Consumer spending is growing 9.1 percent annually, or 225 percent faster than the 2.8 percent annual increase in the Hispanic population, according to a study by Global Insight released this week by Telemundo, NBC’s Spanish-language network.

Although consumer spending among Hispanic households still lags the average by some 20 percent at $51,000, overall spending went up 50 percent in the past five years to $531 billion. Hispanics account for one out of every $12 spent on consumer products and services.

“The crux of the issue is household income,” says Steve Mandala, executive vice president of sales at Telemundo.
 “If you take a look at the figures for 1997, household income among Hispanics indexed at 70,” or 30 percent below average. “Today it indexes at 77 and is forecast to rise to 87 nine years from now.”
 Behind the growing income is improved levels of education and employment.
The number of employed Hispanics, for example, grew 450,000 since 2000 while the overall job market lost nearly 1 million employees.

More than 1.6 million Hispanics own their own business, which is an increase of 33 percent over five years ago.
“I wonder if part of this also has to do with more Hispanics coming into adulthood, where they have more opportunity to make an income,” says Monica Gadsby, managing director of Tapestry, the multicultural division of Starcom Mediavest Group.
“We have explained to clients that the relatively low level of education and income go hand-in-hand with the fact that Hispanics have a lower median age.”

Whatever the cause, Hispanics are spending more money on products and services.
Although Hispanics’ share of consumer spending remains disproportionately low at 8 percent, relative to 13 percent of the population, robust increases in consumer spending will assure that starts to decrease, especially for certain products and services.
Hispanics, for instance, now account for about 8 percent of new vehicle purchases but are projected to account for 11 percent by 2012.
Moreover, Hispanics account for about 15 percent of movie tickets sales, 12 percent of fast-food sales, nearly 11 percent of department store sales and more than 10 percent of clothing store sales. Hispanics’ share of spending in each of these categories is forecast to go up this decade.
Advertisers have not overlooked this.
Ad spending on Spanish-language television went up 10 percent last year -- almost twice the rate of overall ad spending, according to Nielsen Monitor-Plus -- and was the fastest-growing media type on a percentage basis.
At just under $2 billion, ad dollars on the Spanish-language networks account for 2 percent of total spending.
“I can say with great certainty that ad dollars will increase,” says Gadsby. “For one thing, it’s an under-developed market and two, as the population continues to grow we’ll see spending continue to grow.
 “But I don’t think growth will just be driven by Telemundo and Univision. There will be more options to choose from.”
Among those options could be networks targeting better-educated and more affluent Hispanics.
One cable outlet tackling an issue of concern to Spanish-language media, namely that assimilated Hispanics will turn to English-language media, is Sí TV, a network targeting English-speaking Hispanics set to launch this summer.
“There’s a notion that assimilation means monolingual,” says Mandala.
“I think we’ll find that there will be more bilinguals than today, but the question should be about which language is spoken in the home.”
The population of people who speak Spanish at home is projected to grow by 14 million by 2020, to 42 million people.

April 24, 2003© 2003 Media Life

-Kevin Downey is a staff writer for Media Life.