The US is no doubt a hodge-podge of ethnic and cultural diversity, and that is best represented in the Hispanic population. Despite the fact that Latin American immigration appears to have stagnated, the US Census Bureau expects this demographic to reach 106 million by the year 2050 — a 57% increase from 2015 — and that’s after the bureau actually lowered its projections.

There are two sides to this coin: A group this big, with so much growth potential, Hispanic consumers represent a large segment of purchasing power for a number of products. And at the same time, they are driving food trends that can be seen in product development ranging from flavor fusion to food mashups that represent multiculturalism in often surprising ways.  

What it means to be Hispanic is a tricky proposition, and it can mean different things to different people, especially in specific regions of the US. So, how are people purchasing Hispanic products, and how is this culture affecting what baked foods and snacks Americans of all ethnicities are eating?

Purchasing power

It’s not just the demographic that’s growing. According to research from Mintel, Hispanic consumers’ pocketbooks are growing, too. From 2010 to 2014, the Selig Center for Economic Growth estimated that their purchasing power grew from $1 trillion to $1.25 trillion and projected it to hit almost $1.7 trillion by 2019, thanks to improving labor market conditions that lead to increased disposable income.

In 2013, AHAA: The Voice of Hispanic Marketing, a research firm dedicated to Hispanic-specialized marketing, identified a consumer segment it called Upscale Latino, which accounted for 29% of the US Hispanic population and 40% of the group’s spending power.

Partnering with Nielson, AHAA conducted a comprehensive study of Hispanic households that earn $50,000 to $100,000 per year and discovered that this group is on average 33-years old, living active lifestyles and often have young families — 85% have a household of three or more — falling in line with the target shopper for many bakeries and snack food manufacturers.

Breaking border barriers

The growth of Hispanic spending is happening at a time when Mexican brands are also experiencing growth in the US.

In October, Milling & Baking News reported that Grupo Bimbo, Mexico City, is gaining a foothold with its Mexican brands such as Takis, a corn chip produced by Grupo Bimbo subsidiary Barcel USA. During an October call with analysts, Fred Penny, president, Bimbo Bakeries USA, said that Bimbo and Marinela are two Mexican brands that account for “a significant portion of our sweet goods business.” Chairman and CEO Daniel Servitje noted that the company’s sweet goods portfolio made a smooth transition to the US market from Mexico, and the salty snacks like Takis are following suit.

“We have a separate team working on these categories with synergies also with the Bimbo Bakeries’ business in many regions in the country, and we’re very pleased with the growth,” Mr. Servitje said. “We have a plant in the US focused on basically producing these salty snacks items, and we also do a lot of export from the Mexico zone. So that’s a growing business.”

More than Mexican

With proximity on its side, it’s not only easy for Mexican foods and flavors to quickly gain popularity in US markets, especially in large border states such as Texas and California, but it’s also easy for American consumers and marketers to assume that “Hispanic” directly translates to “Mexican.”   

Not so.

“In terms of the Hispanic population in South Florida, we don’t have the same situation as California or Texas with Mexicans, where there’s one particular ethnicity,” said Luis Lacal, president, Bakery Corp., Miami. “In South Florida, you have about 20 different nationalities, so any product you want to bring to the market doesn’t go to just one.”

Some products gaining popularity, Mr. Lacal observed, include Colombian pan de queso, Cuban or Argentinian empanadas and Mexican bolillo. However, Bakery Corp. actually faced challenges in creating Hispanic products in an area with high Hispanic multiculturalism. “In Miami, you’ve got about 70% Cubans, and the other 30 to 40% is divided between 15 or 20 different nationalities,” he said. “Quite a few years ago, we got into the Latin flavors, especially with muffins and pastries, using mango, guava, dulce de leche, pineapple — tropical flavors from the Caribbean — and it did work for a while, but you have so many Hispanic bakeries — Mexican, Cuban, Colombian —you have a lot of bakeries already taking care of that.”

In the end, Bakery Corp. chose to concentrate on the American foodservice business, including hotels, restaurants and cruise lines, making French breads and dinner rolls. Interestingly, the bakery also produces an RTE Cuban sandwich that’s made with French bread.

Millennials and multiculturalism

It’s not just multi-cultural Hispanic consumers who have diversity of palate. Non-Hispanic millennials, according to Mintel, are also branching out into non-Mexican Hispanic foods. According to the company’s report Defining Ethnic Food, 48% of millennials have eaten Central or South American foods, including arroz con pollo and pupusas, in the past three months, which will likely fuel interest in broader Hispanic cuisines.

On the flip side, a bakery such as Pan Pepin, located in Bayamon, PR, doesn’t have a Hispanic demographic per se because its consumer base is 100% Latino but can still be influenced by outside cultures such as Mexican. “We are a totally Latino market — but we are Caribbean Latinos, not Mexican or Central American — yet tortillas have really started growing here,” observed Mario Somoza, Pan Pepin president and CEO.

“We got into the tortilla business about six years ago,” Mr. Somoza said. “We saw it as a growing category. It was a small market, but it has kept growing on average at a double-digit year-over-year rate.” After using a copacker and seeing how well tortillas would do, the bakery recently installed its first tortilla line in-house.

Mr. Somoza pointed out that Puerto Rican consumers are drawn to a more Americanized type of tortilla. In fact, tortillas, while a seemingly universal product, carry their own Hispanic individualism, especially when it comes to geography. “A big seller here [in Puerto Rico] is the wheat flour tortilla, which is a little bit softer. Not so much as in Mexico and other Central American countries where corn is preferred,” Mr. Somoza said.

Mr. Lacal had a similar observation. “In every single country from Guatemala, Costa Rica, El Salvador, Honduras, even though they use and eat tortillas, each one of them have a different kind of tortilla than Mexico,” he said.

Flavor fusion

Rather than lumping everything into one type of Hispanic food, knowing what types of flavors are born out of specific ethnicities can help bakers and snack makers tweak their product development and fuse flavors for new and interesting products.

“Caribbean Hispanics — Puerto Ricans, Dominicans, Cubans — we’re about using spices to highlight the flavor of the food,” Mr. Somoza said. “We do put a lot of spices in our food, but it’s not hot spice like you would find in Mexico or Central America.” In those locales, spices and chiles are used more for heat when it comes to flavors.

According to Mintel, brands have an opportunity to “mine the interest in Mexican foods,” as noted in Defining Ethnic Food. Focusing on flavors specific to certain regions of Mexico, as well as other Latin and South American cuisines, is a great starting point for fusion concepts.

Mintel also noted that non-Hispanics are seeking savory, tangy and sweet options in their food choices. However, hotter flavors have been driving product innovation, specifically in snack foods, over the past five years.