RUN TO THE SUPERMART AND PICK ME UP SOME CACTUS
For most Americans, nopalitos aren't exactly a comfort food. A product of Mexico, they're sliced cactus. But nopalitos can set off waves of nostalgia among many Hispanics. As can tostones (green fried plantains) from Honduras, and harina pan, a corn flour from Venezuela that is used to make arepas, a cousin of the English muffin. They're all big sellers for Goya Foods Inc., the Secaucus (N.J.) ethnic-foods distributor. And with the U.S. Hispanic population set to pass 26 million this year, other companies are finding it increasingly hard to ignore.
In a sign of the growing clout of the Hispanic market, executives at such companies as Colgate-Palmolive, Nestle, PepsiCo, Procter & Gamble, and CPC are stepping up the number of products they're shipping from Latin America. Marketers say the trend has accelerated since last year's passage of the North American Free Trade Agreement, which opened their eyes to the connections between Hispanics in the U.S. and Latin America. "NAFTA has given people a wake-up call to the opportunities that exist even beyond Mexico," says Leslie Benning, a principal at the Cambridge Group consulting firm.
That's in ample evidence on store shelves these days. In April, Nestle began rolling out Nido, a powdered milk it sells in Mexico, and Nestum, its Venezuelan breakfast cereal. In California, Procter & Gamble recently began test-marketing Choco Milk, a powdered milk it sells in Mexico. Late last year, some Wal-Mart stores started carrying Maizoro, one of the big Mexican cereal brands, in the U.S. About the same time, Colgate-Palmolive Co. began marketing its Mexican household cleaner, Fabuloso, in Los Angeles and Miami.
FAVORABLE TREND. Most of the products aren't big revenue producers yet. But Goya's performance--since 1990, sales have risen from $300 million to $480 million--has fueled marketers' hopes. Also whetting their appetites: the crossover of such Hispanic specialties as salsa into the general market. CPC, which has one of the most ambitious growth plans, hopes to double its Hispanic-product sales to $300 million in the next five years. Others are looking for more incremental growth. Colgate's goal is "to develop growth markets in otherwise flat business categories," says Stephen Fogarty, executive vice-president for marketing.
Since many U.S. consumer-product companies have cut back on product development, importing brands from Latin America means they can gain entry to new categories without spending much on research and expensive product launches. "They're leveraging the brand familiarity and awareness" Hispanics brought with them when they came to the U.S., notes Les Pugh, a food analyst at Salomon Brothers Inc. Many U.S. companies have acquired Latin brands in international expansions. For example, PepsiCo, which bought controlling interest of Gamesa, one of Mexico's biggest cookie makers, has begun selling Gamesa products to U.S. Hispanics.
Demographics work in the companies' favor. The number of Hispanics in the U.S. grew seven times the rate of the general population between 1980 and 1990. By the year 2000, according to Census Bureau projections, the Hispanic population is expected to grow to 31 million. Half the Hispanics currently living in the U.S. came between 1980 and 1990. The marketing recipe is simple, says Joseph Unanue, Goya's president: "Follow the trend of migrating Hispanics who are coming in and market the products they know from home."
But a Latin birthplace doesn't guarantee success. Goya, for example, flopped when it tried to change panela, raw brown sugar sold in block form that Colombians grate for use in desserts and drinks. Goya decided to sell the product already granulated, to make it more convenient. It turned out that people preferred to scrape the sugar themselves, thinking it tasted better that way. It didn't really taste better, a Goya executive says, "it was all psychological." The lesson: Even in panela, perception is everything.
Products sold in Latin America and now being marketed to Hispanics in the U.S.
NESTLE Nestum instant cereals--oats, rice, corn, and a wheat, rice, and corn combination--Maggi dehydrated soups, Nido whole milk powder
Fabuloso household cleaner
GOYA FOODS Goya brand maduros (ripe plantains), nopalitos (sliced cactus), tostones (green plantains), arina pan (corn flour), frozen yucca (cassava)
CPC INTERNATIONAL Knorr dried soups & bouillon, Fruquo spicy ketchup/pasta sauce, Lizano liquid seasoners, Maizena corn starch
MAIZORO Maizoro corn flakes, sugar frosted flakes, cocoa flakes
PEPSICO FOOD INTERNATIONAL Gamesa cookies and pasta
LES JORGENSENLaura Zinn in New York, with bureau reports