July 25, 2012
PL Buyer: The Ethnic Foods Opportunity
Through a special arrangement, what follows is a summary from a current article from Private Label Buyer, presented here for discussion.
Private label earned only 6.8 percent of the growing ethnic foods category, with Mexican/Hispanic and Asian brands such as Tostitos, Pace and Kikkoman dominating, according to a January 2012 report from Mintel. But that could change if consumers became more convinced of private label authenticity, according to the report.
Younger households, families with children, and those earning more than $75,000 represented especially promising targets for private label ethnic brands, Mintel says. The report suggests that ethnic food be moved out of generic-sounding "international" aisles and introduced more appealingly to a broader range of consumers through signage, in-store education, cooking classes and sampling efforts.
Overall, Mintel expects the ethnic food category to expand 5 to 6 percent annually through 2016, reaching $4 billion. Growth is expected to be driven as immigration continues, native-born Americans further diversify their palates, and the slow-growth economy keeps families eating at home more.
Euromonitor International also believes that younger Americans who make up the Millennial generation comprise a promising target for ethnic foods. More of these consumers have Hispanic and Asian backgrounds as well as more adventurous eating habits and a desire for healthier options provided by food cooked in spices rather than fats and oils.
Euromonitor predicts that consumers will move beyond more established Chinese and Mexican offerings — which are not seen as much more "ethnic" than Italian food — to other ethnic and regional cuisines such as Indian, Korean and Vietnamese. Private label players such as Whole Foods and Trader Joe’s have entered this space already through ethnic frozen ready meals like Korean bulgogi, a barbecued beef dish.
According to a study from Consumer Science, most consumers cited price as their main motivator for buying private label ethnic foods, although younger consumers were somewhat more likely to cite quality rather than price.
Private label ethnic food need not be "ethnic as in cheap ethnic," said Ann Stettner of Wild Thymes Farm, Greenville, NY. "It’s high-quality ethnic at a cheaper price."
Also, retailers that segregate Hispanic products into a "Hispanic products section" potentially will lose otherwise interested Anglo consumers, says Jim Wisner, president of Wisner Marketing Group.
"Unless it is products that nobody in the United States would typically buy, it doesn’t make sense" to segregate, he says. "Better-selling items that appeal to a broad base of people ought to be marketed where they belong," which leads to "reverse acculturation," he said. "The United States is learning to be more Hispanic."
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Discussion Questions
Discussion questions: Do you think there is more reluctance on the part of consumers to try private labels in ethnic foods versus other categories? How might retailers work to overcome this?
Poll
Yes, however a 6.8% share is a reasonable point at this time given the fact that private label ethnic foods have not been around very long, and that the various ethnic groups have been long time brand loyals. As the reverse acculturation continues and the economy continues to stagnate, retailers have a great opportunity to attract new users into the categories and convert the ethnic population to more private label sales.
As various ethnic groups continue to grow, the demand for authentic, quality ethnic products will also continue to grow. But in terms of private label ethnic products, it will be a harder sell. Many times, newly arrived immigrants want the products they enjoyed in their native country, which oftentimes are brand names. So getting these shoppers to try private label may be a challenge. However, as the tastes of other shoppers continues to evolve, private label may be an option for these shoppers.
I agree with Jim Wisner that America is learning to be Hispanic. The demographic figures alone should teach us that we will both absorb and be influenced by the Latino culture over the next decade or two.
Looking back into the early Twentieth Century, Italians were discriminated against — as the newest wave of immigrants. Now we are all eating pizza three nights a week. Ultimately, the U.S. is a melting pot and we’re an amalgam of many cultures. I believe this is one of the glories of our nation.
Like the author says, the Millennials are a key target for private label ethnic foods. They are more exploratory and experimental than their demographic counterparts and are the most open to private label in general. In order for retailers to capatalize on this, they will need to create merchandising solutions which both inform and inspire how their private label ethnic lines can enhance, anchor or support a meal solution. Many Millennial shoppers are new to cooking and as a result of this, are primed and ready for retailers to “push” meal ideas at them at the point of sale. I agree that if retailers segregate their ethnic products into just a particular ethnic section, they will lose capturing a larger audience. Cross merchandising with more mainstream foods will create more excitement around “what’s for dinner.”
As this planet shrinks, cultures continue to converge. So many popular TV shows highlight interesting foods from different lands. With PL growing globally, and the US actually trailing the penetration of PL in several other countries, it is only a matter of time before US shoppers embrace PL ethnic items. Display it and they will come!
Some of this might involve a credibility factor. Not sure if I would be inclined to try Wegmans’ Bulgogi, but if at H Mart from my semi-annual visit, and they have a “house brand” I might be inclined to give it a try.
Research has, for decades, shown that Hispanics favor brands much more than other cultural groups do. Private label products aimed at this group will have more of an uphill battle than other PL offerings, even if supermarkets resort to the same strategy they currently use — pushing brands off the shelf in favor of their store brands. In my opinion, Hispanics will retreat to local bodegas for their preferred brands.
Regarding the term, “The United States is learning to be more Hispanic” — and in spite of the weird theory that the U.S. learned to be more Italian because we eat pizza three times a week — I suggest that Hispanics learn to be more American. After all, they came to this country for reasons, including better opportunities and more safety. So, why try to turn the U.S. into the country they fled?
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Yes, however a 6.8% share is a reasonable point at this time given the fact that private label ethnic foods have not been around very long, and that the various ethnic groups have been long time brand loyals. As the reverse acculturation continues and the economy continues to stagnate, retailers have a great opportunity to attract new users into the categories and convert the ethnic population to more private label sales.
As various ethnic groups continue to grow, the demand for authentic, quality ethnic products will also continue to grow. But in terms of private label ethnic products, it will be a harder sell. Many times, newly arrived immigrants want the products they enjoyed in their native country, which oftentimes are brand names. So getting these shoppers to try private label may be a challenge. However, as the tastes of other shoppers continues to evolve, private label may be an option for these shoppers.
I agree with Jim Wisner that America is learning to be Hispanic. The demographic figures alone should teach us that we will both absorb and be influenced by the Latino culture over the next decade or two.
Looking back into the early Twentieth Century, Italians were discriminated against — as the newest wave of immigrants. Now we are all eating pizza three nights a week. Ultimately, the U.S. is a melting pot and we’re an amalgam of many cultures. I believe this is one of the glories of our nation.
Like the author says, the Millennials are a key target for private label ethnic foods. They are more exploratory and experimental than their demographic counterparts and are the most open to private label in general. In order for retailers to capatalize on this, they will need to create merchandising solutions which both inform and inspire how their private label ethnic lines can enhance, anchor or support a meal solution. Many Millennial shoppers are new to cooking and as a result of this, are primed and ready for retailers to “push” meal ideas at them at the point of sale. I agree that if retailers segregate their ethnic products into just a particular ethnic section, they will lose capturing a larger audience. Cross merchandising with more mainstream foods will create more excitement around “what’s for dinner.”
As this planet shrinks, cultures continue to converge. So many popular TV shows highlight interesting foods from different lands. With PL growing globally, and the US actually trailing the penetration of PL in several other countries, it is only a matter of time before US shoppers embrace PL ethnic items. Display it and they will come!
Some of this might involve a credibility factor. Not sure if I would be inclined to try Wegmans’ Bulgogi, but if at H Mart from my semi-annual visit, and they have a “house brand” I might be inclined to give it a try.
Research has, for decades, shown that Hispanics favor brands much more than other cultural groups do. Private label products aimed at this group will have more of an uphill battle than other PL offerings, even if supermarkets resort to the same strategy they currently use — pushing brands off the shelf in favor of their store brands. In my opinion, Hispanics will retreat to local bodegas for their preferred brands.
Regarding the term, “The United States is learning to be more Hispanic” — and in spite of the weird theory that the U.S. learned to be more Italian because we eat pizza three times a week — I suggest that Hispanics learn to be more American. After all, they came to this country for reasons, including better opportunities and more safety. So, why try to turn the U.S. into the country they fled?