FMI: Hispanics Are Buying More Store Brands

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December 16, 2009

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

In fact, 37 percent of Hispanic shoppers are purchasing more store brand products this year and 25 percent plan to buy more in 2010, according to the research report titled “Se Habla Isn’t Enough: Private Brands Among Hispanics 2009.”

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

Seventy-three percent of Hispanics agree that “store brands are a great value for the money,” including 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 42 percent holding this view strongly.

“This emerging trend has tremendous sales potential for food retailers,” Walsh said.

The most popular private brands among Hispanics are dairy products (54 percent), paper products (41 percent), carbonated beverages, soda or bottled water (35 percent), cleaning supplies (34 percent) and hot or cold cereals and other breakfast products (34 percent).

The report found that store 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 Hispanics at all income levels are buying store brands. Hispanics earning $50,000 or more per year spend the most on store brands ($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 stores brands among Hispanics, with the youngest shoppers between the ages of 18 and 24 spending more than any other age group at $99.41 every two weeks. Additionally, 42 percent of Hispanics entering their prime earning years (aged 25 to 39) have increased spending on these store brands this year.

Of course, the positive outlook is also attributed to the large population of Hispanics currently at 45 million and projected to grow to 64 million — one in five Americans — by 2020, according to research firm Synovate. Their buying power is expected to double over that time period to $2.2 trillion.

The report also found opportunities for retailers to increase store brand sales since 10 percent of Hispanic shoppers never buy these products and another 48 percent do so sometimes or rarely.

The following are the top factors rated “very influential” in moving these low users to try out a new store brand 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 as the alternative national brand (49 percent)

• If the store would donate a percentage of store brand sales to the community (48 percent).

Although it is well recognized that having Spanish 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, according to the report.

Read These Related Articles:

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• Store Brands Drive Differentiation and Profit
• Retailers and CPG Companies to Focus on Store Brands in 2010
• Study: Regional Grocers Can Compete With Walmart

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