Hispanic influence growing in the dairy and dairy alternative beverages market

Hispanic influence growing in the dairy and dairy alternative beverages market

This blog is based on the Packaged Facts reports Dairy and Dairy Alternative Beverage Trends in the U.S., 3rd Edition andHispanic Food Shoppers in the U.S.Purchase your copies for more insights.

And be sure to visit our 'Dairy and Dairy Alternatives' curated page, Packaged Facts' all-in-one resource covering the market for dairy and alternative products. 

Over the last couple of years the big story in the dairy milk vs. plant milk competition is the extraordinary growth of almond milk. Dollar, volume, and unit sales of almond milk have all increased at double-digit rates the expense of dairy milk as well as by taking sales away from soy milk, which no so long ago was the leading plant-based alternative to dairy milk. And looking a short way down the road it is possible that almond milk, for all of its remarkable success, may find itself soon overtaken by cashew milk which is getting the same kind of “tastes great and good for you” promotion that almond milk received.

But take a look just a bit further down the road and the bigger story may well be the influence of Hispanic culture on the combined dairy and plant-based milk markets. Hispanic culture, that is the cultures of Mexico, South America and Central America and the Caribbean have already had a tremendous impact on mainstream culture (which probably needs redefining as “mainstream” continues to lose meaning as various ethnic and health streams appear to be the ones with rising tides). As Packaged Facts has previously noted, “Tortillas and taco kits outsell hamburgers and hot dog buns. Salsa boasts almost twice the dollar sales of ketchup.”

More specifically, spending by Hispanic consumers for food at grocery and other food stores grew more than 80% over the 2004-2013 period to $67 billion, more than twice the growth rate registered by consumers on average. Packaged Facts expects that expenditures by Hispanic food shoppers will reach $86 billion in 2018. This represents 2013-2018 cumulative growth of 28.2% and a compound annual growth rate of 5.1%.

In addition, without Hispanic households, the dairy industry would have seen a sharp decline in the volume of milk consumed on a daily basis between 2004 and 2013. As a result, Hispanics were responsible for all of the growth in milk consumption during the period. Further, the growing numbers of Hispanic consumers is good for the whole milk category. According to the USDA, when measured in terms of the average amount of different types of dairy products consumed by consumers each day, Hispanics allocate a much higher percentage to whole milk (52% vs. 30%). Compared to American consumers as a whole, Hispanics drink 66% more whole milk.

As impressive as these numbers are, in the dairy and dairy alternative beverages market, the impact of Hispanic culture is still in a relatively early stage of development. But a growing demand for new and exciting flavors among non-Hispanic consumers is setting the stage for future development. A key area in terms of potential growth is the dairy creamer market. Dairy creamer has several competitive Hispanic brands including La Vaquita, Cacique and El Mexicano, that are popular among Hispanic consumers and making the crossover in sales to non-Hispanic customers.

Cacique uses authentic recipes to prepare its Mexican-style products, which include yogurt smoothies in eight flavors as well as creams (Crema Salvadoreña; Crema Mexicana; Ranchero). La Vaquita is notable as an example of a brand that has been acquired by a larger “mainstream” dairy company, in this instance Dairy Farmers of America, Inc. (DFA).

Another extremely promising segment is coconut milk where the major Hispanic marketer Goya Foods owns about 10% of the market. A third area with strong growth potential is the shelf-stable milk and milk substitutes segment that includes ready-to-drink Latin American-style smoothies, as for example the Nuestro Yogurt Hispanic-style smoothies marketed by Nuestro Queso, “a company committed to bringing the highest quality dairy products to our Latino families.” New flavors include Pecan, Mango, and Piña Colada.

Alpina Foods, one of the most recognized companies in South America, has been expanding its U.S. lineup of Latin American-style smoothies. According to the company, its Alpina Avena is a traditional, creamy, oat-based dairy beverage that has been a staple in many Latin American homes for centuries. Alpina’s recipe follows the generations-old tradition of El Espinal, a region in the company’s home country of Colombia.

Alpina, which has manufacturing facilities in Colombia, Ecuador, Peru, Venezuela, has also expended into producing as well as marketing its products in the U.S. This can be taken as a signal of the likelihood of increasing Hispanic influence on the dairy and plant milk markets, especially when viewed together with the April 2015 announcement from Borden Dairy Company that it would start manufacturing LALA Frutas dairy and fruit beverage in the U.S.

LALA Frutas, made and sold in Mexico by Borden’s parent company Grupo Lala, is one of Mexico’s most popular dairy and fruit beverages. Borden will begin by rolling the strawberry and mango flavored products out in Southern California, initially targeting the 10 million Hispanic consumers living in that area. Distribution will later be expanded through the Southwest.

In announcing the product rollout, Jenica Oliver, senior director of brand marketing and innovation at Borden Dairy Company, noted that Borden is happy to deliver the “true taste of Mexico” to those 10 million Hispanic consumers who want to enjoy an authentic Mexican product. But she also cited statistics indicating that half of all consumers prefer flavored milk over plain milk, which might be taken as a hint that Borden may be looking beyond its immediate goal of serving just the Hispanic community.

Add either Dairy and Dairy Alternative Beverage Trends in the U.S., 3rd Edition (April 2015)orHispanic Food Shoppers in the U.S.  (June 2014)to your own intelligence library and receive a 5% discount during our promotional period effective through October 1, 2015. Use code PF0623DAIRY.

-- Howard Waxman