56% contribution, 43% growth rate and only 1.2% of the budget? There is something wrong with this picture...
Between the debt ceiling uncertainty, world markets declining and businesses struggling to survive, one question unites market analysts and CEOs alike; what should we do to grow? Where should we invest for the future?
For corporations, for example, the summer marks the season of 2012 business planning. This is a time when their brightest and most creative minds gather to figure out the next big trend and uncover that one golden nugget that will set them apart. Would it be an iPad app? An increased focus on "green", exploring emerging markets or introducing an all-natural low-calorie product? While all of these seem enticing and trendy, when it comes to the hard numbers around contribution, growth and key drivers of volume in America's top markets, we come back to one answer: Latinos are the engine for growth.
Is it denial or simply a case of analysis paralysis? Sometime the most obvious option gets unfortunately dismissed. So my question today is, how many more numbers, statistics, trends, charts and consumption reports need to be published to demonstrate that to win in today's American market you cannot afford not to invest your fair share to reach THE market that is driving all the growth? Today's report captures in four minutes what you may need to share with your CFO and CEO for business planning. Hard-new numbers that tell a clear story: if you want to grow, jump on the growth trend driven by Latinos in the U.S. Would you have peace of mind knowing that you are simply dismissing 30% of your market in the top five markets? Maybe you are...
According to the U.S. Census, the Latino population grew by 43% from 38 million in 2000 to 50 million in 2010, while the Non-Hispanic population only grew by 4.9%. But more than population numbers, there is significant financial growth represented by this group. In the last 10 years, Hispanic buying power has grown by 347% reaching $1 trillion in 2010. This ranks the U.S. Hispanic market as the world's ninth biggest economy -- larger than the Gross National Product (GNP) of Brazil, Spain or Mexico. Also, minorities make up nearly half the children born in the U.S. -- part of a historic trend in which minorities are expected to become the U.S. majority over the next 40 years. For the first time in national history, the majority of young people in two states -- California and New Mexico -- now identify as Hispanic, according to census data released this year.
And their disposable income over-indexes in many categories where Latinos spend three to six times more than Non-Hispanics. For example, Latinas spend three times more on beauty and cosmetics per month, Latinos go two times more to the movies and are 80% more likely to see a movie in the opening weekend, and when it comes to everyday shopping, they spend $133 in groceries per week vs. $91 by the rest, that is 46% more. 46% more that you could be gaining in your share of revenues.
It is obvious that the strategies and investments that worked 10 years ago, may no longer be relevant to win today's highly diverse America. Companies like Diageo, Nestlé, Kraft, Western Union, State Farm, among others, have publicly announced their increased focus to reach the Hispanic shopper. The latest U.S. Census data has captured the interest of many chief marketing officers, says Emil Morales as part of a report by the Miami Herald, senior vice president and general manager for TNS, a market research company. "The trend for 2050 is that 125 million people in the U.S. will be of Hispanic origin. Growth is going to come from this segment and companies that don't get into this market now will be late for the party."
However, while it seems companies are paying attention, total Hispanic media spending is still a timid $5 billion. That is 1.2% of a total $365 billion U.S. advertising spend. 1.2% allocated to reach that 16% of the population.
Maybe 16% of the population doesn't sound impressive enough, however what many fail to realize is that America's top five states combined, which represent almost 30% of total U.S. population, are currently 29% Hispanic.
Also, America's largest cities like New York, Los Angeles, Chicago and Houston are already more than 29% Hispanic. And the youth market is dominated by Latinos in key states like California. This makes it very difficult to win in the top markets without maximizing the Latino shopper opportunity.
So, are we having a case of Hispanic insanity? Or is it denial combined with fear of the unknown? Maybe it gets deeper into a diversity and cultural competencies issue within the circles of decision-makers. If numbers are not telling the story, maybe there is still personal bias getting in the way of data-driven decision making, and hopefully that is not the case for you and your company.