Soft drinks companies home in on Hispanics
The Hispanic community is a large and growing ethnic group within the US population and a consumer segment that soft drinks marketers are looking to tap. Hinde Liep of US market research company, Business Trend Analysts, examines how soft drinks brands are addressing this expanding market.
Among the more intriguing factors impacting consumer demand for fruit beverages in the US is the shifting of the ethnic makeup. A study by Business Trend Analysts showed the influence of the Hispanic population on product development in the US is enormous.
The ethnic group has truly emerged as a strong force in determining the growth potential for beverages. At over 35m today, the Hispanic population is projected to nearly double in size by 2012, reaching close to 20% of the total US population.
Nationally, 38% of the Hispanic population is aged under 20 and spends an average of US$375 a month - 4% more than the average for non-Hispanic teens. The beverage industry has found a niche that has yet to be fully exposed; its size and the number of countries and cultural differences that make up the group should provide manufacturer and marketers willing to listen, a world of opportunities.
The soft drinks industry is already capitalising on the tastes and preferences of the Latinos; the fruit beverage manufacturers are introducing new flavours targeted to their tastes, energy drinks and sodas are getting a 'Spanish zest', while both plain and flavoured water are growing in popularity among Hispanics.
Per capita consumption of fruit juices changed little between 1992 and 2002. Consumption, which peaked at 9.0 gallons per person in 1997, was somewhat erratic throughout the period. In 2002, consumption totalled 8.7 gallons per person. Wherever the greatest potential for growth lies, the leading suppliers jump on the bandwagon and the Hispanic group has the potential to revive the industry.
According to ACNielsen, Hispanics consume more fruit juices and drinks than African-Americans and have become a prime target for marketers. For example, Minute Maid Mifruta Flavored Fruit Drink drinks were developed with Hispanic consumers in mind. The chilled beverages will be offered in Agua de Jamaica (Hibiscus), Agua de Mango Naranja (Mango Orange), Agua de Pina (Pineapple), and Fresa (Strawberry) flavours. Lemon and lime juices are commonly used in the Hispanic community and some companies are using the lime flavour to target this particular consumer group.
Lime has also made its way into soft drinks and is becoming a favourite ingredient for both consumers and soda makers. While white America is slowly becoming wary about soda, the Hispanic population is making it a favourite in their homes. According to Beverage Digest magazine, Diet Coke with Lime has taken 0.7% of the US soft drink market in 2004, outselling both Diet Coke with Lemon and Vanilla Coke. PepsiCo has joined the lime-flavoured soft drink trend with Pepsi Lime and Diet Pepsi Lime. Also, the beverage giant will be specifically targeting the Hispanic population with Manzanita Sol, an apple-flavoured Mexican soft drink.
Demographic trends also play a major role in the New Age beverage market. Many of the products have traditionally been geared toward consumers with more active lifestyles, but manufacturers of these products are now finding buyers in the youth population as well as sports participants in older age groups. In addition, various ethnic groups, including Hispanic and black consumers, have been a major factor in the surge of energy drink introductions and sales in recent years. The US$3.6 billion sports drink market is growing 10 times faster than carbonated soft drinks.
A study on New Age beverages published by Business Trend Analysts demonstrated that lime was the No. 3 ingredient used in sports drinks, behind strawberry and orange. This research revealed that Hispanics are more inclined than any other ethnic groups to consume energy and sports drinks. Mott's Inc launched Clamato Energia, a blend of tomatoes, onions, celery, spices, and clam juice, geared toward Hispanic consumers, who consider clams to be an energizer and an aphrodisiac. South Beach Beverage Company is also targeting this specific ethnic group with its SoBe Bodacious Brew Tropical Fruit Flavored Beverage.
Gatorade, the market leader, has launched Xtremo, which has already taken 2.5% share of sports drinks. The drink was developed with flavours popular in Latin America such as citrus and mango, and will be pushed to areas heavily populated with Hispanics. Gatorade has been targeting the Spanish population with Spanish-language advertising since the 1980s. On the other hand, Powerade will start its first advertising campaign targeted to Latinos this year.
A statewide study published last year by the Public Policy Institute of California revealed that 55% of Latinos drink bottled water, compared to about 40% of whites. More specifically, it seems that English-dominant Hispanics are more likely than bilingual and Spanish-dominant Hispanics to drink bottled water: 85.1% compared to 81.2% and 62.6% respectively. In fact, it seems Latinos are overall more likely to drink bottled water because they perceive tap water as unsafe.
Sparkletts, the leader in the western US, targeted Hispanics because most Mexican immigrants to the US have experience with water problems and are accustomed to using alternative sources. The vending machines that dispense up to a gallon at a time also simplify the transaction for non-English speakers.
The consumption of bottled water in the southwest has doubled since the 1990s which might be a result of the influx of Spanish immigrants in this particular area.
Flavoured water companies are taking advantage of such factors and adding tropical flavours.
American Water Star has announced the expansion of its Hispanic beverage line-up of products. Agua Fresca Sport contains no sugar, no calories, only one carbohydrate, and is fortified with calcium and vitamins. American Water Star is also the maker of the popular Hawaiian Tropic. Geyser Fruit Beverages, a line of eight different fruit-flavoured waters which have proven to be popular with consumers includes Geyser Fruta, a Latino-orientated range of seven different fruit-flavored beverages. Geyser Fruta is made without sugar in response to the growing concern of the Hispanic population with diabetes, the leading cause of death in this ethnic group. It can be expected that as companies introduce flavours and drinks targeted to the Hispanics, they will also increasingly respond to their health concerns.
Source: Soft Drinks International
For further information on Soft Drinks International, go to www.softdrinksjournal.com
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