Hispanic market notes of interest

Growth Strategies, Nov 2003

The Affluent Hispanic Target Market

Although average Hispanic household income is lower than the national average, a segment of Hispanic consumers is increasingly affluent. According to J.D. Power and Associates, about 31% of Hispanic households earn $50,000 or more annually; about 13% earn $75,000 or more; and about 6% earn $100,000 or more. Total household financial assets among Hispanics in the US, projects Power, will grow to $2.5 billion by 2010.

In fact, the wealth of affluent Hispanics is growing faster than that of the general population. According to investment house Merrill Lynch, the number of Hispanic households earning more than $100,000 a year grew 126% between 1991-2000, compared to 77% for the general American population. This trend actually accelerated during the stock market downturn of 2001-2002, since acquiring wealth through real estate or other entrepreneurial activity such as business ownership, rather than through ownership of financial products, is typical of this segment.

There are now some 3.7 million affluent Hispanics in the US. It is estimated they will have a combined buying power of $292.4 billion by 2006, almost two-thirds of the $452 billion in buying power for the 37 million people of the overall Hispanic market. This represents tremendous concentration of Hispanic wealth. Affluent Hispanic households cluster geographically as well, in four states: California, Texas, New York and Florida.

Because Hispanics, including affluent Hispanics, have traditionally used financial products and services less than the general population, many mainstream financial services companies have ignored Hispanic consumers. But now banks and brokerages are waking up to the large and increasingly affluent Hispanic market. For example, Merrill Lynch has some 350 Hispanic American financial advisors, and is recruiting more. Their goal is to provide investment advice, estate planning, retirement planning and tax planning to this large, growing and affluent target market.

The high net worth Hispanic client is educated and assertive, according to Roberto Orci, founding partner of M3 Alliance Consulting. He or she is also more responsive than the general market, likely to make multiple purchases and remain loyal if products and services provided are superior. But this doesn't make them Anglo. Many companies mistakenly assume their image in the perception of the Hispanic market is the same as that of the general population. On the contrary, to market successfully to affluent Hispanics a company must understand nuances, the importance of community, and how they relate to the brand.

As Anne Morriss points out in Poder magazine (August 2003), there is a growing opportunity for luxury brands in the ranks of the Latino elite (which she calls "ricos invisibles"), but most companies don't see it, blinded by an obsolete social framework that has convinced them this market doesn't exist. Yet affluent Latinos care intensely about signaling status, and desire the best in food, wine, art, cars and clothing (not to mention boats, planes, yachts and penthouses!). Writes Morriss:

Wealthy Latinos are a premium brand's dream. Yet most brands don't deserve them. With relatively few exceptions, the segment has not even made it onto most companies' strategic radar screens.

Many marketers assume that "acculturated" Hispanics already consume their messages through traditional, Anglo luxury channels. This is a flawed view of the market. Rich Latinos have spent a lifetime in America's cultural blind spot, and they know they're not being addressed.

Enormous value can be created by actively shaping rich Latinos' relationship with a brand. Capturing it begins with recognizing their presence, with choosing media that are unambiguously targeted. As with any segment, it evolves into creating campaigns that directly engage their values and desires.

It will be worth it.

Emerging Hispanic Communities

Hispanics dominate US population growth, but the explosive growth of the US Latino population extends beyond traditional metropolitan receiving areas like Los Angeles, Houston, Chicago and Miami. While 58% of Latinos live in 10 major metro areas, 42% have dispersed to areas not commonly accustomed to receiving clusters of Hispanics, including suburban fringes, small cities and towns, rural areas, and Southern states. Although presenting challenges to local resources, these newly established communities often bring economic life back to areas sorely in need of revitalization.

So concludes the report, "Emerging Communities: A Snapshot of a Growing Hispanic America," released recently by the League of United Latin American Citizens (LULAC). Some of the report's other findings:

Geographic Dispersion

During the 1990s, the Hispanic population in New Latino destinations such as Orlando, FL, Little Rock, AR and Washington, DC grew 250%, even faster than in traditionally Hispanic metropolitan areas such as Houston and San Diego, where it went up 235%.

An Ethnically Diverse Population