Delicious diversity – market potential of ethnic foods – includes related article on Mexican food products exported to the US – Cover Story
Steve Dwyer
Sociologists call the U.S. culture shift the ‘browning’ of America. To food companies, it represents greenbacks.
Now you’re talking my language.” It’s a phrase that denotes understanding…clarity…the breaking down of barriers. It s also music to the ears of food company executives, as it represents the pinnacle of integrated ethnic marketing.
Consumers who have come to America from Asia or Latin America – two continents that have provided significant migration into the U.S. over the years – desire foods that best resemble or mimic those found in their homelands.
At the other end of the spectrum, mainstream consumers have shown a tendency to want it all – from the comfort foods they enjoyed as youths to new regional tastes (e.g. southwestern, Tex-Mex, etc.) to exotic ethnic cuisine.
As such, they are turning to ethnic foods as an outlet to satisfy cravings for hot, spicy and flavorful foods, particularly Baby Boomers whose taste buds are dulling as they age. As vegetarianism burgeons, a melange of ethnic meatless foods step to the fore, including Thai and Indian fare.
These occurrences represent a potent opportunity for food and beverage makers. When one stops to think about it, every single product made has a potential target market beyond its core. All products are “ethnic” to somebody else. The challenge is to make products appealing to non-users.
As the tastes of America evolve, marketing opportunities proliferate. Consider the following:
* Mainstream U.S. food companies have developed individualized programs to connect with multiple ethnic groups;
* Ethnic U.S. food companies (i.e. Hispanic, Asian, African-American, Kosher, European) are scouting for market opportunities to move beyond core markets to the general market;
* Foreign companies, particularly those headquartered in Mexico, have developed a pipeline to the U.S., targeting both Hispanics and mainstream consumers. Some are partnering with large U.S. food companies for marketing and distribution leverage;
* Foodservice operations, supermarkets and quick-serve restaurants are skewing their menus toward the exotic – targeting all consumers, ethnic and mainstream. Going one further, they are tailoring offerings to fit regional or local preferences.
“There are several dynamics at work in today’s society,” explains Mark Heckman, vice president of marketing for Randall’s Food Markets, Houston, Texas. “Ethnic groups are moving toward the U.S. mainstream. Take Hispanics. They’re becoming ‘acculturated,’ which is the degree to which their traditional values become integrated within the cultures and values of the U.S. This group has accepted mainstream products rather easily.”
Heckman revealed that those ethnic consumers who are slow to become acculturated force food companies to make a unique connection with them. But often, something can get lost in the translation.
Multi-Lingual Foods
Over the next decade, the U.S. Census Bureau projects that the population growth of Hispanics (31%) and African-Americans (13%) will greatly outpace that of Caucasians (3%).
Entering the new millennium, the Asian population in the U.S. will continue to grow at double-digit rates. There’s one rub. “It’s really difficult to market to the Asian segment. There are various groups like Chinese, Filipino, Vietnamese and Pacific Islander – that make it very fragmented,” says David Spachner, president of FoodNet, a Manhattan-based food consulting firm. “How do you connect with each unique subgroup?”
Because Hispanic migration to the U.S. leads the pack, marketing programs are weighted in that direction. The Hispanic influx into the States has prompted the Food Marketing Institute, Washington, D.C., to commission a study, “The Profile of the U.S. Hispanic Grocery Shopper.”
The study reveals Hispanics, including Mexican, Cuban and Puerto Rican cultures, are loyal shoppers with a propensity to buy dairy, produce, meat and seafood products more than others. They spend about $102 a week on groceries versus $77 for non-Hispanics. They make purchasing decisions based on brand reputation and quality versus price.
Speaking their language means knowing how to plug into their special needs.
“The Hispanic morn will spend more time cooking a meal, and takes a great deal of satisfaction in it,” says Gina Gallovich, director of ethnic communications for Kraft Foods, based in Northfield, Ill. “She’s not necessarily looking for quick and easy meal solutions, but foods to enhance the overall eating experience. At our company, we call her ‘Mother Nurturer.'”
Kraft, with food and beverage sales of almost $17 billion/yr., has a stated goal to become the “undisputed food marketing leader to U.S. ethnic consumers,” asserts Boris Oglesby, director of ethnic marketing and external relations for Kraft.
“Ultimately we want every ethnic consumer to use Kraft products every day at every eating occasion,” says Oglesby.
Kraft has a method to its marketing muscle: it’s called integration. For the general market, Kraft sponsors a summer promotion called “No Oven Summer,” which kicked off Memorial Day. The promotion encourages families to avoid using their ovens during the summer and instead choose quick and convenient, alternate ways to prepare meals with Kraft ingredients. It bundles those products together in supermarkets in an end cap display as part of its solution selling strategies.
Oglesby states that since Hispanics tend to use their ovens in a more consistent manner throughout the year, “No Oven Summer” would be less meaningful. For them, Kraft’s equivalent of “No Oven Summer” is “Put Flavor in Your Summer with Kraft.” The insight is that Hispanics love flavorful foods. Kraft has a plethora of products tailored for non-oven uses. Rather than use the term “oven,” “flavor” is the Hispanic connector. As part of the promotion and to induce trial, Kraft offers a $1.50 discount when a consumer purchases any three participating Kraft products.
Involvement in grass roots events is also very impactful because companies can develop strong co-marketing programs in association with these events. “It’s a tool that our sales force can utilize to gain incremental support in stores,” says Oglesby. “So by participating in a Fiesta Broadway in California, we can take these events and tie them in with a major retail partner. But you have to become a part of the community without looking invasive or out of place.”
What’s The Use?
Food marketers must have the ability to draw distinctions between the various brand “use rituals” of ethnic groups.
Oglesby says a good example is Kraft’s Kool-Aid brand. “We know from focus groups and quantitative research that black consumers use Kool-Aid differently than the general population,” Oglesby points out. “The latter makes a pitcher of Kool-Aid based on the directions on the package. African-Americans have a more unique relationship with the product. It’s used by the whole family, and it’s usually doctored up with fruits, soft drinks, juices and even more sugar.”
In the general market, Kraft finds that adults express concern about how Kool-Aid delivers from a nutrition standpoint. It is also primarily a kids drink. With African-Americans, the nutrition concerns aren’t as strong. The product also has a broader use and is an overall part of the culture.
Using this unique consumer insight, Kraft developed a dual-use ad campaign that honors these differences. Falling under the tagline “Give Me Some of that Smile,” the Kraft ad depicts African-American children and their moms making Kool-Aid their way. “It’s done in a hip, contemporary manner, and it shows Kool-Aid being made with fruits,” says Oglesby. “The message is more attitudinal and usage focused on the African-American side, while it is more product-benefit focused on the general side.”
These insights are gold to a food company in search of incremental sales. It’s a big reason why Sara Lee formed an alliance this past winter with a top ethnic marketing firm to provide ethnic marketing support for several of its meat brands. The firm, Anderson Communications Inc. (ACI), is the nation’s second oldest ethnic marketing firm and has developed programs for the likes of Quaker Oats and Kraft.
“Our various brands have enjoyed widespread support from African-American consumers over the years, and ACI offered us the marketing expertise and finesse to further enhance our outreach to this audience,” says George Bryan, president of Sara Lee Meats and senior vice president of Sara Lee Corp.
ACI will provide support programs for one Sara Lee national brand – Jimmy Dean – and regional brands like Bryan, R.B. Rice, Rudy’s Farms, State Fair Foods and King Cotton. Products in those lines include lunchmeat, breakfast and dinner sausage, bacon, corn dogs and hot dogs.
Al Anderson, president of ACI, Atlanta, says that for an integrated program to sustain itself, “you have to have the four R’s – relevance, recognition and respect. If you have those you get results. African-Americans like quality branded products. They don’t buy generics or private labels and don’t like ‘lite’ labels. If it’s quality and has a reasonable price point, they tend to buy it.”
Sara Lee’s meat brands have garnered Main Street success over the years, but have also been making strides with Hispanic and African-American consumers.
Anderson’s firm will offer Sara Lee total comprehensive marketing support. Layered within that is the product use quotient. “Some households might use relish and sauerkraut on their hot dogs. At my house, we have hot dogs every Saturday night and we have them with chili, mustard and slaw,” says Anderson, who is African-American. “That’s a tradition that is going to be passed on in my family: the chili-slaw dog.”
Sara Lee’s regional meat brands are about to embark on pilot programs in various U.S. markets where penetration is low or nonexistent. They will target ethnic cultures where they see an opportunity.
State Fair Foods, based in Dallas and acquired by Sara Lee in 1986, has commenced a one-year pilot program in Houston and Milwaukee markets that targets Hispanic and African-American consumers, respectively. The programs emphasize community involvement as a way to generate trial of its core product – corn dogs, which is regarded as both a convenience, snack and center-of-the-plate item, says James Gilmer, vice president of marketing for State Fair.
This summer, State Fair is a participating sponsor of the African World Festival and Jazz Fest held in Milwaukee, where the African-American population is about 15%, says Gilmer.
“One thing I learned at Coca-Cola is that African-American consumers trust a corporation much more if they know the company is in tune with their activities,” stresses Gilmer.
Domestic Ethnic Bliss
While food companies try to ascertain what makes various ethnic groups tick, general consumers are taking a liking to a host of ethnic foods.
Spachner of FoodNet adds: “The food companies or foodservices having the most success are the ones who can offer the ethnic tastes with an American twist.”
Mainstream consumers have their antennae raised for ethnic dishes of all sorts. Mexican foods have gone mainstream as 46% of households polled eat it four or more times per month, according to market research firm Packaged Facts Inc.
Meanwhile, 45% of American adults have eaten Asian foods over the course of any one month. Food companies and foodservices are whipping up foods that represent Asian foods’ health, taste and cost advantages.
At foodservice, concepts like Pan Geos, an international dining concept, is transforming the traditional tray-line cafeteria into mini culinary stations featuring international cuisine from Mexico, Japan, Thailand, Greece, Korea, France, England and the Middle East.
Offered primarily on college campuses from Boston University to the University of Nevada-Las Vegas, Pan Geos was created by Aramark Corp., a $6 billion foodservice operator based in Philadelphia. Because tastes vary from region to region, Pan Geos’ themes cater to the local market. A single Pan Geos may only offer a small handful of its overall ethnic menu.
This is also the strategy with casual dining restaurants such as Applebee’s Neighborhood Bar & Grill. According to Ed Gleich, director of research and development for Applebee’s, the company’s 1,000 locations nationwide rotate their menus seasonally – in the spring and fall. From market to market, menus again vary based on local market preferences. Menu items are given regional-sounding names that create excitement and generate trial.
Supermarkets, eternal practitioners of demographic marketing from store to store, follow the same path with their ethnic food initiatives.
Von’s Co., Arcadia, Calif., is helping the wrap concept evolve. In select stores, the chain has begun marketing “Wrap Ole,” a whole wheat exterior rolled with salsa turkey, jalapeno jack cheese, salsa and cilantro. Von’s also has launched deluxe sandwiches with most selections given catchy and regional names like “California Reuben,” “Cajun Chicken,” “Tuscan” and “Coast to Coast.”
Value-Added Vittles
Packaged food companies are not missing a trick in positioning ethnic style and even U.S. regional foods toward mainstream audiences.
Glory Foods, Columbus, Ohio, whose entrees and side dishes have been dubbed “the next best thing to Mom’s down-home cooking,” continued to bolster its Southern food franchise with the rollout in May of Southern Selections frozen entrees and side dishes. By doing so, the company not only provides new regional options for consumers, it provides variety in meal solutions planning, says Bill Williams, president of Glow Foods.
U.S. regional-style foods fulfill a need, but clearly it is ethnic cuisines that captivate the mainstream consumer. One company, Minneapolis-based Essence of India, wants to provide the general consumer with “unique twists on American favorites using our upscale products,” says Swati Elavia, president of the company and a former food technologist with General Mills.
The company was formed in 1995 to become “America’s favorite brand of Indian food,” says Elavia.
The company, which sells a line of sauces, marinades, chutneys and spice blends, is small – less than $1 million in sales – but opportunities abound at both retail and foodservice levels. At retail, Elavia is offering samples in supermarkets like Randall’s and sponsoring cooking classes at Byerly’s. Natural foods chain Wild Oats is considering adding Essence of India’s chutneys to its line.
Major food processors have been active, too, in marketing ethnic foods to the masses. In the Asian category, Hormel Foods, Austin, Minn., acquired the House of Tsang brand in 1992. Two years after introduction into grocery stores, the number of House of Tsang products nearly doubled from 22 to 39 due to consumer demand.
Patak Spices also joined forces with Hormel to create Patak’s Foods USA in 1995. Patak’s family recipes have been handed down from generations. “Our partnership with Hormel allows us to bring the distinctive tastes of India to the U.S.,” says Kirit Pathak, chairman of Patak’s.
Hormel didn’t stop at Indian cuisine. The company ($3.1 billion sales) has a licensing agreement with ChiChi’s and a joint venture with Grupo Herdez of Mexico City, one of Mexico’s largest producers of authentic Mexican food products with annual sales exceeding $300 million.
Ethnic marketing in whatever way it’s directed is not expected to cool its heels soon. In fact, it has just begun to extend its platform. Meat solutions may be next up to bat.
“The next major (HMR) movement will probably be in ethnic foods – particularly those in the Mediterranean vein, including Middle Eastern concepts,” predicts George Naddaff, founder and former chairman of Boston Market. “It’s a real melting pot. If you can Americanize it – you’ve got it!”
However, Americanizing it is just the half of it. As the browning of America takes shape, you better ethnicize it as well.
RELATED ARTICLE: Food Products That Cross Over…The Border, That Is
While U.S. companies target new demographic audiences, exports of branded foods from Mexico to the U.S. are giving them a run for their money. Exports have soared to more than $400 million annually, more than twice what they were only four years ago, Mexican trade officials report.
The Mexican companies are mainly targeting Mexican-American households, which earn three times more than their Mexican counterparts, but they are also taking aim at general consumers who want Hispanic foods.
According to trade officials, the Mexican food market in the U.S. is worth $3 billion a year, including $1.4 billion in salsas, $700 million in tortillas, $400 million in specialty foods, $300 million in frozen foods and $200 million in beans.
“All Latin American immigrants to the U.S. are taking advantage of current international trade conditions to acquire and taste the same food brands sold in their homelands,” says Jose Vargas, editor-in-chief of Alimentos Procesados magazine, a sister publication of Prepared Foods. “This has prompted Latin American food companies to establish a solid exporting strategy to the U.S.”
“We need to expand our sales by exporting value-added products to the U.S., Europe and the Latin American countries,” says Fernando Rodriguez, executive director of Lactona, a leading dairy processor in Argentina. According to Rodriguez, export sales of Lactona products have increased from $4 million to $12 million over 1996-’97.
Mexican-American partnerships or strategic alliances are becoming hotter than jalapeno.
Grupo Industrial Bimbo SA, Mexico’s leading bread maker, agreed in March to buy Fort Worth, Texas-based Mrs. Baird’s Bakeries, the ninthlargest U.S. baker. The deal was believed to be valued at around $200 million.
Bimbo is hoping to use Mrs. Baird’s extensive distribution network in Texas, Louisiana and the Southwest to push its Mexican rolls, cakes and cookies. Last year, Bimbo grossed $2 billion from those products in Mexico. Since 1994, Bimbo has distributed its brand of packaged tortillas, Tia Rosa, via Mrs. Baird’s.
In 1997, ConAgra acquired a stake in Mexico, vegetable processor Verde Valle SA. Together they are now marketing canned goods to U.S. Hispanics.
Corfuerte SA, a Mexican company that makes jalapeno and dehydrated vegetables, has approached Authentic Specialty Foods, a Texas-based producer of salsas and tortillas, about acquiring the company. If the deal is confirmed, Corfuerte will boost its position in the Southwest region of the U.S., says Ignacio Hernandez, company chairman. Corfuerta is the subsidiary of the Desc Group ($2 billion in sales), which distributes its food products in the U.S. through California-based Embasa Foods, a $20 million/yr. jarred foods and coffee manufacturer.
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