True, not all Hispanic consumers purchase store brand products. But the ones who do are significantly more likely to do so in more food categories than their non-Hispanic counterparts.
For example: Although only 40 percent of non-Hispanic consumers who purchase private brands buy store brand bread and only 36 percent buy store brand cheese, 54 percent and 50 percent of their Hispanic counterparts, respectively, do so, says “The Private Label Food Consumer — US,” a November 2013 Mintel report.
This reality presents opportunities to tailor store brand lines or products to Hispanics — or to do more targeted marketing of store brands to that demographic. Pleasanton, Calif.-based Safeway did just that in 2013 through the launch of its Marcela Valladolid brand with partners Marcela Valladolid and the Food Network.
In addition to developing specific flavors and varieties that target a specific demographic, Safeway partnered with a reputable chef and the Food Network to provide a sort of “stamp of approval” that offers consumers a stronger sense of quality assurance. This cobranding minimizes the potential for any negative perception being associated with the store brand.
Although many Hispanics consume store brand food, a good number of them don’t want people to know they’re doing so. While 11 percent of all store brand consumers don’t want people to know they eat store brand food, 14 percent of Hispanics who purchase own brands feel the same, according to consumer research.
Hispanic shoppers who purchase private brand products also are more likely than those of any other race or ethnicity group to think store brand packaging looks cheap, with 43 percent feeling this way — compared to 36 percent of all store brand consumers. In addition, Hispanic store brand consumers are significantly less likely than all others to think store brand foods are suitable for entertaining.
These findings suggest that retailers hoping to capitalize on the Hispanic market will need to position store brand products as true brands. These consumers will be especially interested in products that are not obviously store brands, particularly those that offer innovative packaging.
Where they buy
In terms of where they purchase store brand items, Hispanic adults who reside in bilingual households are more likely than other Hispanics to purchase private brand goods at large supermarket chains owned by Safeway, Supervalu and Alberstons, as well as Costco Wholesale Club outlets, according to 2012 Mintel data. Bilingual Hispanics also are more likely than other Hispanics to purchase store brand items at natural food grocers, including Whole Foods Market and Trader Joe’s stores. Thus, marketing efforts that target bilingual Hispanics could assist these retailers in further growing their store brand product sales.
Meanwhile, Hispanics who live in Spanish-only homes are the most likely to purchase private label products at Publix Super Markets outlets and any Kroger-owned supermarket. Additionally, Spanish-dominants are more likely than English-dominants to purchase private label goods at supermarkets owned by Safeway and Supervalu, and at Winn-Dixie and Whole Foods Market stores. This reality suggests that grocers harbor strong potential for growing sales of their private label products by increasing their marketing outreach to Spanish-dominant shoppers.
Categories of acceptance
In terms of categories in which they shop for store brand products, nearly half of Hispanic adults buy private label meat, fish, poultry and milk. Consumers might not easily discern national brand milk from store brand milk, given the regional scope of name-brand milk and the abundance of store brand milk found at many grocery stores. Hispanics also are likely to consume private label bottled water, canned legumes and canned fruit and vegetables. Retailers that actively promote these store brand products to Hispanics could maintain and build their sales of these items.
Looking outside of food categories, Hispanic adults are much less likely to purchase several types of private label personal care or cosmetic items over their name brand equivalents. Trust in name brands — and the association of the name brand with quality — likely is a factor in Hispanics’ reluctance to purchase store brands here.
Additionally, many cosmetics do not have a private label counterpart, thus impacting the likelihood of a store brand purchase. Hispanics might be reluctant to try an own-brand product that cannot provide the same level of quality as an equivalent national brand item — for vanity reasons just as much as financial considerations. Thus, retailers that sell private label personal care products must demonstrate that the products are worthy.
Not just about saving money
Speaking of cost, don’t assume that Hispanics who choose store brands do so only for fiscal reasons; they actually purchase them regardless of household income. In fact, Hispanics with annual household incomes of at least $75,000 are more likely to purchase a private label item because it is the best item for its cost than Hispanics with annual household incomes of less than $25,000. However, this finding might reflect larger households and a desire to extend dollars as far as possible without eliminating certain goods. Therefore, private label brands should be widely promoted to all Hispanics, maximizing the opportunity to gain influence with a growing consumer group.
Coupons or discount offers led Hispanics with average annual incomes of $25,000-$34,900 to try a private label product in 2012. This group of Hispanics is also the most likely to purchase a private label product after first sampling it. Consumers in this household income group are likely to seek the best value for their dollar, as are Hispanics with annual household incomes of less than $25,000.
Retailers could attract a greater number of lower-income Hispanics by offering in-store private label product demonstrations. Providing the opportunity to try private label goods before buying them, coupled with coupons or discount offers, will give greater incentive to budget-conscious Hispanics who may be wary of taking a chance with an unfamiliar brand. A positive experience can also lead Hispanics to share their views with friends and family, who may then be inclined to try the private label version of a product.