Hispanic Businesses and the Food Industry

Part 1- There are increasing opportunities for Hispanic businesses and entrepreneurs to live the American dream in the food industry

Thanks to shifting U.S. demographics that are skewing Hispanic, there are now more opportunities for Hispanic entrepreneurs and business owners to succeed in the food industry. Potential opportunities include restaurants (fast food and full service), small mom-and-pop bodegas, franchises, and food processing, transportation and distribution. In order to be truly successful, however, Hispanic entrepreneurs should look into further education, taking advantage of capital funding and investigating government-sponsored programs.

If part one of this two-part series, we’ll dissect the numbers to see why Hispanic entrepreneurs should take advantage of this growing Hispanic-food trend.

Hispanics already know their food is wonderfully tasty, and increasingly, non-Hispanics are also recognizing that. This makes it the perfect time for Hispanic entrepreneurs to get into the food industry, whether as the owner of a full-service or fast-food restaurant, neighborhood bodegas or mercados, or a food-transportation and -distribution business. Even opening a tortilla-manufacturing business could result in huge profits, as the love of Hispanic foods—which is unlikely to abate—only continues to increase.

Take something as simple as the tortillas. Even as far back as 2000, the Tortilla Industry Association said Americans were eating about 85 billion tortillas in that 12-month period. While the tortilla Industry doesn’t have any current data, even at the leisure pace of 3% growth per year (tortilla chips are growing at 3.8% vs. 2.2% for potato chips, according to Infoscan Reviews, a company that tracks retail business), this would mean 128.5 billion tortillas per year.

Of course, with all those tortillas, we need drinks to go with them. In recent years, tequila sales have also been on the rise. In 2006, nearly 107 million liters of the drink were brought into the United States, a 23% hike from the previous year, says Judith Meza with the Tequila Regulatory Council. In 2011, the U.S. imported 125 million liters, another 17% jump.

Based on number such as those, it’s clear the Hispanic food industry creates wealth, employment and opportunities moving forward.

In order to better understand this, let’s take a look at the Food Industry ecosystem and its main segments.

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Hispanic Businesses the Food Industry—Wealth

In 2010, the Latinum Network pointed out that Hispanics have become the most important U.S. demographic growth driver in the food, beverage and restaurant sectors. Among some of its key findings:

• U.S. Hispanics made up more than 50% of real growth in the midst of a stagnant U.S. consumer economy between 2005 and 2008, with $52 billion of new inflation-adjusted Hispanic spending outpacing $40 billion of new spending by non-Hispanics.
• In the food, beverage and restaurant business, this new spending offset most (84%) of the real decline in demand across the entire $1 trillion sector.
• Between 2005 and 2008, Hispanics created over $9 billion of new value in food and beverage in otherwise dormant or declining categories such as fish and seafood, fresh fruit juice and dairy products
• Hispanics created $5.9 billion of new value in growing categories where they represent approximately 20% of the growth, such as vegetable juices and fruit drinks, meats including pork, ham and mutton, and frozen meals, which represent the highest-growth food category among Hispanics. The study suggests that busy Hispanic professionals are increasingly turning to frozen meals to feed their children.
• Hispanics are eating out more while others are cutting back, driving growth in fast-food and full-service sectors. In particular, Hispanics are increasingly likely to eat out during the workday, driving new sales in fast-food breakfasts and full-service lunches.

 

According to Alexia Howard, senior research analyst-U.S. foods at Sanford C. Bernstein: “With total U.S. Hispanic household spending expected to top $1 trillion by 2013…we see the growth in food, beverage and restaurants here as a particularly interesting opportunity for our investors. Especially with the relative stability of Hispanic demographics, this growth can be reliably predicted through 2050.”

Among the 500 largest Hispanic-owned businesses, some 35 are in the food industry and, while many are not huge, they cover a wide range of segments, from food manufacturing to tortillas to distribution to fast-food restaurants.

More importantly for the creation of wealth is the industry’s capacity to generate jobs, whether through self-employment or by being employed for others.

Hispanic Businesses the Food Industry—Employment