's new line of diet nectars, for example, focuses on the fact that the beverages deliver more flavor than on the fewer calories they contain. Calling them 'diet' also might expand their appeal to broader, non-Hispanic market, Ahuile suggested.
Clearly, carrying at least a limited selection of nectars, aguas frescas and sodas in the brands and flavors Hispanics enjoy is a must in today's multicultural marketplace. Ultimately, retailers who understand their target audience, and introduce Hispanic beverages that appeal to the widest swath of customers possible - Hispanics and non-Hispanics alike - will quench consumers' thirst for ethnic beverages and see category profits grow in the process.