Growing demand for ethnic food correlates to increased minority populations
Dec. 19, 2011 at 6:19 a.m.
As Yolanda Martinez-Schneider made her way through the Spanish-labeled aisles of El Ahorro grocery store on Monday afternoon, she filled her basket with ingredients for some of her favorite meals.
With celery and oregano for her chicken and dumplings, a can of fruit cocktail for a healthy yet tasty snack, crushed red pepper and a pig's head for her tamales, Martinez's shopping cart looked like that of a growing number of U.S. consumers - a mixture of both traditional American and ethnic foods.
While Hispanic grocery markets are grossing $90 billion a year, the demand for other types of ethnic food beyond the "big three" - Mexican, Chinese and Italian - is steadily increasing, as seen by the influx of more niche grocery stores and increased ethnic products on the shelves of major grocery retailers.
"It's a good challenge that we need to stay on top of emerging trends in markets," said Doug Wallace, general manager for H-E-B Plus on Navarro Street. "We listen to our customers. When they ask for items, we do everything we can to source them."
The increase in demand for ethnic groceries directly reflects the increase in minority populations.
Major retailers are responding to these population shifts.
In 2009, Walmart, the international retailer opened two Supermercados de Walmart, one in Phoenix and the other in Houston, in an effort to test the country's appetite for a possible string of Hispanic supermarkets and tap into the booming market segment.
Walmart also announced plans to open a Mas Club (More Club), a warehouse retail operation patterned after Sam's Club.
Ethnic grocery stores are some of the fastest-growing stores in the country, as they provide specialized services and products unique to a particular neighborhood and its shoppers, according to the U.S. Department of Labor.
Growing minority populations across the nation bring new food preferences from a variety of cultures, resulting in a growing interest in unfamiliar crops and livestock, according to the Summer 2010 issue of the United States Department of Agriculture's Small Farm Digest.
Many of these food products are not commonly found in American grocery stores, but rather in niche grocery stores and via online grocers.
By statistical measures, home consumption of Mexican food is rapidly becoming more popular for home preparation, according to a business report titled "Authentic Mexican Food: The Next Organic Trend?" by Michael Boland, professor of Agricultural Economics at Kansas State University.
"What businesses have done is really develop a business model to cater to a local demographic," said Conor Flynn, president of the Western Region at Kimco Realty. "As the demographic evolves, retailers need to evolve with them."
Kimco Realty owns and operates North America's largest group of neighborhood and community shopping centers, including 11 Hispanic grocery stores.
These bodegas, family-owned markets, convenience and grocery stores affect the economy in that Hispanics, whose buying power is expected to reach $1.3 trillion by 2015, shop for groceries an average of 26 trips per month, three times more than the general U.S. shopper, according to Iowa State University's Ag Marketing Resource Center's website.
A Food Marketing Institute report indicated Hispanic shoppers were interested in supermarkets that offered a variety of fresh produce; meats and breads; Latino products; bilingual store signs and packages; bilingual employees who are knowledgeable about Hispanic products; and advertisements in Latino and Spanish-language media, according to the Resource Center's website.
Additionally, Hispanic grocery stores are touted as hubs of the communities because they have bakeries, restaurants and meat counters with a greater selection of meats and cuts not typically found in Anglo supermarkets, said Flynn in his popular real estate blog post, "Six reasons why small Hispanic grocers are poised to break out nationally."
Additionally, consumer adventurism, tourism and celebrity chefs have all led to the increased demand for ethnic food among Americans.
THE LOCAL SCENE
"In Victoria, our customers are not only Hispanic, but also Cajun and German," said Daniel Morales, a director of communications and community relations for Walmart. "We are always looking for feedback from our customers. We appreciate it because it helps us provide products and services that they want."
Although Morales could not pinpoint an exact date when customers began requesting more ethnic food products or provide sales figures, he confirmed that both the demand and sales for ethnic products had significantly increased over the last few years.
Morales said Walmart will begin remodeling its Victoria store in March, a move that will allow them to enlarge its ethnic food supply.
Major retailers like Walmart and H-E-B offer customers an array of ethnic products on designated aisles.
Since its remodel about a year ago, H-E-B Plus offers customers an expanded line of Goya products as well as increased Kosher, Asian, Italian, French and British food selections, Wallace said.
Wallace said the decision of what ethnic foods to include in their store also comes from data collected from shopping patterns in other markets.
"We learn a lot from our stores operating in these areas," said Wallace.
While ingredients for African-American cuisine, often referred to as soul food, are often found in large quantities at H-E-B and Walmart, these stores also worked to offer more products to meet the needs of their Hispanic clientele.
However, some customers said they still prefer niche grocers like La Michoacana and El Ahorro.
"It's close to home, and it is very good," Victoria resident Maria Gonzales, 65, said in Spanish as she filled her shopping cart with Sabrosas cookies at El Ahorro. "Things here are cheaper."
"I like the fruit," said Jissac Benavides, 10, also an El Ahorro shopper. "Some apples have a sour flavor."
Management for La Michoacana declined to be interviewed for the story, but store butcher Josh Mancilla said the business has grown in annual profits.
La Michoacana has more than 155 stores throughout Texas.
Mancilla said Michoacana offers a taqueria and a grocery with ingredients for traditional Hispanic dishes such as barbacoa, menudo, carnitas and fajitas and brand name items such as El Mexicano, Gamesa, Panela and El Emprerador.
"We want to make sure we are a one-stop shop for them," Mancilla said about customer feedback.
NEW FLAVORS IN A TRADITIONAL FORMAT
"People want to try new flavors, but in a traditional format. It is a matter of communicating it with a way they are familiar with," said Sanjog Sikand, sales and marketing for Sukhi's Gourmet Indian Cuisine. "It becomes approachable, like I kind of get what you are talking about."
That's the strategy Sikand said her family have utilized in their quest to transform their family-owned business into a multimillion-dollar venture.
The Hayward, Calif.-based gourmet food company, which has been in business since 1989, makes a range of curry sauces, seasonings, frozen entrees and home chef meals that are sold in grocery stores such as H-E-B and Whole Foods and served in corporate and college cafeterias nationwide.
Sikand, who described Sukhi's as an up and coming Indian food dealer, said business has grown at a tremendous rate particularly over the last few years. It grew at 30-40 percent the last three years despite the economic downturn
Products such as their Naanwich, a sandwich served on traditional Naan bread stuffed with Indian cuisine; samosas, empanadas filled with Indian flavors; and tikkis, similar to sliders; and Indian curry wraps have helped Sukhi's to become a staple in many kitchens nationwide.
Sikand said that only 5 to 10 percent of their customers were Indian, the rest were mainstream Americans.
While business has done well nationwide, sales in Texas have done especially well.
"Texas is quite a hot bed for Indian food," said Sikand, who attributed the high demand to large Indian, college-educated populations.
"The college crowd, generation Y, is the biggest consumer of ethnic food not just because they eat a lot, but also because they are exposed to different cultures with the Internet and their curriculums," said Sikand. "If you form eating habits at that age, then when they grow up, they will want it.
The product's healthy ingredients and uniqueness has earned the company rave reviews by foodies and mentions in publications including O-Magazine, Health magazine and Bon Appétit.
A study released in 2009 by Mintel, a market research group, found that Indian food products made by the top manufacturers sold in food, drug and discount stores reached an estimated $44 million in sales last year, up from $17 million in 2004.
Sales are projected to reach $72 million in 2014, according to the report.
Sales of U.S. ethnic foods, including fresh produce, are estimated to reach $2.71 billion in 2015, according to Iowa State University's Ag Marketing Resource Center's website.
Ethnic food sales are being driven by resurgence in cooking and product innovation, more mature consumers and a growing diverse population, according to the website.
The U.S. Hispanic population alone is projected to reach nearly 133 million by 2050.
The USDA's Small Farm Digest advises local producers, who are struggling to compete in the national market, to concentrate their future efforts in the production of ethnic vegetables and fresh produce and then sell them in the local and regional markets.
"Everybody is excited about it. It is a growth vehicle for the future," said Flynn. "It will be exciting to see what happens."