The Market Everyone Wants
by Deirdre Fretz

Daniel Jara gets a lot of phone calls these days. As president of the Statewide Hispanic Chamber of Commerce of New Jersey, Jara knows the Hispanic business community as does no one else. He is often the first person salesmen call when they want to learn how to tap into the growing Hispanic market.

"We act as a bridge between the Hispanic community and those who want to penetrate this market," says Jara, whose outfit is based in Jersey City. One-third of its 8,000 members are non-Hispanic owned companies.

It’s no wonder that businesses have a keen interest in marketing to New Jersey’s Hispanics. The state has the seventh largest Hispanic population in the U.S. New Jersey Hispanics have approximately 7.9% of the total purchasing power in the state, a figure that is expected to increase dramatically over the next several years, according to the Selig Center at the University of Georgia.

The center says Hispanic buying power will expand at the annual rate of 8.7% in the U.S. over the next five years, while the non-Hispanic rate will hover around 4.8%. The disparity reflects the wave of immigration that continues to boost the Hispanic population as well as the rapid rise of household income among U.S. Hispanics. According to the Census Bureau, Hispanic income grew 16% from 1997 to 2000.

One reason for that growth is the large number of successful entrepreneurs within the Hispanic community. New Jersey was home to 36,100 Hispanic-owned companies in 1997, the most recent figures available from the Census Bureau, which were released this year. That was up from 22,198 companies in 1992. The firms are as varied as Mendez Dairy/Tropical Cheese in Perth Amboy, a maker of specialty dairy products, and Northeast Construction of Lakewood. Such firms serve both Hispanic markets and the population at large.

At the same time, Hispanic households have become increasingly attractive to Fortune 500 companies. The high Hispanic birth rate has drawn significant interest from Johnson & Johnson and Toys "R" Us, which are among the top 60 U.S. advertisers to Hispanic consumers (see chart). And the frequency with which Hispanic households make long-distance phone calls to family and friends has caught the eye of service providers like AT&T.

"We have long recognized that the Hispanic population is critical to our business, but targeting the market has come increasingly into vogue because of the high growth rate and growing buying power," says Chet Oldakawski, marketing vice president at AT&T.

Jara, 52, has headed the Hispanic chamber since its inception in 1989. In addition to his role in the organization, the largest individual chamber in the state, he is the owner of Rimac, an insurance, marketing and trade consulting firm in Hackensack. A native of Peru who came to the U.S. when he was 14, Jara also serves as an advocate for the disabled. He has used a wheelchair since 1982 as a result of complications following back surgery.

Jara notes that Hispanic consumer habits make selling to this market particularly appealing. "If you give Hispanics the services they deserve they will be very loyal," he says. That’s one reason why national spending on advertising to the Hispanic market grew from $1.4 billion in 1997 to $2.4 billion in 2000.
Hispanic consumers often find their way to businesses through informal channels. William Garces, the principal partner of the law firm Garces & Grabler of New Brunswick, says that while the office has an advertising budget of nearly $300,000 a year, most of his clients arrive through word-of-mouth referrals. Many show up without appointments and are content to sit and wait patiently for someone to come out and talk to them.

A number of these clients want to bring claims for workers’ compensation. In fact, Garces has handled so many compensation cases that one insurance company dispatched an investigator to find out whether the firm was unethically prompting people to file complaints. "After making phone calls and asking clients how they heard about us, the investigator said to me, ‘Wow, you get a lot of referrals,’" Garces says.
On the other hand, he notes, the diversity of the state’s Hispanic market means there is no single newspaper or other media to reach a large percentage of the population. "Hispanic print media is so fragmented that it is difficult to use, and television and radio is so expensive because you have to pay to tap the New York market," Garces says.

Like Garces, realtor Esperanza Porras-Field, an agent at a Coldwell Banker office in Morristown, has been overwhelmed by the number of former customers who pass on her name to friends and family members. "There isn’t a day that goes by without someone coming in off the street and asking for me," she says. "The people in the office always ask me, ‘How do you do it?’"

It is not just Hispanic-owned firms that enjoy the patronage of Hispanic consumers. "A lot of Hispanics will go out of their way to shop at a ShopRite, because the stores tend to stock a lot of Hispanic foods," says Jara. "They carry Inca Cola from Peru, cheese from Colombia and other items."

Unlike some parts of the country, no single nationality dominates the state’s Hispanic market. While Puerto Ricans, with a statewide population of some 367,000, comprise the largest single group, the number of Hispanics of Mexican descent (102,900) has recently surpassed those from the Dominican Republic (102,600). Yet Hispanic consumers’ tastes are not necessarily limited by their country of origin. "A Peruvian might try a Puerto Rican product and vice versa," notes Jara.

Some may find the fragmented nature of New Jersey’s Hispanic market daunting. But La Cena Fine Foods of Saddle Brook has used it to its advantage. In addition to packaging imported foods under its own label, La Cena imports and distributes a host of popular brand-name products in the tri-state area.

"It is important to people to see labels that they are familiar with," says Jose Badia, La Cena’s general sales manager. "It makes them feel like they are home." The company sells a variety of canned beans and other products under its own brand name to many different Hispanic groups. Says La Cena president and owner Vicente Puig: "Because word of mouth recommendations are essential in our market, we have to be committed to offer the best quality so people continue to buy and recommend our product."

In Perth Amboy, Mendez Dairy/ Tropical Cheese has been adding products and brand names to attract new immigrants. "Historically the New York-New Jersey area was dominated by people from the Caribbean, and for 20 years we have sold dairy products to that community under the Tropical brand," says COO Martin Allen. To serve the growing Central American, Colombian and Venezuelan population, the company launched a line under the Paisano brand name a decade ago. For the past five years it has marketed Mexica-brand products to the state’s growing Mexican population.

"People think that the Hispanic population as just one group, but it is very heterogeneous," Allen says. "That is why we are pursuing a segmented marketing approach." The company, which had revenue of $71.8 million last year, sells its products from Maine to Florida and aims to distribute nationwide.

Goya Foods, which had revenues of $713 million last year, has become synonymous with Hispanic packaged products of every persuasion. While supermarkets typically mark their aisles with labels such as "Asian Foods" and "Pasta and Pasta Sauces," Hispanic food sections are often simply labeled "Goya."

"We have been selling our products for 60 years, so that some of our products, like our black beans, fruit nectars and olives, have become part of the culture," says Goya marketing director Conrad Colon. The Secaucus-based company advertises in both English- and Spanish-language media and participates in cultural events like the Puerto Rican Day Parade in New York City.

Colon has this advice for companies that plan to target the Hispanic market: "Do some research. Find out who are the Hispanics you want to target. Where are they? Find out how they use your product. When you know that, then you will know how to market to them."

Goya has developed its own methods through a lengthy process of trial and error. Lisa Skriloff, editor and publisher of Multicultural Marketing News, a New York City newsletter that focuses on minority and woman-owned businesses, calls Goya a prime example of a "first mover" company in the Hispanic market.

Smaller companies often resort to narrowly targeted marketing. Leo Sierra, the head of marketing for Mi Bandera supermarket in Union City, says the store relies on flyers delivered door-to-door to publicize upcoming sales. "It is what has always worked best for us," Sierra says.
The tactic is effective because Hispanics don’t automatically toss direct solicitations into the waste basket. "They take the time to read mail they get from companies," Skriloff says.

That might change in the future. In fact, there has been such a drastic increase in Hispanic-targeted marketing by national and multinational firms over the past few years that advertising in Hispanic media outlets has become much more expensive. A 30-second prime time slot on Spanish-language television cost only about $1,000 three years ago, but now can run from $5,000 to $6,000.

Skriloff says Hispanic advertising agencies and savvy media sales staffs can help Anglo companies reach Hispanic customers. "They can suggest, for example, [that a client] take out an ad in a newspaper to commemorate a specific country’s independence day," she says.
In the same way, companies need to learn the buying habits of Hispanic customers in different markets. For example, entertainment firms should know that Hispanics are more likely to buy tickets in cash the day of a performance than to purchase them with credit cards in advance.

According to Skriloff, Hispanics are also likely to buy more than just two tickets. "If they decide to go out, it won’t be just a man and wife going out alone," she says. "They will bring the kids, the grandmother and maybe an aunt or uncle. So there will be many more tickets sold." It is that very propensity to act in groups that makes Hispanic consumers increasingly attractive to companies of every kind.

email dfretz@njbiz.com