The nation's food companies are ignoring Latino consumers in advertisements, promotions and couponing efforts, according to an organization of independent supermarket operators who service Spanish-speaking communities.
The corporate neglect of this rapidly growing population segment was alternately condemned and discussed at the first conference of the Mexican-American Grocers Assn. here. The three-day event underscored the significant financial opportunities presented by the emerging Latino community.
Exactly why any household products company would overlook an ethnic group of about 17 million people with purchasing power estimated at $50 billion was not pinpointed. Nevertheless, the loose consensus on the reasons why Latinos are often an afterthought in marketing strategies was attributed to debates over the effectiveness of Spanish-language media, ethnic stereotypes and executives who take Latino customers for granted.
The result of this corporate slight means that supermarket operators in heavily Latino areas of California, Texas, New York and Florida often do without the promotional sales materials and wholesale discounts readily available to the nation's supermarket chains.
Deprived of Increased Sales
Furthermore, the vast product mix offered to major food stores is not as readily available to Spanish-speaking area markets because some sales representatives neglect communities such as East Los Angeles. This food broker disinterest is attributed to the fact that many Hispanic areas are served by independently owned and operated supermarkets and are thus not as attractive as the chains with large-scale purchasing power.
Additionally, fewer discount coupons are distributed to Latino neighborhoods, thus depriving grocers the increased sales often accompanying such promotions.
Consequently, Latino-area food retailers claim they are at a disadvantage in operating supermarkets, an industry whose profits average a slight 1% of total sales.
"We are denied a fair profit through neglect. . . . (And so,) we have to break the stereotype that all Hispanic grocers have small stores and live above them," said Steve Soto, president of the grocers organization and owner of Save-More Grocery in Pico Rivera. "We need direct links with corporate America, which we don't have now."
A former Miami-area food retailer, Jorge Garrido, rhetorically asked convention goers why major American consumer products companies would spend millions of dollars finessing the international Latino market and then ignore the U.S. Latino community.
His query was underlined by statistics presented earlier in the conference that stated that the population of Latino-Americans, including those of Mexican, Puerto Rican and Cuban descent, surpasses all but six of the world's Spanish-speaking nations.
The Mexican-American Grocers Assn. was founded seven years ago in order to bring food retailers and manufacturers together to pursue Latino consumer dollars. Today the organization consists of more than 700 members, and its first convention attracted about 150 people, most of whom were food manufacturers.
One of the group's founders stated that the Latino market can be a lucrative one for food and household products companies. However, those firms maintaining a form of ethnic shortsightedness may ultimately be shut out of the high-volume Latino-area stores.
"The shortage today is shelf space (in supermarkets), not available products," said Joe M. Sanchez Jr., president of Civic Center Sales in Los Angeles.
The veiled threat that some companies that currently forget Latinos will suffer in the marketplace was also taken up by Rep. Esteban Torres (D-La Puente).
"Companies should be relevant to this community because the Hispanic consumer has choices to make and product lines to differentiate. So, corporate America can participate in this population trend or not," Torres said.
The participation goes beyond simply offering various products to Latino-area stores. Torres would like to see companies that profit from sales to Mexican-Americans return a part of their earnings to the community in the form of jobs and services.
Linking Products to Latinos
"If a firm wants to market (to Latinos), then they should provide images on TV, magazines and newspaper advertisements that link Hispanics with their products. Advertising agencies (sensitive to, or owned by, Latinos) are often overlooked when companies develop advertisements. Corporations almost automatically go to Madison Avenue agencies (in New York) and not to those on Wilshire Boulevard," he said.
One food company representative acknowledged that there were few television commercials that cast brown-faces in white-collar jobs.
A Pepsi-Cola Co. executive said that the critical comments made by many of the convention's speakers were not just typical complaining.
"We have been trying to recognize different markets and know as much as possible about them," said Bob French, Pepsi-Cola Bottling Group vice president. "The Hispanic market is absolutely important for us to spend time on because they constitute 30% of our customers (in Southern California)."
Pepsi's marketing campaign involves both English- and Spanish-language advertising targeted toward Latinos, community promotions and sales incentives for Latino-area stores.
One point subtly stressed by a number of the convention speakers was that Latino business people are fighting to eliminate stereotypes while accentuating distinct cultural traits.
A particularly controversial point was coupon redemption among Latinos. Apparently, some food company executives have limited coupon distribution in Latino areas because of a perception that redemption in bilingual areas is minimal.
However, a recent study by the Nielsen Clearing House showed that 74% of all Spanish-speaking households surveyed used coupons versus 81% for white households and 72% for blacks.
The convention's seminars made a convincing case for corporations to target the nation's Latino communities as a rich source of sales. The arguments were bolstered by statistics that indicate that Latino-Americans will displace blacks as the nation's largest minority group within the next decade.
In fact, one speaker told the convention that the major supermarket chains will someday return to the Spanish-speaking communities that were abandoned years ago to independent store operators. This heightened competition will present a serious challenge to the bulk of the Mexican-American Grocers Assn.'s members.
The prediction may prove quite timely. Representatives from both Vons Grocery Co. and Safeway Stores Inc. attended the conference.