Presidential candidate Joe Biden took a lot of heat when he said, “Unlike the African American community with notable exceptions, the Latino community is an incredibly diverse community with incredibly different attitudes about different things.”
Everyone took umbrage at what he got incredibly wrong, but overlooked what he got right: the Latino community is incredibly diverse, and not just on political issues, but as consumers.
It’s long past time for brands to discover this dynamic, rapidly-growing, but too often overlooked or misunderstood consumer segment: people with Spanish-speaking roots. Make this, National Hispanic Heritage Month, running from September 15 through October 15, the time to do it.
The Hispanic market – 61 million strong or 18% of the population – represents the nation’s second largest racial or ethnic group, after white non-Hispanics. What’s more, they accounted for over half (52%) of U.S. population growth from 2010 to 2019.
As a result of their size, rapid growth, and spending power, estimated to reach $1.9 trillion by 2022, a recent Nielsen study said the Hispanic consumer is becoming a “prime driving force in the U.S. economy.”
Nielsen went on to challenge brands to “grasp the advantage of establishing culturally relevant ties in a hypersocial digital world.”
Confusion understandable, but not forgiven
The confusion about this customer is understandable, starting with the fact that we don’t know what to call them.
Hispanic is the term most often used, but because of the rapid-growing diversity of this group, mixed Black and indigenous people are frequently forgotten. About 20% of those who identify as Hispanic also identify as some other non-white ethnic group.
The recently introduced gender-neutral term Latinx, as well as gender-specific Latino and Latina, are also used, but a recent Pew study found that only 20% of people who trace their heritage from Latin America and Spain have ever heard of Latinx, and only 3% actually use it.
No matter what they are called, the Hispanic population is so large and diverse that they can’t be lumped into one bucket.
Rather, brands needs to dig deeper to avoid the all too common mistake of thinking if they simply translate ads or marketing messages into Spanish, they’ve done their job.
Hypercultural Latinx consumer is one to know
Within this large and rapidly growing population, Ilse Calderon, a senior associate at Palo Alto, CA start-up venture capital firm OVO Fund, has found a unique consumer segment that she believes is one of the most important for retailers’ and brands’ future prospects: the 18 million strong young Hispanic consumers in their prime spending years.
She calls them the “Hypercultural Latinx” customer, and she knows them intimately, being one of them.
These consumers are in the early stages or on the cusp of adulthood – the median age of a Hispanic is 30 years old as compared with 44 for a white non-Hispanic. For brands and retailers that make a connection with these consumers early, they can bank on an extended stay.
“Millennial Hispanics are in their prime spending years, which translates into more dollars for businesses that can capture this customer,” Calderon says. “Legacy companies are doing a subpar job at capturing this customer. Forgive the expression, but ‘old white men’ don’t understand them.”
What distinguishes the hypercultural Latinx consumer from others in the Hispanic segment is they have their feet firmly planted in two cultures. “Hypercultural Latinx consumers are 100% Hispanic and 100% American,” Calderon explains.
“They are second-generation Millennials who have been raised in American society and do all the things that Americans do, yet when they go home, they usually speak Spanish, eat traditional foods, and often live in multi-generation families,” she continues. “They are constantly going back and forth between two cultures, and as a result, they are forced to create their own pseudo-culture and community.”
The hypercultural Latinx doesn’t feel so much conflicted between the two cultures, but wants to live fully in both. “She excels in her self-created culture, where her customs, language, and values shine through,” Calderon shares.
Startups have the edge
Being in the continual process of self-creating an identity and community, the hypercultural Latinx consumer is not afraid to take risks and try something new.
“She desires to test the untested, and thus, is likely to cross the chasm before the early majority. This makes her an ideal customer segment for consumer startups,” Calderon explains.
This gives startups a natural advantage since they are in the same self-creating, identity-defining stage in their business development.
“They [startups] can start from scratch and build a brand from the ground up dedicated to the Hispanic millennial,” she says and adds, “Startups have the benefit of having no history of bad marketing or image problems.”
She points to infamous marketing blunders by major brands, like Hershey’s and Kmart, which both got into trouble using Spanish-language terms that carried a slang sexual connotation.
This blended cultural dynamic creates opportunities for brands that get it, like Habit Skin, founded by Tai Adaya, who is of Mexican-Pakistani origin.
It offers anti-aging beauty products for women who don’t buy the traditional beauty industry message that one becomes “less ‘pretty’ over time, that we lose value as we age.”
Habit Skin boldly challenges that notion, claiming, “We believe people, like fine wine, get better with age, so long as we keep ourselves healthy.” This message is powerfully affirming for young Latinx women who honor their mothers and grandmothers
Another emerging brand targeting this customer is Spiritu. A subscription-based service, it delivers four seasonal boxes filled with beauty and lifestyle products curated specifically for the Latinx woman, including products from Latina-owned businesses and artisanal products from Latin America.
Founded by Danielle Levine, who worked for Google and FabFitFun before launching her venture, she explained in an interview with Authority Magazine:
“My road to starting Spiritú stemmed from the desire to explore an entrepreneurial path and wanting to create an ecosystem to better serve the Latina consumer. I wanted to create a platform that disrupts the way the mainstream market interacts with the Latina consumer, who is incredibly powerful, diverse, and yet still underserved.”
Another startup brand, Carson Life, crossed over into the big time in less than four years. Its product line of natural beauty and health products has become a force for wellness in the Latinx community.
Now carried by 1,000 retailers, including Walmart and Walgreens, as well as on Amazon, Carson Life grew primarily through word-of-mouth as being a company that didn’t just cater to Hispanics, but was made by and specifically for their beauty and wellness needs.
Major brands can play too
Maintaining and developing strong social connections, both digitally and personally, is a priority for the hypercultural Latinx community. With this insight, Calderon sees emerging opportunities for major brands to develop a platform approach, rather than a single brand strategy, to reach more widely across this market horizontally and vertically.
She points to Coca-Cola’s Iris Nova multi-brand DTC platform for emerging beverage brands and Arfa for personal care brands, founded by ex-Glossier president and COO Henry Davis, as examples of platform businesses perfectly suited to expanding into the Latinx community.
In a final note, Calderon highlights HerbalLife HLF , the dietary supplement company, as understanding the social dynamic unique to the Latinx market. While it has gotten a bad rap for its pyramid-marketing scheme, HerbalLife is a fixture in Hispanic-American homes.
She sees opportunities for companies to use an “affiliate and referral program” to sell into and through the Latinx community, think Avon and Mary Kay, but without the pyramid-marketing taint.
“An ‘army of social guides’ approach is my way of explaining using Herbalife-like tactics (without the pyramid schemes) to scale a start-up,” she explains, using a network of ‘social guides,’ rather than salespeople.
“This social guide is inspiring and looked up to by the hypercultural Latinx population. My generation, the hypercultural Latinx, are looking for our own aspiring brands and products to become loyal to. After all, it’s innate to Hispanic culture to be social, so buying socially and through each other makes perfect sense,” she concludes.