Posted on | August 24, 2014
Written by | Jeffery Lindenmuth
For wine and spirits merchants, embracing the Hispanic consumer is smart business
The first thing you need to understand about the Hispanic consumer: You really need to understand the Hispanic Consumer. Not only are Hispanic Americans growing in numbers, but also in affluence, college enrollment and almost every other meaningful measure of success. However, Americans remain a diverse and dynamic group, defying broad generalization. Begin your understanding of Hispanic American consumers here and you’ll be better poised for a future that may be arriving sooner than you think, with Hispanics expected to emerge as the majority in major markets like California as soon as 2015.
It’s Not Just About Language
Most foreign languages eventually decline in the face of English in the U.S., but Spanish is still growing, expected to achieve, 37.5 million to 41 million Spanish speakers by 2020, according to U.S. Census Bureau. But communicating in Spanish does not ensure success with Hispanic Americans any more than English advertising does with English speakers. “I think a lot of companies figure we’ll do a general market campaign and then translate it into Spanish and we’ll succeed. But that can feel forced,” says Leslie Vazquez, multicultural marketing/general market off-premise spirits, Empire Wine Merchants. “Diageo brands are doing Spanish language digital and POS, television and radio, but the real connection is not in the language but the deeper insights you bring.”
With campaigns like Johnnie Walker’s “My Label is Black,” Diageo strategically partners with high-profile Hispanics like former New York Yankee Jorge Posada, as well as more culturally specific icons like DJ Alex Sensation and Platinum-selling musical artist Don Omar—figures that hold cachet in the Hispanic community. For 2014, Hennessy will again be supporting the National Council of La Raza’s ALMA Awards and during the recent 2014 FIFA World Cup brought cocktails to the table with Latin ingredients like horchata and guava, cultivating a connection that transcends language alone.
‘Not a Melting Pot, But a Mixing Bowl’
So says Mike Lakusta, CEO / founding partner, EthniFacts, a Dallas-based provider of demographic research born in the beverage alcohol industry. We often speak about Hispanic Americans in terms of country of origin—Mexican, Cuban, Dominican—which can be useful information. “Country of origin is good information because, for instance, soccer might be important to someone from Argentina, but in Cuba or Puerto Rico it is all about baseball,” Lakusta explains. However, his most insightful observations often emerge from looking at generational distance—measured as the percentage of their life Hispanics spent in the U.S., from newly immigrated to natural born and deeply rooted. For instance, Ethnifacts discovered that vodka consumption increases along with generational distance. Brandy, on the other hand, decreases.
Lakusta did work with a particular brand of tequila that was enjoying good consumption among new immigrants, but with generational distance sales fell quickly. His advice was to create an aspirational halo brand to grow consumers along with generational distance. As Lakusta says, “You can’t put a 100 Hispanics in a room and say this is how the Hispanic population thinks.” Understanding Hispanic consumers is not as simple as knowing just where they came from, but perhaps when and why.
Marime Riancho, director multi-cultural marketing for Pernod Ricard USA and a native of Puerto Rico, says that the strong family bonds of many Hispanics, and their fondness of large social gatherings, are values that retailers should recognize. “Right now FIFA is on everyone’s mind, but there are soccer matches that are important to many Hispanics happening every week,” says Riancho. “An occasion does not have to be huge party, but a Saturday afternoon with family.” With Chivas, Riancho says the brand is able build upon its base of popularity in Mexico with “brand values of brotherhood and generosity and collectivism that are incredibly apropos to a Hispanic consumer.” Chivas has expanded the message of brotherhood into video and social media with Latin rock band Maná, a powerful platform since a Pew Research study indicates 68% of Hispanic internet users use Facebook, Twitter and other social sites, higher than the 58% of the general population. And, Hispanics lead in internet access via mobile devices, with 60% of Hispanics using primarily mobile versus 27% of Caucasians according to Vdopia Inc.
When it comes to identifying social opportunities and celebration, be aware that Cinco de Mayo and Day of the Dead might be popular mainstream promotions, but these holidays probably hold more opportunity with college students than with Hispanic families. “We have strong research that suggests there is opportunity in small family gatherings that happen on a weekly basis. By a small family gathering, we don’t mean 3-4 people, but 8-10,” says Riancho. “And family oriented holidays, like Father’s Day, are also more deeply meaningful.”
Beer Leads, But Spirits Are For Anytime
In a survey of 1,000 Hispanic consumers, Ethnifacts determined that in the 30 days prior, 51% of Hispanic consumers drank beer, 35% drank spirits and 33% drank wine. But it’s the occasions that count. While the U.S. in general has made great strides in the acceptance of distilled spirits through the work of organizations like DISCUS and the ongoing renaissance of cocktails, Hispanics don’t discriminate against spirits. “Every celebration is a spirits occasion,” says Riancho. “To bring spirits to a baptism is perfectly normal. There is no taboo about having spirits at a family gathering like with some cultures.”
Recognizing the broad embrace of spirits, Bacardi USA was the first spirits media sponsor during the recent televised FIFA World Cup, appearing on both ESPN and Univision, with their Bacardi Untameable Fan message. “If you watched any games, they were littered with messages from Bacardi,” says Kevin Oglesby, director of marketing rum portfolio, Bacardi USA. “Many Hispanics love the legacy and heritage of the Bacardi brand and family, and while Millennials might be a little more removed, we are committed to remaining relevant to their occasions, and not taking them for granted.”
“You would think tequila would be number one with 60% of Hispanic Americans being Mexican, but vodka is the number one volume category and growing. That was a wow moment! Also, whiskey is a strong number two in terms of volume and the fastest growing category amongst all Hispanics; Pernod Ricard USA is in great position as we have leading brands like Jameson and Chivas within our portfolio,” says Riancho.
Subcategories are less important to many Hispanics, according to Riancho, so sampling a Scotch whisky drinker on an Irish whiskey, or even a Bourbon, like Bulleit, which is gaining traction among younger Hispanics, is not a reach. Retailers may want to think about dedicating more shelf space to brown spirits, or cross-tasting subcategories.
Wine Drinking is Highly Selective
“In the wine category overall, Hispanics remain an underdeveloped sector,” says Danny Brager, senior vice president professional services for beverage alcohol at Nielsen. But by breaking out more specific categories of wine, Brager reveals that growth among Hispanics outpaces non-Hispanics in some top trending areas. “Hispanic consumption of red blends, which are very popular, is over the average index. This is also true of sweeter wines like Moscato,” says Brager. Lastly, Hispanics outpace the average consumer in their consumption of wine from Spain and Spanish speaking countries, like Argentina and Chile, a trend that Brager attributes not only to the language and cultural connection but to the success of these wines in countries like Mexico and Puerto Rico.
When Ethnifacts inquired which wines Hispanics had sampled, they discovered that Sangria was the most popular, followed by sparkling wine, something Lakuska attributes to wine as a special occasion drink. Lakuska says sampling remains the key to expanding wine options among Hispanics, but it can be helpful to present it in a socially acceptable way. “We know Hispanic women are more likely to enjoy wine, but at an in-store sampling she is unlikely to approach a sampling when with a man. If you were to taste a beer and a wine at the same time, it would be more natural for him to try the beer and her to try the wine,” he says revealing the importance of small cultural cues.
First of all, Hispanics in America are a youthful population, with a median age of 28 versus 37 for the general population according to Nielsen, adding that when you speak about Millennials, you are often speaking about Hispanics, especially in metro areas like Los Angeles where they represent 55% of the age demographic.
“If you look at the 21-34 age demographic, the majority of them are minorities, and in looking at their motivations and aspirations, Hispanic Millennials in particular value status. Our current Hennessy campaign, Never Settle, is about people with incredible drive that are on the ascent, so Hennessy very much appeals,” says Manny Gonzalez, senior director, of multicultural marketing at MHUSA. In urban areas, young Hispanics are also embracing on-premise call brands like Ketel One and Cîroc with little regard to price.
Ethnifacts has trademarked a term to describe Hispanics that move effortlessly between languages and cultures, often making them highly desirable professionals: Ambicultural. “Hispanics don’t just acculturate and magically become Anglo,” says Lakuska. “To be Ambicultural is a more and more attractive destination.” Speaking from personal experience Riancho says, “Before the Ricky Martin era, it was not considered cool to be Latino. But now, many Americans see what a cool thing, and great advantage, it is to be able to live in both worlds.”